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  (Source: AFP/Getty Images)
America's top tech firms are seeing sales bans, service disruption, and government-supported piracy

Google Inc. (GOOG) is back in the doghouse with China, but this time it's not over internet censorship and anonymity.  Quite to the contrary, China's government is increasingly adopting a threatening posture towards top tech firms such as Google, Apple, Inc. (AAPL), and Microsoft Corp. (MSFT) over accusations that the U.S. National Security Agency spied on Chinese citizens and Chinese businesses.
 
I. Don't Spy on Me
 
The top two print mouthpieces of the China's ruling party lambasted American tech firms in editorials this week, calling for "severe" punishments.  The pieces -- written in the state-owned English language newspaper China Daily and the Chinese language People's Daily -- called upon Chinese electronics companies to work together to strengthen security against intrusions.
 
Writes People's Daily editor Liang Jun Bianji:

U.S. companies including Apple, Microsoft, Google, Facebook, etc. are all coordinating with the PRISM program to monitor China.  To resist the naked Internet hegemony, we will draw up international regulations, and strengthen technology safeguards, but we will also severely punish the pawns of the villain. The priority is strengthening penalties and punishments, and for anyone who steals our information, even though they are far away, we shall punish them!

The sharply worded criticism is an ironic twist for the U.S., whose government regularly accused China's military of commercial and military espionage efforts.  Some members of the U.S. Congress in late 2012 suggested a nationwide commercial ban on smartphones and routers from Chinese companies, including ZTE Corp. (SHE:000063) and Huawei Technologies Comp. (SHE:002502).

Chinese protesters
Protesters decry NSA spying on Chinese and American citizens, in a protest in Hong Kong.
[Image Source: AFP]

The effort was condemned by many within the U.S. -- and abroad – as people felt the proposed ban on Chinese goods was overly paranoid, protectionist, and anti-capitalist.  The justification by the proponents of the ban was that Chinese equipment could be used to one day spy on Americans.  But at the time, a report from the White House concluded that Chinese OEMs did not appear to be currently engaging in such spying.  Only last year did China and the rest of the world experience the ironic twist -- the U.S. apparently knew China wasn't spying because it was loading malware into Chinese electronics and exploiting the holes in the firmware itself.
 
In essence the U.S. is believed to already have been doing exactly the kind of digital attacks on China that members of Congress concluded China might one day use against America.  What is largely unknown is if Google, Apple, and others actually played a role in any domestic and international sabotage and spying efforts.
 
The threat isn't just hollow rhetoric.
 
The Chinese government and top Chinese businesses have already started to purge their networks of U.S. software and components, terminating or winding down contracts with Oracle Corp. (ORCL), International Business Machines, Corp. (IBM), and Cisco Systems Inc. (CSCO).  And this week Google and Apple reportedly began to experience disruptions in their web services in China, likely due to government interference.
 
Experts suggest that while the move could hurt China both in securing manufacturing contracts and in terms of cost of goods and services, the biggest impact may be felt by the American tech industry.  Getting shut out of the world's largest electronics market could cost American firms tens of billions of dollars or more.

Cisco China
Cisco is among the top American firms losing Chinese contracts. [Image Source: Suzhou China]

Google chief legal officer David Drummond pled in his company's defense this week, stating:

We cannot say this more clearly - the (U.S.) government does not have access to Google servers - not directly, or via a back door, or a so-called drop box.  We provide user data to governments only in accordance with the law.

Apple, meanwhile, pointed the press to an April statement by CEO Tim Cook to ABC News.  In that inteview he stated:

Much of what has been said isn't true. There is no back door. The government doesn't have access to our servers. They would have to cart us out in a box for that.

It's quite possible both sides are right.  According to the documents released by NSA contractor-turned-leaker Edward Joseph Snowden, the U.S. government does most of its data collection by intercepting and modifying device shipments or by tapping into oceanic data cables.  Either approach would not constitute a backdoor on the server itself, but would potentially give the NSA access to the data of Chinese users of these services.
 
