The Biden administration has launched an investigation into China Mobile, China Telecom, and China Unicom. There are concerns that these Telecoms might exploit their access to American data. The firms operate through their U.S. cloud and internet businesses. They might potentially provide sensitive information to Beijing. According to three sources familiar with the matter, the Commerce Department is conducting this investigation.
Commerce Department’s Investigation of Chinese Telecoms
The investigation—which hasn’t been publicized before—involves subpoenas sent to these Chinese firms with governmental support. The Commerce Department has finished “risk-based analyses” of China Mobile and China Telecom. The investigation into China Unicom is still in its early stages. These businesses continue to have a small presence in the country. They provide cloud services and handle wholesale internet traffic from the United States. This is despite being prohibited from delivering retail or phone services in the country. This allows them to continue having access to American data.
Regulatory and Diplomatic Reactions
Requests for response from the Chinese corporations and their American attorneys were not answered. The White House directed inquiries to the Commerce Department. The Commerce Department also declined to comment. The Justice Department refrained from commenting as well. The Chinese Embassy in Washington expressed hope that the United States would “stop suppressing Chinese companies under false pretexts.” The embassy also stated that China will continue to defend the rights and interests of its businesses.
Findings and Concerns about Chinese Telecoms
Reuters could find no proof that the Chinese corporations had broken any laws or purposely given the Chinese government access to private American information. Nonetheless, the probe is a reflection of Washington’s attempts to stop Beijing from abusing Chinese companies’ access to American data in order to harm American businesses, people, or national security. This action is a component of the two geopolitical enemies’ larger digital war.
Potential Outcomes of the Investigation
The way that regulators will respond to the possible threat that these corporations offer is still up in the air. They do, however, have the power to look into internet services that businesses from “foreign adversary” countries sell to Americans. Possible regulatory actions may impede these companies’ capacity to deliver competitive cloud and internet services to clients worldwide by prohibiting transactions that enable them to run in data centers and route data for internet providers.
Expert Opinions and Security Risks associated with Chinese Telecoms
Internet routing expert Doug Madory, from the internet analysis firm Kentik, emphasized that the U.S. views China as its chief global adversary and a very sophisticated one. Madory stated that U.S. regulators would not be doing their job if they were not attempting to mitigate every potential risk. The investigation highlights longstanding concerns about the security implications of allowing Chinese telecom companies to operate within U.S. internet infrastructure.
Historical Context of Regulatory Actions
American regulators have been keeping a close eye on China Telecom, China Mobile, and China Unicom for a long time. China Mobile’s bid to provide phone service was refused by the FCC in 2019, and China Telecom and China Unicom’s licenses were subsequently withdrawn. Citing national security concerns, the FCC prohibited these firms from offering internet service in April. A 2020 report from other U.S. government agencies that described incidents in which China Telecom redirected internet data through China, raising the possibility of eavesdropping, manipulation, or blockage, had an impact on the FCC’s decision.
Security Risks Associated with PoPs
China Telecoms ‘s U.S. operations include eight American Points of Presence (PoPs) at internet exchange points, allowing large-scale networks to connect and share routing information. The FCC has expressed concerns about the national security and law enforcement risks posed by PoPs operated by firms deemed to pose a security risk. Bill Woodcock, executive director of Packet Clearing House, explained that traffic flowing through these points could be vulnerable to metadata analysis, deep packet inspection, and decryption.
Investigation into Cloud Services of Chinese Telecoms
Investigators from the Commerce Department are also looking into the businesses’ US cloud services. This emphasis is a result of a 2020 Justice Department referral involving Alibaba, China Mobile, and China Telecom. In the future, PoPs and China Unicom were included to the investigation. Regulators worry that these businesses may get access to intellectual property and personal data kept on their clouds and provide it to the Chinese government or prevent Americans from accessing it.
Specific Concerns About Data Centers
Authorities are especially worried about a data center in Silicon Valley, California, that is partially owned by China Mobile. According to Dutch cloud computing specialist Bert Hubert, owning such a facility increases the likelihood of mishandling customer data. He stated that in a data center with stringent security regulations where the corporation just leases space, it would be more difficult to tamper with clients’ servers through ownership, such as by installing backdoors for remote access or getting beyond encryption.
Conclusion
The Biden administration’s investigation into China Mobile, China Telecom, and China Unicom underscores the escalating tech war between the U.S. and China. The probe aims to shut down any remaining avenues for these Chinese companies to access U.S. data. This is to protect American national security and interests. The investigation’s findings may significantly impact how these companies operate in the United States. It may also affect their capacity to offer competitive services elsewhere. As the investigation progresses, it remains to be seen how regulators will address the potential threats. It is also uncertain what measures will be implemented to safeguard U.S. data from foreign adversaries.
