The Biden administration is investigating China Mobile (NYSE:CHL), China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU) over concerns the firms could exploit access to American data through their U.S. cloud and internet businesses by providing it to Beijing, three sources familiar with the matter said.
The companies still have a small presence in the United States, for example, providing cloud services and routing wholesale U.S. internet traffic. That gives them access to Americans’ data even after telecom regulators barred them from providing telephone and retail internet services in the United States.
The Chinese companies and their U.S.-based lawyers did not respond to requests for comment. The Justice Department declined to comment and the White House referred questions to Commerce, which declined to comment. The Chinese Embassy in Washington said it hopes the United States will “stop suppressing Chinese companies under false pretexts,” adding that China will continue to defend the rights and interests of Chinese companies.
Reuters found no evidence the companies intentionally provided sensitive U.S. data to the Chinese government or committed any other type of wrongdoing.
The investigation is the latest effort by Washington to prevent Beijing from exploiting Chinese firms’ access to U.S. 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 U.S. data.
Regulators have not yet made decisions about how to address the potential threat, two of the people said. But, equipped with the authority to probe internet services sold into the U.S. 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.
