Apple Inc. (AAPL) and Microsoft Corporation (MSFT) Warned For Using Encryption

US president Barak Obama has criticized China’s plans for new rules on US technology companies urging Beijing to change the policy if it wants to continue business with US and has raised the issue directly with President Xi Jinping.

China’s plan is of the cyber terrorism law, that would require technology firms to handover encryption keys, the pass codes used for protecting data, and also to install security ‘’backdoor’s’ in their systems in order to provide Chinese authorities surveillance access. The Chinese government says that this rule is important for protection of state and business secrets. The second draft of the first anti-terrorism rule was read by a Chinese parliamentary body last week and the legislation is expected to be adopted in the further weeks or month.

The Western Companies say that to work in the worlds second largest economy, the government is reinforcing rules which are oppressive and also widen the gap of mistrust between Beijing and Washington. As said by Obama, all the companies required to do so will for obvious reasons not be willing to do so. This in the long term will hurt the Chinese economy as no US or European firm or any international firm will be willing to the handing over of personal data to the government.

Officials in the western side raise an argument that the law, new banking rules and uncontrollable anti-trust investigations lead up to unfair regulatory pressures targeted towards foreign countries though the same laws has to be abided by domestic companies.

With fluctuating degree of success, even the US and Britain officials have requested the firms to disclose the encryption method. FBI Director James Comey and NSA director Mike Rogers Publically warned Internet Companies including Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) against using encryption.

The argument by Beijing is that there is an urgent need to quicken up Cybersecurity measures in reaction to former NSA contractor Edward Sweden’s revelation of U.S. spying techniques.