Microsoft, IBM May Get New Scrutiny From China

Microsoft Corp. (MSFT[1]) and International Business Machines Corp. (IBM[2]) are among the technology companies operating in China that will be subject to a new security reviews that will begin next month. According to a report in The Wall Street Journal[3], the new review is part of a new cybersecurity[4] law that is designed to give China more control over technology in the country and the flow of information. Technology companies that sell network products and services are part of the new rule that will likely include IBM and Microsoft.

The security review is focused on foreign companies that provide computer hardware and services to Chinese companies that operate in the energy, transportation and finance markets and those that sell to government agencies, critical infrastructure players and public services agencies, noted the Journal. The foreign technology companies will have to offer up their products and services for review by the Cyberspace Administration of China, the country’s Internet regulator. (See also: Microsoft Seeks to Grow Cloud Position in China[5].) Citing an announcement earlier this week, the paper reported that China is implementing the new security reviews to ensure the technology is not only secure but can be controlled.

In the past, tech companies have bristled at the Chinese requirements, arguing the government has been pressuring the companies to provide proprietary information about their products and services. (See also: Microsoft Blocks Latest Windows 10 Update[6].) China’s move to institute a new review process for foreign technology companies comes at a time when Microsoft has been playing nice with Beijing. In March, the WSJ reported the software giant completed a customized version of Windows 10 for the Chinese government, which may help the company increase sales in that country.

According to the Journal report, Microsoft wouldn’t say how it tweaked its operating system for China, but the government of China was concerned about software and technology devices that may include hidden ways for foreign entities to engage in surveillance–so-called backdoors. The version of Windows 10 for the Chinese government was created with the help of China Electronics Technology Group, a state-owned company. Microsoft isn’t alone in creating a customized product for the China market.

Qualcomm Inc. (QCOM[7]), Intel Corp. (INTC[8]) and other U.S. tech companies have reached similar partnerships in China to gain access.

IBM recently announced it inked a joint venture with the Wanda Group of China to offer cloud-based services[9].

References

  1. ^ MSFT (www.investopedia.com)
  2. ^ IBM (www.investopedia.com)
  3. ^ The Wall Street Journal (www.wsj.com)
  4. ^ cybersecurity (www.investopedia.com)
  5. ^ Microsoft Seeks to Grow Cloud Position in China (www.investopedia.com)
  6. ^ Microsoft Blocks Latest Windows 10 Update (www.investopedia.com)
  7. ^ QCOM (www.investopedia.com)
  8. ^ INTC (www.investopedia.com)
  9. ^ cloud-based services (www.investopedia.com)

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