China seen probing IBM, Oracle, EMC after Snowden leaks

SHANGHAI Fri Aug 16, 2013 4:08pm EDT

A worker is pictured behind a logo at the IBM stand on the CeBIT computer fair in Hanover February 26, 2011. REUTERS/Tobias Schwarz

A worker is pictured behind a logo at the IBM stand on the CeBIT computer fair in Hanover February 26, 2011.

Credit: Reuters/Tobias Schwarz

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SHANGHAI (Reuters) - China's Ministry of Public Security and a cabinet-level research center are preparing to investigate IBM Corp, Oracle Corp and EMC Corp over security issues, the official Shanghai Securities News said on Friday.

The report follows revelations by former U.S. spy agency contractor Edward Snowden of widespread surveillance by the National Security Agency. It also comes as Beijing probes Western drugmakers over allegations of bribery and over-pricing.

Documents leaked by Snowden revealed that the NSA has had access to vast amounts of Internet data such as emails, chat rooms and video from companies including Facebook Inc and Google Inc, under a government program known as Prism.

"At present, thanks to their technological superiority, many of our core information technology systems are basically dominated by foreign hardware and software firms, but the Prism scandal implies security problems," the newspaper quoted an anonymous source as saying.

Officials with EMC, IBM and Oracle declined to comment.

China's Ministry of Public Security also declined to comment. The State Council's Development Research Centre, one of the groups reportedly involved, told Reuters they were not carrying out such an investigation.

China has been a focal point for the Snowden case since he stopped in Hong Kong en route to Moscow. He also claimed that the NSA hacked into critical network infrastructure at universities in China and in Hong Kong.

Daniel Castro, a senior analyst with the Information Technology & Information Foundation, said he was concerned that a Chinese government probe could result in demands for U.S. companies to provide authorities with the blueprints to their technology so that Beijing can screen them for potential security threats.

China, repeatedly accused by the United States of hacking, was given considerable ammunition by Snowden's allegations, which Beijing has used to point the finger at Washington for hypocrisy.

Chinese regulators and the police have begun a series of investigations in recent weeks into how foreign and domestic companies do business in the world's second-biggest economy.

"The Prism scandal certainly provides ample material for real concern," said Mark Natkin, managing director of Beijing-based market intelligence firm Marbridge Consulting.

"What the scandal has done is make it increasingly difficult to ascertain what is being done out of legitimate concern and what may be being done for any sort of political reasons," said Natkin.

Some experts have warned that Snowden's leaks could hurt the sales of U.S. technology companies in Asia and Europe, as reports of their complicity with NSA spying programs may lead foreign businesses and governments to purchase equipment and services from non-U.S. suppliers.

The foundation, a think tank, last week projected that U.S. cloud computing firms could lose $21.5 billion in sales over the next three years, eventually ceding 10 percent of the foreign market to European and Asian competitors.

A spokesperson for the Ministry of Industry and Information Technology (MIIT), which oversees China's IT industry, said it could not confirm anything because of the matter's sensitivity. Another MIIT official told Reuters they were unaware of the reported probe.

(Reporting by Pete Sweeney in Shanghai and Paul Carsten in Beijing. Additional reporting by Jim Finkle in Boston; Editing by Robert Birsel, Tiffany Wu and Leslie Gevirtz)

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Comments (10)
UauS wrote:
Awesome! Still remember “IBM PC” sold to Chinese Lenovo?
Greed is shortsighted by definition…

Aug 15, 2013 11:10pm EDT  --  Report as abuse
CountryPride wrote:
Chinese hacking is much worse than what America is doing and it’s not the same. America is simply gathering information while China is gathering information and committing mass espionage and theft of everything from management plans, blueprints, bidding strategies to flat out core theft of intellectual property that is costing billions a year in damages and bankrupting our companies. That is just from the hacking but they also have thousands of moles in our best companies, universities, and government contractors and more every year because of our insane immigration policies. All you have to do is go to the Justice.gov website and type Chinese in the search and you will find page after page after page of Chinese nationals who have been convicted of trade theft against our country. And to think, our Senate and OWEbama want to allow tens of millions of illegal criminal foreigners and 20 million through increased legal immigration to come here to invaded and pillage our jobs our land and our resources! It’s time to make your voice heard, band together in your community and tell them to shut the doors, stop pandering to foreign interests and focus on the American people so we can heal our country and take it back!

Aug 15, 2013 11:55pm EDT  --  Report as abuse
Rhino1 wrote:
I am surprised to see this headline on the BBC website, but not on Reuters:

Edward Snowden documents show NSA broke privacy rules

The US National Security Agency (NSA) broke privacy rules and overstepped its legal authority thousands of times in the past two years, according to documents leaked by Edward Snowden.

http://www.bbc.co.uk/news/world-us-canada-23721818

Aug 16, 2013 2:15am EDT  --  Report as abuse
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