Citing security concerns, the U.S. is reportedly making efforts to impose regulations on Chinese cloud companies such as Alibaba and Huawei to prevent them from operating in the U.S.
Reports cited sources from the U.S. Department of Commerce and the Department of Defense that U.S. officials have been consulting with cloud companies in the U.S. such as Google, Amazon and Microsoft in regulatory discussions for the past 18 months. Part of those discussions included exploring ways to apply stricter regulations on Chinese cloud companies when operating services in the U.S. as well as ways to deter their overseas expansion.
U.S. regulators are raising concerns China could use Chinese data centers in the U.S. and abroad to access sensitive data. They also accuse Chinese cloud providers of expanding their presence in emerging markets in Asia and South America by offering low rates backed by government subsidies.
In April, nine Republican senators called for Alibaba, Huawei, Tencent, Baidu and others to be placed on the ‘Entity List,’ an export control list that bars companies from accessing U.S. technologies and components. The U.S. Commerce Department is also considering creating stricter rules to regulate Chinese cloud operators to limit the use of technology in the U.S. that could pose a threat to national security.
The move by the U.S. government in fueling the digital cold war between the world’s two largest economies underscores the growing importance of the cloud industry. Cloud companies operate vast data centers that enable companies to process large-scale data on the web and provide computing power and software to businesses. The role of the cloud and the data center industry has also increased with the recent hype surrounding the rapid growth of the artificial intelligence industry.
In 2021, the U.S. had banned the sale of Huawei and ZTE telecom equipment in the U.S. citing security concerns, accused of providing collected data to the Chinese military and spy agencies. The former Trump administration had also begun restricting Chinese involvement in the building of undersea internet cables.
In response, China have been trying to prevent countries to side with the U.S. on pressuring Chinese tech companies. As his first trip abroad as premier, Chinese Premier Li Qiang visited Germany, China’s biggest trading partner in Europe, to persuade the country to remain politically neutral and not participate in U.S.’ “de-risking” efforts.