Updated with Cisco comment.
A new report from Reuters removes any lingering doubts that China is making life very difficult for US technology companies.
The news agency obtained a list of the Chinese central government’s approved technology vendors, and found that major US companies including Apple and Cisco have been removed entirely since Edward Snowden disclosed that the NSA routinely accessed US company data and hardware to spy on adversaries.
The number of China’s approved foreign tech companies fell by a third between 2012 and 2014, and those with security-related products fell by two-thirds. It’s not just hardware—last year, Beijing banned government offices from buying the latest version of Microsoft Windows, as well as security software from Symantec and Kaspersky Lab. Reuters reports Intel’s McAfee unit and software maker Citrix Systems have also been dropped from the approved list.
Cisco’s struggles in China were already well known—the network equipment manufacturer blamed the Snowden scandal for decimating its business there starting in 2013. According to Snowden, the NSA routinely intercepted Cisco routers and inserted surveillance devices to target adversaries, apparently without the company’s knowledge.
Cisco said in a statement: “Cisco is allowed to sell to all Chinese government, enterprise, and commercial customers. Any suggestion otherwise is false. We have served our customers in China for more than 20 years, and we look forward to continuing to do so.”
Huawei, the world’s biggest network equipment maker, is Cisco’s biggest competitor, and thus benefits from the company’s absence from the approved vendor list. But it’s also notable that Huawei is barred from government contracts in the United States due to officials’ concerns that its products might enable Chinese spying.
Apple has also suffered a series of run-ins with Chinese regulators about user privacy and other issues. Its absence from the approved vendor list—which does not apply to local governments, state-owned enterprises, or the military, which have their own lists—may have less of an immediate impact because the company’s business is largely focused on consumers buying iPhones. But the clampdown does point to government pressure Apple faces as it relies more heavily on China; the company reportedly gave Chinese officials access to sensitive source code as part of a “security check” by Beijing.
Ultimately it is impossible to untangle China’s efforts to thwart US spying from its goal of helping its domestic tech industry to compete against Silicon Valley. Beijing has clearly concluded that the strategy is a win-win—and that US policies have given China all the justification it needs.