The Biden administration has initiated an investigation into China Mobile, China Telecom, and China Unicom over fears that these companies could exploit their U.S.-based cloud and internet operations to access and potentially misuse American data, according to sources familiar with the matter.
The investigation, led by the Commerce Department, involves subpoenaing the state-backed firms and conducting “risk-based analyses” primarily focused on China Mobile and China Telecom. Although less advanced, the probe also includes China Unicom. The investigation aims to prevent any potential exploitation of U.S. data by these companies, despite their restricted operations following previous regulatory actions that barred them from providing telephone and retail internet services in the United States.
The Chinese companies and their legal representatives in the U.S. have not responded to requests for comment. The Justice Department and the White House have declined to comment, while the Chinese Embassy in Washington has urged the United States to cease what it views as unjustified suppression of Chinese companies.
While found no evidence of intentional data breaches or wrongdoing by these firms, the investigation underscores ongoing efforts by the Biden administration to safeguard U.S. data from potential exploitation amid heightened tensions in the tech sector between the United States and China.
Focus Areas of Investigation
Regulators are examining various facets of the Chinese telecoms’ U.S. operations, including their involvement in data centers and their capacity to route internet traffic. The investigation’s expanded scope now includes scrutiny of their cloud services, prompted by concerns raised in a 2020 referral from the Justice Department. This move reflects fears that the companies could access and potentially transfer personal and intellectual data stored in their clouds to Beijing, or disrupt American access to it.
Potential Regulatory Actions
Although no decisions have been finalized, regulators possess the authority to block transactions that enable these companies to operate within U.S. data centers or route data for American internet providers. Such actions could severely impact the companies’ ability to offer competitive cloud and internet services to global customers, potentially limiting their remaining U.S. business opportunities.
National Security Risks
The investigation’s heightened scrutiny is driven by concerns that these companies, despite restrictions on their operational scope, could still compromise critical U.S. data infrastructure. This includes their Points of Presence (PoPs) located at U.S. internet exchange points, which facilitate large-scale network connections and are deemed potential access points for data manipulation.
In conclusion, as U.S.-China relations continue to strain, particularly in the technology sector, the investigation into China Mobile, China Telecom, and China Unicom underscores Washington’s vigilance in safeguarding national security against perceived threats posed by foreign adversaries in the digital realm.
