China Makes Big Push To Get American Tech Companies To Agree To Its Rules

from the this-is-getting-interesting dept

China is a big — and quite appealing — market. I think just about everyone recognizes that. But it’s also a troubling market for a variety of reasons, and American tech companies have struggled with how to handle China. Beyond the fact that China often requires American firms to “partner” with a local Chinese firm, China often helps local firms get a leg up on American firms. And, then, of course, there’s the whole “Great Firewall” censorship issue, and concerns about the Chinese government’s desire for greater surveillance powers. Google famously left China about five years ago after it got tired of pressure to change its search results. However, just recently it was reported that Google has (at least somewhat) caved to China with a plan to bring a censored version of the Android Play store to China.

On the flipside, however, after years of appearing somewhat hostile to American tech firms, China is now making a big push to “open” its doors to those companies — but with a few conditions baked in. It appears that China recognizes that it’s in the power position with American tech companies, and it’s going to use that to its advantage. China’s President Xi Jinping is making his first state visit to the US shortly, and the Chinese government surprised (and annoyed) a bunch of folks by announcing that it is hosting its own tech/internet forum in Seattle, inviting basically all the big US tech firms: Apple, Microsoft, Facebook, Google, Uber, IBM and more. Apple’s Tim Cook is likely to appear.

Apparently the White House isn’t at all happy about this, as it was planning to use the visit to put pressure on China over its online spying and its anti-competitive practices against US companies. Having those very same US companies slobbering all over Chinese politicians that same week sort of takes away from the White House’s talking points.

The meeting is rankling the Obama administration by veering off the script agreed to for Mr. Xi?s carefully stage-managed visit, two American officials said. There are also concerns the meeting could undercut President Obama?s stern line on China by portraying its leadership as constructively engaging American companies about doing business in China, even as the administration suggests American companies are hurt by anticompetitive Chinese practices.

And then there’s… “the pledge.” China is pushing US tech firms to sign this pledge to commit to certain data practices if they’re to operate in China. It’s believed that China is hoping to highlight companies signing the pledge at that forum. And if you look at the basic text of the pledge, much of it looks and sounds like really good things. The kinds of things companies should be proud to do and users should be happy to see companies commit to. It includes things like making sure users have control over their own data, that companies are clear and transparent in how that data is used, and that they can stop allowing companies to use their data. It also requires companies not to “install hidden functionalities” that users are unaware of inside products.

But it’s really the last two items that everyone knows are the key here, and where China is really trying to flex its power. They’re both worded somewhat innocuously, such that they might sound fine after a quick read, but it’s the details that concern people.

Guarantee the security of user information. To employ effective measures to guarantee that any user information that is collected or processed isn’t illegally altered, leaked, or used? to not transfer, store or process any sensitive user information collected within the China market outside China’s borders without express permission of the user or approval from relevant authorities.

Accept the supervision of all parts of society. To promise to accept supervision from all parts of society, to cooperate with third-party institutions for assessment and verification that products are secure and controllable and that user information is protected etc. to prove actual compliance with these commitments.

The first one is a big concern because it’s saying all data has to be kept within China. While it’s likely that some companies would want to keep data within China, there are also good reasons to keep the data elsewhere — including to protect users from the prying eyes of the Chinese government. And, of course, many other countries have been pushing for these kinds of “localization” requirements that actually take away many of the advantages of a global internet.

The second point above is the really concerning one, and all of the concern is focused on the single word: “controllable.” Many are taking this to mean you’re agreeing to backdoor encryption for the Chinese government. In the past few months, China has been much more aggressive in pushing for backdoors to encryption, and this is the next step in that process.

This is why it’s actually more important than ever for the Obama administration to stop twiddling its thumbs over the issue of backdoors, and to come out with a clear and strong position that it is absolutely against backdoors, because that harms the public and puts them at risk. Anything less than that will clearly give the Chinese extra cover in pushing US tech companies to give them backdoors.

Either way, how American tech companies deal with China over the next few years is going to be an increasingly important issue, and so far, it seems like China has the upper hand, while the US is still struggling to come up with a coherent policy.

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Comments on “China Makes Big Push To Get American Tech Companies To Agree To Its Rules”

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G Thompson (profile) says:

Though the last item of those two points above does raise serious questions when it comes to the defining of the word ‘controllable’ (not to mention the defining of the phrase ‘all parts of society’) the first of these raised points is absolutely a non concern, other than for countries like the USA who seem to think they are allowed access to anyone’s data that resides in their ‘controlled spaces’ (cloud, physical locations, without due process or comity because of reasons.

Every country that has a minute amount of consumer protection laws and considers there citizens data as not only a privacy issue but also a national security concern (since citizens are the actual nation) is doing this.. Or should Australia, New Zealand, Canada, the whole of the freakin EU, UK, etc all kowtow to America as well and allow ALL citizen data (Health, legals, government, education, etc) to be stored outside of there own borders (and legal protection) where three letter acronyms like the NSA can do what they will, or even worse the data can be onsold to capitalistic* organisations who have no ethical problem with using the data in any way they see fit without the users knowledge or agreement. (*welcome to the near non existent USA consumer data laws where the consumer is just another way to make ethically dubious money)

Sorry Mike, but you cannot have it both ways. The first part of this whole post is extremely US centric and though China might be problematic to the USA at moment, that doesn’t really mean it actually is in this matter.

