After Snowden’s Prism leak, will China give Cisco the boot?

Jun 21, 2013 at 10:45 AM ET

In his explosive revelations about the National Security Agency’s Prism surveillance program, former N.S.A. contractor Edward Snowden named nine prominent tech companies that were legally obliged to provide data to the U.S. government. Noticeably absent: Cisco, the California-based telecommunications giant.

Now, in the aftermath of Snowden’s leak to the Guardian and the Washington Post, a growing chorus of Chinese media outlets have speculated that Cisco could face restrictions, or even be kicked out of China altogether. The IT behemoth, which works closely with the U.S. government on Internet infrastructure, controls a large majority of China’s Internet traffic. And that has many Chinese worried that the American firm could provide the N.S.A. with state secrets. As one Chinese pundit noted: “American companies are going to have a much harder time winning Chinese contracts than they used to.”

Since Snowden’s leak, many in China have praised the 29-year-old contractor, who was last known to be residing in Hong Kong. Though he didn’t say that Cisco had a legal obligation to help the U.S. spy on China as part of Prism, Snowden did say that the U.S. already monitors Chinese communications.

The Chinese government has not officially commented on any changes to its relationship with Cisco. In recent years, the company has faced harsh criticism, even legal action, for allegedly working with the government to stifle dissent, though there has yet to be any penalties made against it — perhaps an indication that an anti-Cisco crackdown will be averted once again. (Cisco did not respond to a request for comment).

Yet in the aftermath of the leak, many in the Chinese media have wondered whether Cisco’s strong presence in the country is potentially problematic. According to one Chinese news outlet, “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.”

Aside from its work in China, Cisco also provides a vast array of services it provides to the U.S. government, including “cybersecurity,” which is perhaps why on Weibo, the popular Chinese micro-blogging site, many users expressed concerns about Snowden’s assertions and the company’s large presence in China in strikingly nationalistic terms.

田夫一丁: [Translated] U.S. company Cisco is involved with China’s backbone network hardware and software, the exposure of “Prism” directly points at Cisco’s involvement in the case. Having one’s fate held by another country’s company is so dangerous!

宙斯盾与飞: [Translated] Just by looking at the headline, I already feel that this time, Cisco’s future in China is bleak | Snowden Exposes: US Uses “Cisco’s” Monitoring of China […]

American officials have their own concerns about Chinese telecommunication companies operating in the U.S.. Huawei, for instance, the second largest telecommunication equipment maker in the world, has barely touched the American market. Like all major Chinese companies, the firm is closely linked to the government, and some U.S. officials fear that the telecom giant may enable or even engage in cyber-spying. (A recent article in Time magazine about the company was titled “Inside the Chinese Company America Can’t Trust.”)

Of course, Huawei’s presence within the U.S. has always been small, and certainly smaller, proportionally, than that of Cisco in China. Yet some American officials remain suspicious; last year a congressional investigation found that “Huawei and ZTE [another telecommunications company] seek to expand in the United States, but…we do not have the confidence that these two companies with their ties to the Chinese government can be trusted with infrastructure of such critical importance,” according to Michigan Rep. Mike Rogers, who chaired the committee that authored the report.

Just two weeks ago, President Obama met with his Chinese counterpart Xi Jinping at Sunnyland, California, where the two leaders appeared to have a constructive dialogue. On the second day of the summit, Obama asked Xi for “rules and common approaches to cybersecurity,” and Xi’s senior foreign policy adviser, Yang Jiechi, responded amicably saying that cybersecurity should “be a new bright spot in our cooperation.”

Two days later, Snowden unmasked himself.

Update: In a comment on this story after it was published, John Earnhardt, Cisco’s director of communications said that, “Cisco did not participate in the [Prism] program.” He added that the firm is “a truly global company, which means that we must operate in an environment of trust and respect in every country.” Earnhardt’s full response is posted below in the comments section.