The Biden administration is investigating China Mobile, China Telecom and China Unicom over concerns that the companies could provide U.S. data accessed through U.S. cloud and internet providers to Beijing.
The Commerce Department is conducting the investigation, which has not been previously reported, according to three sources familiar with the matter.
Subpoenas have been sent to state-owned companies and a “risk-based analysis” has been completed for China Mobile and China Telecom, while the investigation into China Unicom is in its early stages. Although these companies have faced restrictions in the past, several still operate cloud services and handle wholesale routing of internet traffic in the US, with only a small number of services offered in the US. These companies have access to Americans’ data even after telecommunications regulators banned them from offering telephone and internet retail services in the US.
The Chinese companies and their U.S.-based lawyers did not respond to requests for comment. Reuters The Justice Department was not immediately available for comment, and the White House referred questions to the Commerce Department, which also declined to comment. Meanwhile, the Chinese Embassy in Washington called on the United States to “stop suppressing Chinese companies under false pretenses” and vowed that China would continue to safeguard the rights and interests of its companies.
Importantly, there is no hard evidence that these companies passed significant amounts of sensitive U.S. data to the Chinese government or engaged in any wrongdoing that would justify their inclusion on the list.
The investigation is part of Washington’s broader effort to prevent Beijing from using Chinese companies’ access to U.S. data in ways that harm companies, individuals or the national security of the U.S. It signals the administration’s efforts to block any remaining avenues for targeted Chinese companies in Washington to access U.S. data.
Potential Regulatory Actions
Regulators have yet to decide what steps they will take, but they could block deals that give these companies data center locations and allow them to transfer spectrum to internet providers that need it. Such measures could have a major impact on the ability of Chinese companies to offer competitive cloud and internet services in the United States, potentially eradicating what remains of their US operations for customers around the world.
“They’re our biggest global adversary and they’re very sophisticated,” said Doug Madley, an internet routing expert at Kentic. “I don’t think (U.S. regulators) are doing their job if they’re not trying to prevent all risks.”
Chinese telecommunications companies have a significant presence within the U.S. internet infrastructure system. For example, China Telecom operates eight points of presence (PoPs) at major public internet exchange points in the U.S., allowing large networks to leverage connectivity and share routing details. According to the FCC, PoPs pose “significant national security and law enforcement risks” if operated by companies deemed a national security risk.
Commerce Department investigators are also looking into the companies’ U.S. cloud services, citing concerns that the companies could access personal information and intellectual property stored in the cloud and provide it to the Chinese government or block Americans from accessing it.
Regulators are particularly concerned about a data center partly owned by China Mobile in California’s Silicon Valley, which could increase opportunities for mishandling customer data, said Bart Hubert, a Dutch cloud-computing expert.
Political support and future prospects
Republican lawmakers strongly supported the investigation and called on the administration to take strong action to prevent Chinese companies from misusing American data.
The investigation highlights ongoing tensions between the United States and China in the technology sector, particularly over data security and national interests, and represents an escalating chapter in the tech war between the two geopolitical rivals.
