Huawei. TikTok. Who’s next?
The United States government this week launched a new phase in its campaign to push back on Chinese technology firms, announcing efforts to block cloud and software companies from China from thriving in the West.
The move was flanked by a decision Thursday to block business dealings with social media company TikTok and chat app WeChat and follows a two-year-long diplomatic campaign against telecom giant Huawei, as officials warned repeatedly that these firms don’t play by Western rules, particularly when it comes to snooping and data protection.
And there’s more coming.
U.S. Secretary of State Mike Pompeo, who is scheduled to visit Central Europe next week, signaled Washington’s plans to use its trade and export tools against a broader range of Chinese technology firms. Those efforts will likely spill over into Europe, where privacy concerns, human rights woes, security and trade interests are advancing political pushback against Chinese tech.
[TikTok] was the most downloaded app in the first three months of 2020.
POLITICO lists the likely targets in China’s technology sector that are drawing the attention of security authorities, data protection groups, trade officials and China hawks alike.
TikTok is owned by Chinese tech giant ByteDance and has a sister application in China called Douyin. The app has become immensely popular with young people worldwide: It was the most downloaded app in the first three months of 2020.
What’s the fuss: U.S. President Donald Trump issued an executive order Thursday banning “transactions” with ByteDance, alleging the company shares user data with the Chinese state. ByteDance denies the allegations, saying its user data is stored in the U.S. and Singapore. It said it will build a new data center in Ireland. It is now mulling a sale of a chunk of its business to Microsoft to avoid the ban.
Between the lines: Like most advertising-funded social media platforms, TikTok collects a lot of user data, raising privacy concerns. The platform’s young clientele is an added cause for concern.
What Europe thinks: Calls for a ban have so far not been echoed in Europe, even in capitals that have taken tough stances against Huawei. Europe’s grouping of privacy regulators set up a task force to look into TikTok earlier this year, and several national watchdogs are also investigating the app.
The new Irish data center could shake up ongoing privacy probes in Europe, which could be entrusted to the Irish Data Protection Commission.
WeChat, owned by Tencent, is sometimes called a “super app,” offering messaging, social media and payment functionalities to its users. It’s relatively small outside China.
What’s the fuss: Trump issued an executive order against WeChat, similar to the one on TikTok, barring “transactions” with the company. Pompeo said earlier on Fox News that the app was “feeding data directly to the Chinese Communist Party.”
Between the lines: WeChat would have access to large amounts of personal data from its individual users. A recent report by the Toronto-based digital rights research organization Citizen Lab also showed the app used its international users’ posts to train its domestic version to better censor the Chinese internet.
What Europe thinks: Privacy and human rights concerns could play well with European digital rights groups and politicians.
Alibaba is China’s dominant e-commerce and cloud company. The firm has data centers in China, the U.S., Germany and the U.K., among other countries.
What’s the fuss: Founder Jack Ma met Trump days before he took office as president in 2017, and promised to create 1 million jobs in the U.S. Relations have soured since but Alibaba’s name had remained largely absent from the U.S. onslaught against Chinese tech giants. That changed this week, when Pompeo announced plans to create “Clean Cloud,” which would bar Alibaba from getting access to U.S. citizens’ personal data and companies’ corporate data.
Another concern goes back to last year, when the city of Hangzhou said it would embed state officials at tech companies including Alibaba — blurring the lines between the company and the state.
Europe wants to move away from foreign cloud providers.
What Europe thinks: Alibaba’s cloud services arm has data centers in Europe and caters to the Continent’s companies, like Dutch electronics firm Philips. But Europe also wants to move away from foreign cloud providers.
Alibaba has also faced harsh criticism from European consumer groups, who warn that the company’s e-commerce platform floods the European market with illegal and dangerous items.
Founded in 1997 by the son of former Chinese leader Hu Jintao, Nuctech is a state-owned manufacturer of X-ray machines, scanners and explosive detection systems.
What’s the fuss: Nuctech is owned by an industrial conglomerate that also works in China’s nuclear sector, raising security concerns. Also, the EU put anti-dumping duties on the company’s cargo scanning equipment a decade ago. But in recent years it has found success in selling security gear to European airports.
“It’s extremely worrisome if a foreign state-funded company gets more and more control over our strategic infrastructure,” German conservative MEP Axel Voss told POLITICO previously about Nuctech’s success in Europe.
Between the lines: One worry is that the gear could be used as a transmitter of malicious software. Another is that Nuctech equipment could cause disruption at Europe’s airports and borders if it were to be misused by foreign actors.
The case of Nuctech also poses tough questions for Europe’s competition authorities, who have trouble protecting the European market from Chinese companies that undercut the prices of European players.
DJI is a private drone-manufacturing company based in Shenzhen. It’s the biggest beneficiary of the explosion in the world’s drone market, securing a 74 percent share, according to 2018 estimates.
What’s the fuss: The U.S. government has moved away from using DJI drones in recent years. Security officials fear the data gathered through the drones could include detailed imagery of critical infrastructure, military hardware, frontiers or nuclear sites. DJI officials rushed to assuage concerns, insisting it has access to “essentially none” of the data its drones produce.
Between the lines: The main problem is that DJI’s non-Chinese alternatives are considered up to 10 times as expensive — a hard pill to swallow for public authorities procuring gear.
What Europe thinks: National and local governments across the bloc are using DJI drones for surveillance and inspection purposes, as POLITICO has reported. Government authorities have largely dismissed concerns by arguing the drones are only used for non-sensitive work, but both German and French militaries as well as British police use their drones.
Video surveillance company Hikvision is a market leader in providing closed-circuit television and surveillance systems to public authorities across the world. Its controlling shareholder is a state-owned defense conglomerate.
What’s the fuss: The U.S. in 2018 barred the company from providing equipment to the federal government. In October 2019, it also added the company to the export controls “entity list” due to its work with public authorities in Xinjiang, where the government is accused of persecuting the Uighurs, a Muslim ethnic group.
Once concern China’s tech companies face is the country’s domestic intelligence legislation.
What Europe thinks: The company has subsidiaries in a number of European countries. It has had success selling to British authorities, in particular, despite calls from national politicians to investigate the company.
What this is really about
At the heart of political concerns around Chinese tech is a cocktail of trade worries, human rights woes, security interests and data protection considerations — as both the U.S. and Europe seek to rebalance diplomatic relations with Beijing.
One concern China’s tech companies face is the country’s domestic intelligence and security legislation, which “obliges” companies to “assist and cooperate” state intelligence services. Another is that Chinese security services could more easily hack and manipulate software and hardware from domestic firms, as the EU grows “more suspicious” of Chinese cyber espionage campaigns.
Governments also fear that European champions might get outcompeted by China’s growing companies. And Chinese tech companies have come under scrutiny for their role in supporting the Beijing government’s detention of Uighur Muslims in the Xinjiang province and the crackdown on protests in Hong Kong.
Critics of the campaign against China’s tech firms have pointed out these risks aren’t limited to Chinese products: Many Western firms have China-based manufacturing plants and deep commercial ties with Chinese manufacturers. In Europe, critics also point to the U.S.’s own mass surveillance schemes exposed by whistleblower Edward Snowden years ago.
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