Consumer electronics giant Apple (AAPL) plans to defy a new demand by the Indian government for smartphone makers to pre-install their devices with a state-run cyber safety app, Reuters reported, citing people familiar with the matter.
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Apple’s arch rival, South Korea’s Samsung (SSNLF) is still reviewing the demand, insiders also told the outlet. Vivo, Oppo and Xiaomi (XIACF) — who are also active in the Indian smartphone market — are also required to comply with the order.
India’s telecoms ministry said the demand to phone makers to add Sanchar Saathi within 90 days was aimed at redressing the rise in scams using duplicates or spoofed versions of the International Mobile Equipment Identity (IMEI) from stolen phones.
IMEI is typically a 15-digit number tied to a smartphone’s hardware. The number can be used by scammers on a blacklisted phone or can be combined with other personal details to hijack a person’s account.
Indian Government’s Push Sparks Surveillance Fears
As part of the demand, the government also required that phone makers make it impossible for users to disable the app. Existing devices are also to be covered through a software update.
However, the demand faced heavy criticism from the Indian government opposition and privacy advocates who fear the underlying motive might be mass surveillance. Apple intends to argue that the demand poses risks to the security of its ecosystem.
Apple India Sales Grow amid Antitrust Case
The U.S. tech giant’s plan comes at a time it is facing the risk of a fine of up to $38 billion in an antitrust case initiated by the Competition Commission of India. The market competition watchdog has accused Apple of engaging in “abusive conduct” such as blocking third-party payment processors and charging fees of up to 30% for in-app purchases. Apple has denied any wrongdoing.
The new demand also comes at a time when the Indian smartphone market — where Apple recently hit $9 billion in sales — is becoming increasingly important to Apple. However, apart from China, the whole of Asia still accounts for a significantly smaller portion of Apple’s sales.
Is Apple Stock Still a Good Buy?
On Wall Street, Apple’s shares currently have a Moderate Buy consensus rating based on 21 Buys, 12 Holds, and two Sells assigned by 35 analysts over the past three months.
At $289.17, the average AAPL price target indicates a little over 2% upside from the current levels.
