Apple's China App Store Unit Under Scrutiny: Multiple Staff Members Dismissed For Misconduct

Reports indicate that Apple Inc. AAPL has removed several staff members from its China App Store unit due to alleged business misconduct.

What Happened: An internal investigation by Apple, as reported by Apple Insider, revealed that at least five employees had unauthorized interactions with mobile game developers. These employees belonged to various departments, such as app approval and revenue guidance for developers.

The investigation began in 2022 following an internal audit that discovered these irregularities and was concluded in mid-2023. 

One part of the investigation reportedly involved unauthorized contact between the employees and external parties, which included accepting complimentary meals and outings to nightclubs. 

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The investigation was conducted during Apple CEO Tim Cook’s visit to China amid increasing global regulatory scrutiny over Apple’s App Store operations. The U.S. Department of Justice is reportedly preparing a possible lawsuit against Apple, seeking insights into the company’s stringent control over the iPhone, including the App Store.

The internal investigation by Apple determined that the dismissed employees did not have direct authority over app approval in the Chinese App Store. However, their positions could have influenced which apps were featured, and the specifics of their unauthorized contacts are still unclear.

Why It Matters: The investigation and subsequent dismissal of staff coincides with increasing tensions over Apple’s operations in China. 

This week, Cook was involved in his second high-stakes meeting of 2023 with China’s Commerce Minister Wang Wentao. 

The meeting was held against a backdrop of concerns over a potential iPhone ban by the Xi Jinping administration. During the discussion, Wentao emphasized China’s commitment to opening its markets and fostering cooperation with multinational companies like Apple. 

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