Apple Inc. (NASDAQ:AAPL) is facing a potential market share decline in China due to its strict App Store policies, according to Telegram Messenger founder Pavel Durov.
What Happened: Durov criticized Apple’s “walled garden” approach, stating that it could lead to a further drop in iPhone market share in China.
He pointed out that the Chinese government is pushing its citizens to switch from iPhones to Android smartphones made by local companies like Xiaomi and Huawei Technologies.
"Apple shot itself in the foot with its centralized "walled garden" app policies," Durov said on his official Telegram channel, underscoring Apple's policy of forcing users to install apps and games only from its App Store.
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Apple has recently relented in the European Union, but even there, it has strict policies that users need to follow to install apps from alternative stores.
Unlike iPhones, most Android phones allow the installation of apps from sources other than the official app store, such as the direct version of Telegram. This could result in a significant migration of Chinese users to Android, according to Durov.
"As a result of this change, the iPhone market share in China will keep shrinking. Prioritizing profits over freedom for users is not a good long-term strategy."
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Apple recently removed apps like Telegram, and Meta Platforms Inc.'s WhatsApp and Threads from its Chinese App Store following pressure from the Chinese authorities.
However, Durov says there has been no decrease in app downloads from China, leading him to believe that Telegram was not the primary target of this change.
Why It Matters: Apple’s relationship with China has been under scrutiny for some time. The company’s CEO, Tim Cook, visited China in March, amid declining sales in the region and increasing regulatory pressure. This was seen as a signal that Apple could be looking to strengthen its ties in China.
However, the company has faced challenges, including a directive from the Chinese government to remove Meta Platforms’ WhatsApp and Threads from its App Store due to security concerns. This move, along with the strict app policies, could further impact Apple’s market share in China.
Price Action: Apple's shares were up 0.43% in premarket trading on Monday, after closing at $165 on Friday, according to Benzinga Pro.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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