US probing China Telecom, China Mobile over internet, cloud risks

The Biden administration is investigating China Mobile, China Telecom and China Unicom over concerns they might exploit their US cloud and internet operations to provide American data to Beijing, Caliber.Az echoes an exclusive report by Reuters.

The Commerce Department is leading the investigation, having subpoenaed the companies and completed risk analyses on China Mobile and China Telecom. The probe into China Unicom is less advanced.

Despite being barred from providing telephone and retail internet services in the US, the companies still offer cloud services and route US internet traffic, giving them access to American data.

Chinese companies and their US-based lawyers did not comment. The Justice Department and White House also declined to comment, while the Chinese Embassy in Washington criticized the US for "suppressing Chinese companies under false pretexts."

Reuters found no evidence of intentional wrongdoing by the companies. This investigation is part of Washington's effort to prevent Beijing from exploiting US data amid escalating tech tensions. Regulators could block transactions to prevent these firms from operating in US data centers, thereby impacting their remaining US businesses.

China Telecom, China Mobile, and China Unicom have faced long-standing scrutiny. The FCC denied China Mobile’s telephone service application in 2019 and revoked China Telecom and China Unicom's licenses in 2021 and 2022. The FCC cited security risks, including China Telecom's alleged misrouting of US internet traffic through China.

Commerce investigators are also examining the companies' US cloud services, initially prompted by a 2020 Justice Department referral. They are particularly concerned about a data center part-owned by China Mobile in Silicon Valley, which could allow easier manipulation of client data.

The FCC has highlighted the national security risks posed by Points of Presence (PoPs) operated by these firms, which could potentially allow access or manipulation of US data traffic.