China to Probe Software Giants
China is set to fire the next salvo in the US/Sino security battle by launching investigations into EMC Corp. (NYSE: EMC), IBM Corp. (NYSE: IBM) and Oracle Corp. (Nasdaq: ORCL), according to a Reuters report that cites the "official Shanghai Securities News."
Following the allegations by whistleblower Edward Snowden that the US National Security Agency (NSA) has hacked into university networks in China and Hong Kong, the country's Ministry of Public Security has raised security concerns related to the use of major IT systems from overseas suppliers. Now it plans to launch an investigation into the role that EMC, IBM and Oracle systems play in Chinese IT systems and networks.
This development will no doubt be followed closely by Chinese vendors Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), which have found themselves at the center of security allegations in the US. (See Security Concerns Cling to Huawei and US vs Huawei/ZTE: The Verdict.)
Where does this go next? China is clearly irritated at the treatment Huawei and ZTE have received in the US, so it's no shock that the Chinese authorities are acting on Snowden's allegations to make a point. (It didn't have to become public that a probe of the software companies was being planned.) (See China Lashes Out at 'Cold War Mentality'.)
And previous reports suggest that Cisco Systems Inc. (Nasdaq: CSCO) gear has already been replaced in China Unicom Ltd. (NYSE: CHU)'s network -- this is shaping up to be a global lose-lose scenario. (See Cisco Feels Security Heat in China.)
— Ray Le Maistre, Editor-in-Chief, Light Reading