In Snowden’s wake, China will probe IBM, Oracle, and EMC for security threats

If you’re a US-based tech company, you won’t soon forget this face.
If you’re a US-based tech company, you won’t soon forget this face.
Image: AP Photo/Kin Cheung
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The NSA surveillance scandal is about to become a major headache for some US tech firms, as the Chinese government prepares to probe IBM, Oracle, and EMC over “security issues,” according to the official Shanghai Securities News.

The US National Security Agency’s Prism surveillance program accessed data from major internet firms like Facebook and Google according documents leaked by Edward Snowden, a former NSA and Dell contractor. But he has also alleged that the US spy agency worked with technology providers including Microsoft and Cisco to create “back doors” that allow it to penetrate the computer networks of foreign countries like China. IBM, Oracle and EMC have not been named in any documents leaked by Snowden.

“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,” an anonymous source told Shanghai Securities News, according to a Reuters report.

IBM, the world’s largest IT company, Oracle, the biggest enterprise software firm, and EMC, a leading cloud computing and Big Data provider, all have substantial businesses in China that could be damaged if Beijing takes a hard line on potential NSA intrusions—much as China-based Huawei, the world’s biggest vendor of telecom equipment, has been largely blocked from doing business in the United States.

Investigators at China’s Ministry of Public Security and a cabinet-level research center will reportedly carry out the probe. Their first action item may well be watching an interview that Oracle CEO Larry Ellison gave this week where he called the NSA’s surveillance efforts “essential.” They will also certainly consider that IBM and Oracle are major vendors to the NSA, while EMC’s technology has been used to test and optimize NSA databases.

EMC also has a major joint venture with China-based Lenovo to integrate servers and storage systems, and it conducts cloud computing research with China’s elite Tsinghua University—a particular target of NSA spying, according to Snowden.

The ultimate cost of Snowden’s revelations could reach far beyond China. A recent report estimated that US cloud computing firms will lose $21.5 billion to $35 billion in business to Asian and European competitors because of companies’ reluctance to trust their data to US-based companies. “Why would you pay someone else to hold your commercial or other secrets if you suspect or know they are being shared against your wishes?” Neelie Kroes, European commissioner for digital matters, said to the Guardian last month.

Previously China’s state-run media, which is often used to signal government policy, identified eight US companies—Cisco, IBM, Google, Qualcomm, Intel, Apple, Oracle, and Microsoft—as US government proxies that posed a “terrible security threat.”