US President Joe Biden’s administration is investigating China Mobile Ltd (中國移動), China Telecom Corp (中國電信) and China Unicom Hong Kong Ltd (中國聯通) over concerns the firms could exploit access to US data through their US cloud and Internet businesses by providing them to Beijing, three sources familiar with the matter said.
Authorities at the US Department of Commerce are running the investigation, which has not been previously reported. They have subpoenaed the state-backed companies and have completed “risk-based analyses” of China Mobile and China Telecom, but are not as advanced in their probe of China Unicom, the people said, declining to be named because the probe is not public.
The companies have long been in Washington’s crosshairs. The US Federal Communications Commission (FCC) denied China Mobile’s application to provide telephone service in 2019 and revoked China Telecom and China Unicom’s licenses to do the same in 2021 and 2022 respectively. In April, the FCC barred the companies from providing broadband service.
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The companies still have a small presence in the US, providing cloud services and routing wholesale US Internet traffic. That gives them access to US data even after telecom regulators barred them from providing telephone and retail Internet services in the nation.
The Chinese companies and their US-based lawyers did not respond to requests for comment. The US Department of Justice declined to comment and the White House referred questions to the commerce department, which declined to comment.
The Chinese embassy in Washington said it hopes the US would “stop suppressing Chinese companies under false pretexts,” adding that China would continue to defend the rights and interests of Chinese companies.
The investigation is the latest effort by Washington to prevent Beijing from exploiting Chinese firms’ access to US data to harm companies, Americans or national security, as part of a deepening tech war between the geopolitical rivals. It shows the administration is trying to shut down all remaining avenues for Chinese companies already targeted by Washington to obtain US data.
Regulators have not yet made decisions about how to address the potential threat, two of the people said.
However, equipped with the authority to probe Internet services sold into the US by companies from “foreign adversary” nations, regulators could block transactions allowing them to operate in data centers and route data for Internet providers, the sources said.
Blocking key transactions, in turn, could degrade the Chinese firms’ ability to offer competitive US-facing cloud and Internet services to global customers, crippling their remaining US businesses, experts and sources said.
The commerce department “must rigorously use its ... authorities to protect US data and infrastructure from Chinese companies like China Telecom,” US Representative and Committee on Foreign Affairs chairman Michael McCaul said in a statement.
“As one of our top adversaries, China cannot and should not ever be trusted to have access to Americans’ private data,” he added.
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