Why is China Cracking Down on Tech Companies?
As the world’s second-largest economy, China makes up an important part of the global technology industry. For this reason, many tech companies have their servers set up in China. However, the Chinese government recently announced that foreign companies will be required to host their servers in China as well in order to do business there. While this may seem like an innocuous request on the surface, it has serious implications for digital privacy, and it represents an alarming trend on the part of authoritarian governments worldwide. Here’s why China is cracking down on tech companies.
The Great Firewall of China
The Chinese government monitors a lot of its internet traffic, and websites like Facebook and Google are blocked. But a new, more restrictive policy may make things tougher for foreign tech companies who operate in China. Reuters reports that executives from Apple, Qualcomm, Microsoft and other U.S.-based tech firms were all summoned to Beijing by China’s Ministry of Commerce last week to be warned that they need permission to continue selling their products there. This comes just one year after President Xi Jinping announced plans to further open up internet services in response to criticism that digital trade wasn’t being promoted or protected well enough in China. Now it seems officials want greater control over how data flows into their country—or at least over what happens once it gets there.
Privacy concerns in China
The Chinese government has long had a cyber sovereignty policy, according to which it can control what technology companies operating in its borders are allowed to do. Just last month, for example, Tencent was forced to agree to remove news apps from WeChat if they were not licensed by state censors, so as not to provide access to inappropriate content. Before that, Apple had been banned from using Chinese funds for further app development.
Freedom of Speech vs. National Security
Earlier in 2018, Facebook was ordered to stop a Chinese company from selling facial recognition technology to police. And Apple recently removed 674 apps that had been accused of spying on users; it also stopped selling downloads in China of virtual private network (VPN) software, which allows people to access blocked sites. The Chinese government has long restricted freedom of speech and monitored its citizens, but a recent crackdown has targeted foreigners working for tech companies.
The growing power of Chinese tech giants
In response to a raft of new regulations, Apple has shut down its News app in China and Google has announced that it’s shutting down its Chinese language search engine. Meanwhile, Amazon’s cloud computing service in China—its only major cloud presence outside of North America—is reportedly set to be hit with a $29 million fine as regulators squeeze foreign companies for some of their revenue. Facebook too has been pressured by Chinese regulators who want access to user data, after it balked at handing over information about local users, who now number more than 130 million. And Alibaba (China’s largest tech company) could potentially overtake Amazon as soon as 2022 to become second only to Google in global market value if current trends continue.