The U.S. Commerce Department has launched an investigation into three major Chinese telecommunications companies China Mobile, China Telecom, and China Unicom due to concerns over potential exploitation of American data. This probe is focused on whether these companies might be providing data to Beijing through their cloud and internet services.
The current status of the investigation reveals that risk-based analyses for China Mobile and China Telecom have been completed. However, the investigation into China Unicom is less advanced. These investigations have not been publicly disclosed, and subpoenas have been issued to the companies involved.
Despite being barred from providing telephone and retail internet services, these companies maintain a presence in the U.S. through small-scale operations such as offering cloud services and routing wholesale internet traffic.
So far, there has been no response from the Chinese companies or their U.S.-based lawyers. The Justice Department and the White House declined to comment on the matter, while the Chinese Embassy has urged the U.S. to stop suppressing Chinese companies. The Federal Communications Commission (FCC) has expressed serious concerns regarding national security and law enforcement risks.
Historical Context
This investigation is part of a broader pattern of regulatory actions against Chinese telecom firms. In 2019, the FCC denied China Mobile’s application for telephone services. This was followed by the revocation of China Telecom and China Unicom’s licenses in 2021 and 2022, respectively. In April 2023, the FCC barred these companies from providing broadband services, citing risks such as the misrouting of internet traffic through China and potential data interception, manipulation, or blockage.
Technical and Security Risks
There are significant technical and security risks associated with the presence of these companies in the U.S. Internet infrastructure. China Telecom’s Points of Presence (PoPs) in the U.S. are particularly vulnerable to metadata analysis and deep packet inspection. Additionally, there are concerns about cloud services potentially granting access to personal information and intellectual property, posing disruption risks to Americans’ data. Specific interest has been directed towards China Mobile’s partially owned data center in Silicon Valley, where ownership increases the potential for data mishandling.
Experts have emphasized the sophistication of China as a global adversary. Doug Madory of Kentik highlighted the risks posed by China’s advanced capabilities. Bert Hubert, a Dutch cloud computing expert, noted that ownership of data centers allows for greater opportunities to install back doors or bypass encryption.
The U.S. Commerce Department’s investigation into China Mobile, China Telecom, and China Unicom highlights the ongoing efforts to safeguard national security by scrutinizing foreign access to U.S. data. These measures, while potentially disruptive, are deemed necessary to mitigate risks associated with escalating U.S.-China tech tensions. As the probe continues, further regulatory actions may be taken to block transactions and operations in U.S. data centers, highlighting the importance of addressing national security risks linked to Chinese firms’ access to American data.
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