II. Prodding the Sleeping Dragon
 
Tensions between the nations reached a boiling point after the U.S. Department of Justice charged five Chinese military officers with hacking U.S. companies to steal trade secrets.  The move was basically a publicity stunt by the U.S. government -- the officers in question are reportedly part of a Chinese military cyberwarfare unit (Unit 61398) stationed in Beijing, China.  China refuses to even consider the possibility of extradition and has harshly criticized the U.S. for the pointless charges.

Eric Holder
U.S. Attorney General Eric Holder charged five Chinese military officials with hacking earlier this month. [Image Source: Bloomberg]

A statement by China's Foreign Ministry condemned the charges, commenting:

It is widely known that the U.S. has for a long time been using its advanced technology and infrastructure to perpetrate large scale theft of secrets and eavesdropping against foreign political leaders, enterprises and individuals.

From WikiLeaks to the (Edward) Snowden incident, the U.S. hypocrisy and double standards have been abundantly clear. The Chinese PLA has been a serious victim of this kind of behavior from the U.S. Statistics show that in recent years the PLA's international internet terminals have suffered a large number of attacks. IP addresses show that a large number of those attacks come from the U.S.  China demands that the U.S. give a clear explanation of its internet theft of secrets and eavesdropping on China and immediately cease such activities.

The Obama administration's decision to prod China already appears to have brought serious economic consequences as it was shortly after the charges that the Chinese government ratcheted up rhetoric and restrictions against American firms.
 
Many top U.S. services have been banned in the past several months.  Facebook, Inc. (FB) has been blocked by Chinese censors.  And China last month announced its decision to "ban" Microsoft's Windows 8 from government networks.

Windows 8 in China
Former Microsoft Windows President Steven Sinofsky announces Windows 8 at an Oct. 2012 launch event in China. [Image Source: EPA]

China is expected to rely on a mixture of pirated U.S. software and local offerings as it transitions away from U.S. hardware, software, and services.

China workers
U.S. companies rely on China for cheap manufacturing. [Image Source: Southern Weekly]

For American tech companies it's a tough position.  The Obama administration appears to stand firmly behind ongoing NSA spying efforts, target both Americans and foreigners, including the Chinese.  At the same time tech companies have little means of punishing China, as many of them are heavily invested in and overly reliant upon Chinese manufacturing.  

Sources: China Daily, People's Daily, Reuters



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Duh?
By Reclaimer77 on 6/4/2014 4:47:01 PM , Rating: 2
Not sure how Obama and the rest of this criminal Administration thought China would respond to this on Planet Idiot, but back here on Earth I think we all saw this coming.

I just have to ask, is the man TRYING to fsk up every single aspect of his job and usher in a new Russia/China cold war?

We are just so completely screwed...




RE: Duh?
By tng on 6/4/2014 5:05:18 PM , Rating: 2
Yep.

quote:
The Chinese government and top Chinese businesses have already started to purge their networks of U.S. software and components, terminating or winding down contracts with Oracle Corp. (ORCL), International Business Machines, Corp. (IBM), and Cisco Systems Inc. (CSCO). And this week Google and Apple reportedly began to experience disruptions in their web services in China, likely due to government interference.

This is just the start. Some of our top tech businesses will suffer for this and what happens when there is a slowdown of new product for companies like Apple?

I am not blaming BO on this because it started long before he took office, but he is doing nothing to stop it either.


RE: Duh?
By amanojaku on 6/4/2014 5:11:07 PM , Rating: 3
You're joking, right? The US has been spying on China long before Obama got in office. And China has been spying on us, so let's not take the side of hypocrites.

http://en.wikipedia.org/wiki/Chinese_intelligence_...

This is nothing more than an opportunity for the Chinese government to deflect its citizens' attention away from it's own abusive actions. Come on, Reclaimer, you were all over China because of this a few years ago.


RE: Duh?
By amanojaku on 6/4/2014 5:32:05 PM , Rating: 3
Should also point out that the US isn't the only country confirmed to conduct mass surveillance, foreign and domestic.

http://en.wikipedia.org/wiki/List_of_government_su...


RE: Duh?
By amanojaku on 6/6/2014 9:26:23 AM , Rating: 2
RE: Duh?
By Camikazi on 6/8/2014 2:25:02 PM , Rating: 2
Every country capable of it does it, knowledge is power and knowing the citizenship gives you the ability to influence them which all politicians want.


