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Thursday, May 23, 2024

Chinese Cloud Computing Companies Raise Alarm in the United States

U.S. authorities are increasingly focusing on Chinese cloud computing behemoths as a new target in the digital cold war with China.

Five individuals familiar with the situation have told the New York Times that the Biden administration and members of Congress have been investigating possible solutions to security concerns regarding the cloud computing divisions of Chinese internet giants like Alibaba and Huawei for the last 18 months.

Three sources confirmed that U.S. officials have discussed the possibility of imposing stricter regulations on Chinese firms operating in the United States, as well as strategies to block the companies’ expansion overseas. Three other sources familiar with the topic confirmed that the Biden administration has contacted American cloud computing giants Google, Microsoft, and Amazon to learn more about the strategies employed by their Chinese rivals.

It is possible that the breadth of the technology disputes between Washington and Beijing may expand if U.S. authorities continue to target Chinese cloud enterprises. The United States has restricted China’s access to critical technology and attempted to curtail the global influence of Chinese IT and telecom firms in recent years.

Previous President Trump had his government seek to prevent Huawei and ZTE, two Chinese telecom equipment manufacturers, from having a role in the development of fifth-generation (5G) wireless networks. In addition to targeting Chinese participation in undersea internet cables, the Trump administration has gone after Chinese-owned applications like TikTok and Grindr, ultimately leading to the sale of the latter. President Biden has carried on with some of these initiatives.

Just as China has fought back on U.S. obstacles, so too will cloud computing firms, which maintain enormous data centres to give processing power and software to enterprises. China’s senior diplomat, Wang Yi, urged Secretary of State Antony J. Blinken on Monday that Washington should cease interfering with Beijing’s efforts to advance its own technical capabilities.

Concerns about Chinese telecom equipment and TikTok have been echoed by fears that Beijing may utilise Chinese data centres in the United States and overseas to obtain sensitive data. Services like video streaming and the use of artificial intelligence can’t exist in the digital economy without cloud computing.

The White House press secretary would not elaborate. Alibaba, another Chinese internet company with a cloud subsidiary, and Tencent, another Chinese tech powerhouse, also declined to comment, as did Huawei. Google, Amazon, and Microsoft all said they were unable to respond.

According to Samm Sacks, a cyber policy scholar at the New America think tank, the Biden administration’s interest in cloud computing reflects its focus on Chinese influence in the internet’s underlying infrastructure and the digital businesses that rely on it.

There has been some progress for U.S. attempts to restrict Chinese IT companies. While attempts to remove Huawei equipment from wireless networks in the United States continue, American limitations on suppliers to Huawei have damaged the company’s smartphone business. The Chinese owners of Grindr were pressured by the Trump administration to sell the app, but attempts to get the Chinese internet company ByteDance to sell TikTok have so far proved fruitless.

Synergy Research Group estimates that the worldwide public cloud industry was worth $544 billion in 2017. According to Synergy’s principal analyst John Dinsdale, even though Chinese corporations have data centres in Silicon Valley and Virginia, they only make up a small portion of the U.S. cloud industry.

China’s cloud providers, however, are expanding their presence across Asia and Latin America. In a statement made last year, Huawei’s chairman cited the company’s “rapid growth” in its cloud business as evidence. Huawei held a cloud-related symposium in Indonesia back in May. Last year, Alibaba held a conference in Mexico to showcase its cloud services.

Virginia Democrat Senator Mark Warner issued a statement expressing worry that despite the FCC’s ability to exclude some Chinese corporations from providing telecom services in the United States, same companies have “still been able to offer services like cloud computing.” Mr. Warner authored a bill that would give the White House expanded authority to monitor Chinese technological development.

In April, nine Republican senators urged a group of administration officials to probe and punish Chinese cloud giants, including Huawei, Alibaba, Tencent, and Baidu, for allegedly endangering national security.

According to two of the sources, the Commerce Department has considered drafting stricter regulations to oversee the Chinese cloud providers. Under new legislative power, it might craft regulations to limit potentially dangerous technology.

Two persons with knowledge of the situation have claimed that the State Department has begun formulating a plan to raise American concerns about Chinese cloud computing companies with other governments. Diplomats may learn more about what messages resonate with other countries since the agency has previously brought up the subject in meetings behind the scenes, one of the individuals said.

Experts worry that Chinese cloud computing providers may undercut their American rivals by offering contracts at lower prices since many Chinese enterprises get large subsidies from the government. To compete with the incentives offered by Chinese enterprises, the United States government may give its own overseas aid or encourage American cloud providers to provide consumer perks like free training.

A representative for the State Department emphasised the need of dependable hardware for all components of the global internet, including data centres. The official went on to say that another priority for the agency was minimising threats to wireless infrastructure, submarine communications cables, and satellites.

David Faber
David Faber
I am a Business Journalist of The National Era
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