Cisco's business in China set to suffer from Prism revelations

Want China Times, Staff Reporter 2013-06-18

Cisco's booth at a trade show in Washington DC. (Photo/CFP)

At a time when nine internet companies are believed to be involved in the US National Security Agency's Prism surveillance, Cisco Systems, one of the nine and the world's biggest IT equipment provider in cloud computing, has been involved in almost all China's major network construction projects, the Shenzhen-based Securities Times reports.

Edward Snowden, a former technical worker at the CIA and NSA last week sensationally revealed himself as the whistleblower behind leaks that uncovered secret US government surveillance programs. Snowden, an IT administrator for the defense contractor Booz Allen Hamilton, said that the UK intelligence-gathering agency GCHQ may have connections to the Prism program, which is said to give American agencies easy access to nine of the world's top internet companies, as well as the phone records of millions of people.

According to Snowden, nine companies, including Cisco, Apple, Facebook, Microsoft and Google, are involved in spying activities by giving access to their databanks to the US agencies — an accusation all nine companies swiftly denied, the report said.

However, on June 14, Facebook and Microsoft admitted that the US government had asked them to provide information on their users, and they unveiled the partial details in a bid to distance themselves from the Prism revelations as early as possible.

Meanwhile, Chinese media has turned the focus to the potential threats to China's internet security by these US internet companies, as Snowden revealed that the NSA monitored China's internet and computer operations via Cisco.

Cisco has reportedly been involved in almost all the construction of major network projects in China related to the government, customs, post offices, finance, railway, aviation, medical, military and police, as well as telecommunication networks. Cisco controls more than 70% of China's two biggest internet operators, China Telecom and China Unicom, which together account for more than 80% of the country's internet traffic.

Furthermore, Cisco is the key technology and equipment supplier to the US government and its military. Security experts are therefore worried that in the even of war, the US government could use Cisco's products around the world to create an internet war to deal a major blow to adversary countries.

Cisco has overtaken Hewlett-Packard and IBM to become the world's biggest IT equipment provider in terms of cloud computing, according to market researcher Synergy Research Group.

Cisco raked in income of more than US$1.6 billion last year in China, representing 30% of its total profits. It is expected that the Prism incident will seriously affect its business in China, while other companies such as Microsoft and Apple will also see their business in mainland China affected, the report said.

Since last year, security experts already called for the Chinese government to emphasize internet security problems. The Prism incident is a major warning and may well prompt Beijing to enact an internet security act to set clear rules to regulate purchases by the government, military and state-run enterprises.

Such legislation would inevitably benefit domestic suppliers such as Huawei and ZTE in cloud computing, data processing, IT consulting and information security, the report said. Perhaps a touch ironically, the two Chinese companies have seen their attempts to expand their business in the United States hampered by national security concerns from the US government in precisely the same manner as Cisco may be expected to experience.

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