The Joe Biden administration has launched an investigation into China Mobile, China Telecom, and China Unicom over concerns that these firms could potentially exploit their access to American data through their U.S. cloud and internet operations to benefit Beijing, Reuters news report said.
The U.S. Commerce Department is spearheading the investigation. Subpoenas have been issued to these state-backed companies, and “risk-based analyses” of China Mobile and China Telecom have been completed. The probe into China Unicom, however, is still in its early stages.
These Chinese companies maintain a limited presence in the United States, primarily offering cloud services and handling wholesale U.S. internet traffic. Despite being barred from providing telephone and retail internet services by telecom regulators, their operations still grant them access to American data.
Efforts to reach the Chinese companies and their U.S. legal representatives for comments were unsuccessful. The Justice Department declined to comment, and the White House directed inquiries to the Commerce Department, which also refrained from commenting. The Chinese Embassy in Washington expressed hope that the United States would “stop suppressing Chinese companies under false pretexts” and reiterated China’s commitment to defending its companies’ rights and interests.
Reuters said it did not find any evidence that the companies deliberately provided sensitive U.S. data to the Chinese government or engaged in any other wrongful activities.
This investigation is part of Washington’s broader strategy to prevent Beijing from using Chinese firms’ access to U.S. data for activities that could compromise American businesses, citizens, or national security. The move is indicative of the intensifying tech rivalry between the two nations and underscores the administration’s efforts to eliminate any remaining pathways for targeted Chinese companies to access U.S. data.
Regulators have not yet determined the course of action to address the potential threat. However, they possess the authority to scrutinize internet services provided to the U.S. by companies from “foreign adversary” nations.
They could potentially block transactions that enable these firms to operate in data centers and manage data routing for internet providers. Experts and sources suggest that obstructing these key transactions could significantly hinder the Chinese companies’ ability to offer competitive cloud and internet services to American customers, thereby crippling their remaining U.S. operations.