I’d love to hear what Glynn thinks about this as well

orbitalinsertion (profile) says:

Re: Re:

all kowtow to America

It’s not about kowtowing to USAmerica, it’s about sensible network architecture. there is a problem with the US in that regard, depending on where data might be stored, to such an extent that US companies keep data out of US agency-friendly places. Pretty sure Mike is totes aware of that. Moreover, everyone should have it both ways, and more, with governments ensuring the safety of everyone’s data, not poking into it. And it is patently ridiculous to claim China is not problematic in this area, to the US, or anyone else, including China.

G Thompson (profile) says:

Re: Re: Re:

It’s not about kowtowing to USAmerica, it’s about sensible network architecture

Though I agree with you regarding sensible architecture (network and otherwise) the kowtow remark is actually what the USG is asking for in TRIPS/TPP etc treaties with the aforementioned countries I stated. They want it to be a breach of said treaties for a country (like Australia for example) to actually make legislation which Australia currently has in place (guess where I am from 😉 ) that stops sensitive data from travelling outside of the jurisdiction.

Until the USA stops thinking it has some God given right (and I use that phrase in all its religious and egotistical meanings – since that is the crux of what the USG actually tries to shove down everyones throats) to access information anywhere it sees fit and make up dubious laws and excuses and ‘reasons’ then for itself to tell China all this is hypocricy in the extreme.

Yes China wants to control it’s citizens information etc, I’m not stating otherwise, and most governments want that access if they can too (no matter what style of government or autocracy they have). That doesn’t impact or take awaty from the crux of my comment, in that Mike with this article cannot have it both ways. Privacy is either for all or for none and one country does not have an exclusive on how they dictate what it is and isn’t to rest of the planet which the US is trying to do.

Anonymous Coward says:

As a US citizen, I’ll be opening a email account in China so all my data is stored over there. Chinese citizens can feel free to open email accounts in the USA and store their data on American soil.

I personally like all this data segregation in different legal jurisdictions. If a US judge wants my emails, he/she can politely ask a Chinese court for them. And vise-versa.

tqk (profile) says:

Re: Care for a game of Go?

… how does one live in a country with democratic values …

There’s your first mistake. The US has only paid lip service to its historical democratic values for more than a century, perhaps even a couple of centuries. You’re still falling for the PR spin doctors’ spiel.

… and drop to their knees in front of a dictator for money …

First, consider replacing “dictator” with “administrator” or even “benevolent despot.” China has a long history of its rulers having the responsibility to govern its people for China’s long term benefit. Individual freedoms and rights have never been part of Chinese thinking, nor that of most other Asian countries (cf. Singapore, Japan, & Russia).

… any of the companies that take the deal should be pretty ashamed of themselves.

Any that take the deal want to make money for their owners and shareholders as companies should. They’d be breaking the law if they lost sight of that.

You sound like someone who believes the West, and USA especially, operate within a free market. That’s never been the case. Look at the dog’s breakfast of regulatory agencies and boatloads of laws in place by which those Western gov’ts control their market functions (capriciously and poorly, I might add). China’s just less of a liar and hypocrite for not paying lip service to such illusions.

China’s been at this for four thousand years. It didn’t begin at Chaing Kai Shek vs. Mao Tse Tung. It’s not just another kid on the block. The sooner the West grows up and recognizes this, the sooner their torment with Asia will end.

Anonymous Coward says:

All country,s should have the right to say sensitive user data ,especially financial data should be held on servers in that country,
saying all data should be able to sent to the usa is a very usa centrentic view ,
Especially since the nsa seems to want to acess all data
anywhere and the nsa seems to regard any non person living
outside the us as a potential terrorist,
even spying on angela merkle and the german government .
an ally of the us government.
ANY person living outside the us has no legal right to
privacy according to the surveillance practices of the nsa , including us citizens
living abroad.
Obama would be better to state he is in favour of encryption of user data for security reasons ,
and to state that backdoors in devices and software are
dangerous to user privacy and security .
if you want to stand up to china you must also
stand up for the right to citizens to have privacy .
The usa is trying to extend us law to all the world re patents data
and copyright thru the backdoor of trade agreements .
IF the usa government or the nsa wants to acess all data emails phone calls and
text messages of us citizens it makes it very hard for the government to criticize china .

jim says:

Data forever!

Android, overlord, on durn, wrong data. You are all taking this wrong. And blaming the US. Like all countries, business is in the control of a select few companies. Companies hold no nation. As a home. Companies are not governments, but the US has decided a compact is controlled by a person or entity. And is therefore prosequitable. Business now operate under rules that would make a bank robber blush. They got away with buying a presidency, now they make the rules.
It’s the same even in china. No business, people starve, government changes. But to blame the US, about companies who were there before the us? Check the DNA of the robber barons.

andy says:


Americans want to demand that they have the right to access Chinese citizens data and ensure the Chinese people can use the internet with no restrictions but at the same time those people are demanding that American people have no rights online and that their every action is recorded.

Talk about two faced, i hope the Chinese show how they are only doing the same as American laws are doing and if Obama does come out claiming a wrong by the Chinese they show they are just following what his government is authorising..

Anonymous Coward says:

Re: Re:

Just in case you don’t know…. china is peddling an illegal contract that will get entire companies seized and the officers imprisoned if they comply with the current text. There is a russian in prison for trying the same thing a few months ago. It violates import/export requirements on dual use and military technologies. There is no use to the agreement if it isn’t a dual use technology at this point.

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