Tags: Yahoo | China | NSA | Rogers

US Tech Stocks Trapped in Chinese Box

By    |   Wednesday, 04 March 2015 08:44 AM

American tech CEOs can't ignore China — but China can ignore them. That's exactly what is happening, too, and it is bad news for Silicon Valley.

Reuters reported last week it had obtained a list of the Chinese government's approved technology vendors. Some big U.S. companies that used to be on the list are gone now. They include Apple (AAPL), Cisco (CSCO), Intel's (INTC) McAfee unit and Citrix (CTXS).

Beijing moved these names to its blacklist after National Security Agency (NSA) contractor Edward Snowden spilled the beans about U.S. government surveillance programs. China might also be trying to favor its own tech industry, but the NSA's global dragnet didn't help.

You and I can't do much to stop the NSA from spying on us. China can — and it just did.

The American technology sector is collateral damage in the war on terror. These companies simply can't grow without expanding into emerging markets, of which China is by far the largest. China has twice as many Internet users as the United States does.

This is a huge problem for the industry, and therefore a huge problem for the U.S. government. Yet the NSA and other agencies are still doing all they can to destroy our tech industry's ability to compete overseas.

For instance, the NSA desperately wants "back door" access into smart phones, cloud storage services and other technology. The agency went into hysterics after Apple added encryption features to the iPhone that even Apple can't penetrate. The FBI is upset, too.

In an unusual public exchange last week, a senior Yahoo! (YHOO) executive challenged NSA Director Admiral Mike Rogers on his agency's demands.

Yahoo, you may recall, fought a hard, secret battle against the NSA's demands several years ago, surrendering only after the government threatened astronomical fines.

The fight happened in public this time. According to the Washington Post, Yahoo Chief Information Security Officer Alex Stamos asked Rogers this question at a cybersecurity conference:

"If we're going to build defects/backdoors or golden master keys for the U.S. government, do you believe we should do so — we have about 1.3 billion users around the world — should we do the same for the Chinese government, the Russian government, the Saudi Arabian government, the Israeli government, the French government?"

Rogers had no good answer to the question. That's because there isn't one.

Yahoo is in an impossible position. It can't operate globally when every country demands its own secret backdoor. The same is true for all U.S. technology companies.

Silicon Valley's leadership is trapped. They can do business in the U.S. or they can do business overseas. They can't do both.

Maybe somebody has a way to square this circle, but I can't imagine how. We're entering a high-tech trade war in which every nation restricts outsiders and favors its own domestic producers.

No one will win this war — and everyone will be its victim.

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American tech CEOs can't ignore China — but China can ignore them. That's exactly what is happening, too, and it is bad news for Silicon Valley.
Yahoo, China, NSA, Rogers
Wednesday, 04 March 2015 08:44 AM
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