RE: Duh?
By Reclaimer77 on 6/4/2014 5:49:48 PM , Rating: 2
Yes we've been spying on China, and they've been spying back.

However Snowden with his NSA leaks have caused a public firestorm over the spying that we've never had to deal with before.

So how does Barrack Obama follow it up, now that he has egg on his face? He makes an unprecedented attempt to begin a legal action against Chinese hacking! Just...wtf. Do you have any idea how hypocritical this makes us look as a country?

This is also happening at the same time he's actively destroying US/Russian relations.

I don't know if his timing sucks, he's just insane, or what. But just..hello?


RE: Duh?
By amanojaku on 6/4/2014 6:35:45 PM , Rating: 2
quote:
This is also happening at the same time he's actively destroying US/Russian relations.
No, Putin is doing that. Relations where so-so when BO came into office. His interactions with Dmitry Medvedev are what made the US-Russia ties friendly again. Then Putin lost his mind when he got his third term in 2012. It's been downhill ever since.


RE: Duh?
By tamalero on 6/4/2014 11:48:45 PM , Rating: 1
If Western interests really wanted to keep friendly nature with Russia, they shouldn't never have meddled with Ukraine and destabilize the country like they did.
Considering Ukraine is a buffer country between West interests and Russian interests.. A huge important interests for Russians as well (due of Sevastopol).

I hardly think this is "Only Putin's fault" like many love to point.

But if you see the whole progress in the past 10 years.
US interests and West, have waged war with Dictators and nations which were pro Russian buffer zones.


RE: Duh?
By amanojaku on 6/5/2014 1:09:16 AM , Rating: 5
Whaaaaaaaaaaat?!? The United States has enjoyed friendly relations with Ukraine since it declared its independence! We've stayed friends even when Ukraine stabbed us in the back with the Cassette Scandal. We didn't destabilize the government. Former President Viktor Yanukovych started to become a dictator, so the people revolted and Parliament impeached him. We've had every reason to strengthen the Ukraine, especially since the people ousted Yanukovych over his ties to Russia and the people wanted to get closer to Europe and the US.


RE: Duh?
By wordsworm on 6/4/2014 5:50:24 PM , Rating: 2
Isn't a part of this article indicating that the US government knows that China hasn't been spying due to it having resources in China which would have revealed such activity?

In essence, American propaganda in this instance is never forgotten by guys like Reclam, and is always touted as a reason for doing something anticompetitive against China.

Well, that'll teach the naive Chinese for trusting American imperialists. If not for Snowden, the world would still be ignorant about America's double standard.


RE: Duh?
By amanojaku on 6/4/2014 6:28:34 PM , Rating: 2
quote:
Isn't a part of this article indicating that the US government knows that China hasn't been spying due to it having resources in China which would have revealed such activity?
No. The article says China did not put spyware into electronic firmware. It does not clear China of spying charges, and actually links to an article confirming China was spying.


RE: Duh?
By Spuke on 6/4/2014 9:11:45 PM , Rating: 2
China is spying and has been doing it for decades. There is no refuting this. The issue here is that the US got busted doing it putting everyone's spy programs in the public eye. That's why they're "pissed".


RE: Duh?
By cloudrunner on 6/12/2014 6:56:04 PM , Rating: 2
^^^ this. Every government is a form of control and will use all means necessary at any time to be at the advantage.


RE: Duh?
By retrospooty on 6/4/2014 6:50:01 PM , Rating: 2
I wouldn't worry about it... There cant be another cold war with China, our economies are too linked. If we fall, they fall. If they fall, we fall and we both know it. All the hoopla is to distract its own people and try to gain the upper hand with the US. Same from our govt to them, just jockeying for potition... Agreed BO should ahve kept his trap shut...

It's all BS, but more Sabre rattling than anything.


RE: Duh?
By Jeffk464 on 6/5/2014 5:34:19 PM , Rating: 2
Cold war, the US has been in a trade war with China for years and has been to stupid to realize it. China also has the ultimate trump card because the US government has become completely dependent on borrowing money from China.


