> And the story isn't even that bad for Amazon or Apple - it's much worse for US-China relations than it is for either of those companies.

If true, it's pretty bad. For one thing customers will be more wary of buying hardware from China. If they move manufacturing elsewhere (or, for Amazon, source hardware elsewhere) they would have higher costs and lower margins, if they don't and a competitor does they lose business.

On top of that, people are already wary of the privacy implications of these companies having all your data, but most are willing to trust major US companies. If it looks like they can't keep it secure against random Chinese companies engaged in industrial espionage, more customers will conclude that operating servers in-house is the better choice.