How Russia Could Help Apple By Banning The iPhone

If Russia implements a ban on the use of cloud-based data storage services beginning in 2015, the consequences of such a decision will be interesting for investors to watch. Ironically there is a chance that such a ban, even if it could actually be enforced, may help iPhone sales around the world and boost shares of Apple higher still.

Early in November reports surfaced that the Russian government wanted to ban the usage of smartphone data storage services that aren’t based in Russia, such as iCloud. Some reports speculated that this ban would extend to the phones enabled to use such services, but that outcome appears unlikely. What may be more likely is that the news could produce a kind of Streisand effect–a circumstance where suppressed information gets more publicity than it would have simply because of the attempt to suppress it.

If the purpose of such a ban is to remove access to stored data services outside of Russia’s physical borders, the action raises a lot of questions about technical, economic and legal feasibility. This digital protectionism seems tricky to enforce both in implementation and maintenance. Even if it could be accomplished the cost would might be prohibitive to sustain for long.

What also may be relevant to consider is what kind of message the ban sends. If some speculate that the Russian government is perhaps not merely trying to protect the hardworking members of a fledgling server-farm industry within its borders, they are left to logically assume only one thing: Putin wants data control.

If data control is what Putin wants, their reasoning would follow, and if his government has fingered Apple products as an obstacle to this, then those within Russia who fear that outcome may extrapolate that they have now been told what their solution is. It is possible that news of the ban has inadvertently given free publicity to Apple as a tool for avoiding data snooping by the Russian government. Even if that weren’t true, it would be difficult for the Russian government to convince people of that by simply denying it.

Of course sales of iPhones in Russia represent less than 3% of all iPhones sold. The product gets more expensive every day the Ruble falls in value to the U.S. Dollar so the current climate is not likely to help iPhone sales anyway. But because relatively very few Russians ever consider buying an iPhone, this news item elevates the product’s importance to a select crowd.

Even if the ban were effectively implemented it would not cause a serious dent in sales or Apple’s share price. But because this news draws attention to the fact that data integrity is an issue to be considered, Apple iPhones have thus been given a certain value that may not have previously been there.

Strangely, this may help sales both in Russia and in other countries where people with similar concerns reside. The net effect being that sales figures outside the U.S. may continue to grow among the more affluent who care about data security and integrity. It might take a while for this effect to ripple through, but throughout 2015 if this perception grows, it could increase the value of the iPhone in the minds of non US consumers and it could contribute to the perceived value of the stock.

Shares of Apple have risen rapidly ever since several hedge funds decided to liquidate their positions in the stock. The quick rise could attract yet more retail buyers and continue the persistent upward trend of the stock heading through 2015. It is strange to think that the news of a Russian ban would end up being valuable free publicity to the company, but that’s just what it may be.

Reports Forbes

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