RE: Duh?
By milktea on 6/4/2014 8:51:48 PM , Rating: 2
Easy solution for Obama. Just terminate NSA once and for all.
That will shut everyone up from talking more about the spying, and prevent some from using that as an excuse or take advantage of.


RE: Duh?
By Spuke on 6/4/2014 9:20:11 PM , Rating: 2
quote:
Easy solution for Obama. Just terminate NSA once and for all.
We can't. We still need that capability. We'd be f%^ked without it. Seriously. Look, we ALL know we ALL spy on each other. Those are the facts. The US gov f$%ked up, decided to overstep their bounds and got caught with their panties around their ankles. Now instead of just teasing the d&*k, they're gonna have to deep throat AND swallow.


RE: Duh?
By milktea on 6/4/2014 10:56:01 PM , Rating: 2
You are very 'trusting' (look up synonyms of this) to believe the Government when they tell you NSA is terminated.

It's just a political move, if you know what I mean. ;)


RE: Duh?
By Jeffk464 on 6/5/2014 5:31:51 PM , Rating: 2
Duh is right, I'm pretty sure I mentioned foreign countries dropping US tech if they got to cozy with the NSA.


RE: Duh?
By The0ne on 6/8/2014 1:31:19 AM , Rating: 2
I can tell you aren't joking at all, in which case that makes what you've said even sadder and funnier. I won't even bother explaining as others have already done so and provided links. Plus putting China and Human Rights support in the same sentence is well...ironic? hypocritical? funny? laughing out loud funny? The shear level of censorship, the night raids that makes people, mainly activists, disappeared with absolutely no trace to speak of and they are talking about US spying as though it's new? Come on lol. You can't be this ignorant on the subject, not with the net available to you.


Cut the cable
By SteelRing on 6/4/2014 6:13:51 PM , Rating: 2
If they mean what they say then just cut the whole country from the internet so nobody can snoop on anybody. What is the point of these rhetoric, it's all just talk and empty threats.




RE: Cut the cable
By Grimer21 on 6/4/2014 6:38:38 PM , Rating: 2
quote:
What is the point of these rhetoric, it's all just talk and empty threats.


Funny, it says the contrary right in the article. Anyway, I find the verbage used in People's Daily,
quote:
[...]but we will also severely punish the pawns of the villain[...]
to be quite alarming. They refer to the U.S. as 'The Villain' in their widespread publications? Yikes!


RE: Cut the cable
By Cypherdude1 on 6/5/2014 5:23:56 PM , Rating: 4
quote:
If they mean what they say then just cut the whole country from the internet so nobody can snoop on anybody. What is the point of these rhetoric, it's all just talk and empty threats.
Actually, what they're doing is cutting out all the USA companies from their Internet connections . We now know that the USA companies have allegedly allowed the NSA to infect their products, their software, their firmware, with code which allows the NSA to spy on their customers. We now know that the FBI allegedly went to every single tech company and demanded their encryption keys. See the free Frontline documentary "United States of Secrets (Parts One and Two) ." DailyTech does not allow URL's in their posts. Google:
Frontline video pbs org 2365245528
Frontline video pbs org 2365251169
If you create a free PBS account, you can see all their videos in HD.

Today, after the Snowden leaks, few foreigners trust American tech companies. The Germans and the French are talking about setting up their own Internet backbone. Chancellor Merkel now has her own encrypted cellphone for telephone conversations.

Now, all of a sudden, all the USA companies are beefing up their security. Suddenly, all the USA tech companies are "fighting" the NSA. The problem is, all the trust is gone and it will be years before foreigners buy USA security products. As far back as 10 years ago, all the high-tech USA companies, including Yahoo, allegedly gave the NSA their encryption keys and allowed the NSA to spy on their customers. Instead of fighting the NSA in court, all the USA companies allegedly went along because it was cheaper and easier. Now that it has become public knowledge and it is hurting their bottom line, suddenly all the USA tech companies are changing their tune. The only reason why they're changing now is because many of their customers are dropping them and switching to foreign companies. The NSA scandal is going to be a major boon to German companies because they take privacy seriously. If you need an encrypted proxy and eMails, drive encryption, phone conversation encryption, your only real choice is German SecurStar.com through SurfSolo and their other products.

