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

The Biden administration is investigating China Mobile, China Telecom and China Unicom over concerns the firms could exploit access to American data through their US cloud and internet businesses by providing it to Beijing, three sources familiar with the matter said.

Authorities at the Commerce Department 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 still have a small presence in the United States, for example, providing cloud services and routing wholesale US 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 US-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 US 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 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.