In the digital cold war between the United States and China, American officials are increasingly turning their attention to a new target: the Chinese cloud computing giants.
Over the past 18 months, the Biden administration and members of Congress have stepped up their exploration of what can be done to address security issues related to the cloud computing divisions of Chinese tech giants such as Alibaba and Huawei, five people said in a statement. knowledge of the matter.
American officials have debated whether they can set tougher rules for Chinese companies when they do business in the United States, as well as ways to curb the growth of companies overseas, the three people said. The Biden administration also spoke to American cloud computing firms Google, Microsoft and Amazon to understand how their Chinese competitors operate, three other people with knowledge of the matter said.
By focusing on Chinese cloud companies, US officials are potentially widening the scope of tech tensions between Washington and Beijing. In recent years, the United States has stifled China’s access to crucial technologies as it seeks to limit the reach of Chinese telecom and technology companies overseas.
Former President Donald J. Trump has directed his administration to prevent Chinese telecom equipment makers such as Huawei and ZTE from playing a role in next-generation 5G wireless networks. The Trump administration has also targeted Chinese-owned apps such as TikTok and Grindr, forcing the sale of the latter, and has begun working to limit Chinese involvement in undersea internet cables. President Biden has continued some of these efforts.
Cloud computing companies, which operate vast data centers that supply computing power and software to businesses, would become a new technology front just as China pushed back on US roadblocks. Wang Yi, China’s top foreign affairs official, told Secretary of State Antony J. Blinken on Monday that the United States needed to stop interfering with China’s technological development.
But US officials fear Beijing could use Chinese data centers in the US and abroad to gain access to sensitive data, echoing concerns about Chinese telecommunications equipment and TikTok. Cloud computing is a crucial behind-the-scenes driver of the digital economy, enabling services such as video streaming and enabling businesses to run artificial intelligence programs.
A White House spokesman declined to comment. Huawei did not offer comment, while Alibaba and Tencent, another Chinese tech giant with a cloud division, did not respond to requests for comment. Google, Amazon and Microsoft declined to comment.
Samm Sacks, an information policy fellow at the New America think tank, said the interest in cloud computing reflects the Biden administration’s approach to examining Chinese influence in the Internet infrastructure and digital services they use. the web.
There is an intention to focus on the whole ecosystem across those layers, he said.
US efforts to stymie Chinese tech firms have met with mixed success. US restrictions on Huawei’s suppliers have hurt the company’s smartphone business, but efforts to remove Huawei equipment from wireless networks within the United States continue. The Trump administration forced Chinese owners of Grindrs to sell the app, while efforts to pressure Chinese internet giant ByteDance to divest TikTok were unsuccessful.
The global cloud computing market is substantial, with total public cloud revenue of $544 billion last year, according to Synergy Research Group. In the United States, Chinese firms account for a small share of the cloud market, despite having data centers in Silicon Valley and Virginia, said John Dinsdale, chief analyst at Synergy.
But Chinese cloud companies are making their way into Asia and Latin America. Huawei’s president said last year that his company has seen rapid growth in its cloud business. In May, Huawei hosted a cloud conference in Indonesia. Alibaba convened a meeting in Mexico last year to promote its cloud products.
Senator Mark Warner, Democrat of Virginia, said in a statement that he was concerned that while the Federal Communications Commission may prevent some Chinese companies from providing telecommunications services in the United States, those companies have still been able to offer services such as cloud computing. Mr. Warner has written legislation that would give the White House more power to control Chinese technology.
In April, nine Republican senators wrote to a group of administration officials encouraging them to investigate and penalize Chinese cloud companies they believe pose a threat to national security, including Huawei, Alibaba, Tencent and Baidu.
We urge you to use all available tools to take decisive action against these companies, they said.
The Commerce and State departments have been considering how to deal with Chinese cloud computing companies, four people with knowledge of the matter said.
The Commerce Department has been trying to create stricter rules governing Chinese cloud service providers, two of the people said. It could create the rules under a new legal authority that would allow it to restrict technologies that could pose a threat to national security.
A Commerce Department spokesman declined to comment.
The State Department has also begun developing a strategy to raise American concerns about Chinese cloud computing vendors with other countries, two people with knowledge of the matter said. The agency has already quietly brought up the topic in conversations with foreign governments, which can help diplomats figure out which messages work best, one of the people said.
With many Chinese companies benefiting from significant government subsidies, experts fear Chinese cloud computing vendors may be able to offer contracts below the rates of their American competitors. The US government may find a way to offer its own foreign assistance or urge US cloud service providers to provide customer benefits, such as free training, to counter incentives from Chinese companies.
A State Department spokesman said it was imperative that every aspect of the global internet, including data centers, be powered by reliable equipment. The spokesman added that the agency also focused on reducing the risks associated with wireless equipment, undersea telecommunication cables and satellites.
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