There are several documentaries you must see:
1. Inside Job , 2011 Best Documentary Oscar winner
2. We're Not Broke
3. Park Avenue: Money, Power and the American Dream (free)
Google: Park Avenue video pbs org 2296684923
4. Split Estate
5. Gasland I & II


RE: Cut the cable
By ritualm on 6/4/2014 7:00:36 PM , Rating: 2
You cannot destroy your enemies until you become friends with them.

You can never be betrayed by someone you never trusted.
quote:
it's all just talk and empty threats

You'll have to retract those harsh words soon, son. It's not whether they're actually gonna do it, rather... it's a matter of time.


RE: Cut the cable
By Spuke on 6/4/2014 9:24:09 PM , Rating: 3
Except they're not our friends. And like was mentioned, we are both intertwined financially. It would be suicide on theirs and our parts. Besides, what's the point? Where's the gain? Better to use this for political purposes, they'll get more from that.


By 1prophet on 6/4/2014 9:35:13 PM , Rating: 3
It's the corporations, and that is where America is most vulnerable thanks to that profits first, outsource everything, cheaper is better greed mentality which China has exploited.

quote:
For American tech companies it's a tough position. The Obama administration appears to stand firmly behind ongoing NSA spying efforts, target both Americans and foreigners, including the Chinese. At the same time tech companies have little means of punishing China, as many of them are heavily invested in and overly reliant upon Chinese manufacturing.


Like a drug dealer they were more than happy to hook American corporations with their cheap labor and lack of or little workplace/environmental regulations these corporations so much hated back home

The Chinese are now in the position to threaten to cutoff the drug/profit that these shortsighted corporate masters are addicted to and they know there isn't much that is going to be done about it,

Selfishness and greed is America's Achilles heel and the Chinese are more than happy to use that to their advantage.




You've fallen for it
By bug77 on 6/5/2014 5:12:39 AM , Rating: 2
By going after the (easy) Snowden reference, you've walked right into their (China's) trap.

This is not about human rights of privacy (this is China, remember?). This is about protectionism. China has always favored domestic companies. Yes, everybody does it, but unlike China, other countries have rules about how far they can push said protection. If they allow foreign companies in their country, is because they need the know how. But as domestic companies grow stronger, we will see more and more of these attacks.

I mean, think about it: accusing Google that it shares data with NSA? The Chinese already demand to know what Google does in China and are imposing rules about which results Google is allowed to return. So that argument doesn't stand any way you look at it.




That's fine
By Fidget on 6/5/2014 10:33:49 AM , Rating: 2
Lets just bring all our jobs/manufacturering back to the US




By masamasa on 6/5/2014 4:16:03 PM , Rating: 2
"The Chinese government and top Chinese businesses have already started to purge their networks of U.S. software and components, terminating or winding down contracts with Oracle Corp. (ORCL), International Business Machines, Corp. (IBM), and Cisco Systems Inc. (CSCO)."

It's all about trust and right now there is none. Doesn't take a genius to figure our nobody trusts the Chinese or the Americans. If you cannot trust your friends, then they aren't your friends anymore, are they?!




By someguy743 on 6/5/2014 8:41:49 PM , Rating: 2
All your computers and telecommunications are belong to us ... well, to sneaky, shadowy dudes at the NSA anyway. They gotta know what the internet porn habits of top Chinese leaders are so they make fun of them at big meetings.

http://www.youtube.com/watch?v=qItugh-fFgg




thank god
By SPOOOK on 6/4/14, Rating: -1
RE: thank god
By amanojaku on 6/4/2014 8:23:44 PM , Rating: 2
You don't have to live in the US. You're more than welcome to move to China, where your rights... will be violated every day.

And did you really wish for other countries to fight the US? I'm sure you didn't mean militarily (I hope you aren't that stupid). But understand that if the world punishes the US it will do so economically through trade sanctions - which will not affect the government. They will affect taxpayers and employees.


RE: thank god
By milktea on 6/4/2014 8:46:09 PM , Rating: 2
which will cause wide spread civil unrest and possibly led to overthrowing the government.


RE: thank god
By milktea on 6/4/2014 9:01:44 PM , Rating: 2
by the way...

following my previous comment, China doesn't need to move a single man (military) to achieve its objectives. Civil war would tear apart the nation.

