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
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.