The Biden administration is investigating China Mobile, China Telecom, and China Unicom over concerns these companies could exploit their U.S. cloud and internet services to provide data to Beijing. This was reported by three sources familiar with the matter.
Investigation Details
The U.S. Commerce Department is conducting the investigation, which has not been publicly reported before. Authorities have subpoenaed these state-backed firms and completed risk-based analyses on China Mobile and China Telecom. The probe into China Unicom is less advanced. Despite telecom regulators barring them from providing telephone and retail internet services in the U.S., these companies still operate cloud services and route wholesale internet traffic, giving them access to American data.
Official Responses
The Chinese companies and their U.S.-based lawyers did not respond to requests for comment. The Justice Department and the White House declined to comment, referring inquiries to the Commerce Department, which also declined to comment. The Chinese Embassy in Washington expressed hope that the U.S. would stop suppressing Chinese companies under false pretences and stated that China would continue to defend its firms’ rights and interests.
Broader Context
The investigation reflects Washington’s ongoing efforts to prevent Beijing from exploiting Chinese firms’ access to U.S. data, part of a broader tech war between the geopolitical rivals. Regulators have yet to decide on addressing the potential threat but possess the authority to block transactions allowing these firms to operate in data centres and route data for internet providers. Such actions could significantly impact the Chinese firms’ ability to offer competitive cloud and internet services in the U.S., experts and sources said.
Historical Concerns
China Telecom, China Mobile, and China Unicom have faced scrutiny in Washington for years. The FCC denied China Mobile’s application to provide telephone service in 2019 and revoked China Telecom and China Unicom’s licenses in 2021 and 2022, respectively. In April, the FCC further barred these companies from providing broadband services. The FCC cited national security risks, including instances where China Telecom misrouted internet traffic through China, exposing it to potential interception or manipulation.
Internet Infrastructure and Cloud Services
China Telecom has eight Points of Presence (PoPs) in the U.S. that connect large-scale networks and share routing information. These PoPs pose national security risks, according to the FCC, as they could potentially access or manipulate data. Commerce investigators are also scrutinising the companies’ U.S. cloud services, with concerns that these firms could provide the Chinese government with access to personal information and intellectual property stored in their clouds or disrupt Americans’ access to it.
Specific Concerns
One focal point of the investigation is a data centre in Silicon Valley part-owned by China Mobile. Ownership of such a centre offers greater opportunities for mishandling client data, such as installing backdoors for remote access.
The Biden administration’s probe into China Mobile, China Telecom, and China Unicom underscores the importance of securing American data from potential foreign threats. As U.S.-China tensions persist, safeguarding digital infrastructure and personal information remains a top priority for American regulators.
(With Inputs from Reuters)