"The supreme art of war is to subdue the enemy without fighting." - Sun Tzu

"The greatest victory is that which requires no battle." - Sun Tzu


RE: thank god
By Spuke on 6/4/2014 9:21:35 PM , Rating: 2
quote:
"The supreme art of war is to subdue the enemy without fighting." - Sun Tzu "The greatest victory is that which requires no battle." - Sun Tzu
Except they don't follow that sh!t anymore.


RE: thank god
By milktea on 6/4/2014 10:51:23 PM , Rating: 2
That is exactly what they wanted you to believe.

From first chapter...
"All warfare is based on deception" - Sun Tzu ;)


RE: thank god
By retrospooty on 6/5/2014 8:36:38 AM , Rating: 2
"Civil war would tear apart the nation"

Because there is internal strife doesn't mean they wouldn't band together against an external enemy if we were to become one (not that I think we should or will). Look at us on 09/12 - all the partisaned bickering goes away the moment we are threatened by an external force. China isnt any different.


RE: thank god
By milktea on 6/5/2014 3:44:13 PM , Rating: 2
You brought up an important point, "to become one".
I see at least someone here actually contemplates.

Just other points for your to ponder...
1. History doesn't necessary dictates the future
2. What constitutes an 'enemy' (you've mentioned about 'external enemy')? Everyone has a different view on that don't you think?


RE: thank god
By amanojaku on 6/4/2014 9:38:18 PM , Rating: 2
That's true. It worked for Cuba, North Korea, Iran...
quote:
Veteran diplomat Sir Jeremy Greenstock, Britain's ambassador to the UN between 1998 and 2003, says the fundamental reason for the popularity of sanctions is "that there is nothing else between words and military action if you want to bring pressure upon a government".

"Military action is increasingly unpopular and in many ways ineffective in a modern legitimacy-oriented world, and words don't work with hard regimes. So something in between these is necessary. What else is there?" he asks.
http://www.bbc.co.uk/news/world-middle-east-107421...
http://www.stanford.edu/class/ips216/Readings/pape...
http://www.businessweek.com/articles/2013-05-23/wh...

You've got to be kidding if you think the American people are going to rise up against the government for spying on OTHER countries. We haven't even risen up to confront the spying on US. And we've watched as the economy has crumbled, and most of us just grumbled.


RE: thank god
By Cheesew1z69 on 6/4/14, Rating: 0
RE: thank god
By inperfectdarkness on 6/5/2014 7:55:26 AM , Rating: 3
If you think for a second that Hitler wouldn't have used similar methods at his disposal--had the technology been available--you are beyond hope of intellectual redemption.

If you want to talk about "violation of rights", you really don't need to look further than your precious China to see myriad instances of its citizens pushing for greater personal liberties (as defined in the Chinese constitution) and the Chinese state cracking down on it. So in all fairness, violation of "rights and the laws" happens on a regular basis in China--and arguably to an exponential extent than occurs in the USA.

Fortunately for you, the USA is a free country--so you are therefore entitled to disparage it as much as you would like. That said, it is also apparent that you've never had to subsist in an environment where personal freedoms and liberties are NOT guaranteed. Since you appear to lack the intellectual, moral or character composition to ever warrant serving in the US military, I'll advise you to do the next best alternative in support of gaining an eye-opening insight into the blessings of your personal freedom:

Move to Iran.


RE: thank god
By lagomorpha on 6/5/2014 1:00:07 PM , Rating: 3
quote:
the USA is a free country


This old mantra keeps getting repeated. How many people have to get raided over parody twitter accounts before we can stop believing it?


RE: thank god
By inperfectdarkness on 6/8/2014 1:08:20 PM , Rating: 2
Fine. RELATIVELY free country. Still way better than China, Iran or Russia.


RE: thank god
By lagomorpha on 9/7/2014 10:58:37 AM , Rating: 2
quote:
Fine. RELATIVELY free country. Still way better than China, Iran or Russia.


Ought we not hold ourselves to higher standards than that?


RE: thank god
By masamasa on 6/5/2014 4:17:25 PM , Rating: 1
LOL, spoken like a true PRC member!


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