Elon Musk, big tech ties to China raise security concerns
A U.S. senator warns U.S. tech companies that deep ties to China pose national security risks as cyberattacks rise. Time to choose a side, experts say.
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A U.S. senator raised concerns Tuesday about the national security risks posed by Elon Musk and big tech's connections to China in light of increasing Chinese-sponsored cyberattacks, including a hack that compromised data held by high-profile telecommunications providers.
A Chinese nation-state group known as Salt Typhoon is actively targeting U.S. telecommunications companies, including AT&T and Verizon. The group copied law enforcement wiretapping data and targeted both Vice President Kamala Harris and President-elect Donald Trump's presidential campaigns. Sen. Richard Blumenthal (D-Conn.), chair of the Senate Judiciary Subcommittee on Privacy, Technology and the Law, said during Tuesday's hearing that Congress needs to "radically rethink" how to protect against Beijing's spying and influence.
He said while Congress took important initial steps this year, such as limiting Chinese state-affiliated apps operating in the U.S., including TikTok, it should also examine U.S. tech companies' involvement in China. Hearing witness Sam Bresnick, a research fellow in the Center for Security and Emerging Technology at Georgetown University, recommended requiring U.S. companies to disclose detailed information on their foreign dependencies, including research and development investments, revenue shares and activities, particularly for nations posing a strategic risk to the U.S.
Blumenthal specifically called out Elon Musk, founder and CEO of companies including Tesla and SpaceX. Trump recently appointed Musk to lead a new Department of Government Efficiency, which aims to cut regulations and restructure federal agencies. Blumenthal said Tesla makes half of its cars and nearly a third of its sales in China.
"Meanwhile, the Department of Defense and other agencies are becoming more reliant on Musk's SpaceX, and now he's been promised power over the entire federal government," Blumenthal said during the Senate subcommittee hearing. "Those extensive economic ties and China's willingness to exploit them are a dangerous combination."
Big tech should diversify supply chains
Blumenthal said Elon Musk isn't the only big tech executive with strong economic ties to China, pointing to Apple CEO Tim Cook. Blumenthal said Apple collects 20% of its sales and bases 80% of its suppliers in China.
When forced to choose between American security and hugely profitable access to the Chinese market, Americans may doubt that SpaceX and Musk, Tim Cook, and other technology leaders will side with America.
Sen. Richard Blumenthal
"Even as Chinese companies undermine our national security, American ones often do the same," he said. "China has used economic coercion to enlist American companies for its own agenda, and we have given them a free pass far too often."
Blumenthal said U.S. tech companies' connections to China pose "a real risk to this country."
"When forced to choose between American security and hugely profitable access to the Chinese market, Americans may doubt that SpaceX and Musk, Tim Cook, and other technology leaders will side with America," he said.
Bresnick recommended that the U.S. government identify an optimal "U.S.-China de-risking balance." He said that will be critical, particularly if conflict breaks out between China and Taiwan.
U.S. tech companies might find it much harder to sever ties with China in such a situation, compared with what happened at the start of the war between Russia and Ukraine, Bresnick said. Several U.S. tech companies, including Musk's SpaceX, provided aid to Ukraine and severed ties with Russia.
However, he said few of those companies relied on Russia for revenue, manufacturing or R&D, and could easily align with the U.S. government's interests. The same can't be said for China.
"U.S. tech companies' flexibility and decision-making without the risk of significant financial or technological losses or disruptions may not apply as readily in future crises involving China, where economic and technological entanglements run far deeper," Bresnick said. "In comparison to the Russia and Ukraine crisis, where the financial cost of withdrawing from the Russian market was relatively low, the high stakes involved in losing the Chinese market could deter companies from taking actions perceived as antagonistic to China."
Indeed, U.S. tech companies including Apple and Tesla have a high degree of exposure in China, said hearing witness Isaac Stone Fish, CEO of New York City-based risk management research firm Strategy Risks. Companies that conduct business in China often need to satisfy the Chinese government to ensure business access, he said.
"U.S. tech companies have long tried to balance between the U.S. and China," he said, noting that both the U.S. and Chinese governments are pressuring U.S. tech companies to choose a side. "Time is running out."
Bresnick recommended that Congress create incentives and programs to support supply chain diversification and reduce corporate reliance on Chinese manufacturers. He emphasized that maintaining some connection to China instead of fully decoupling would be important as "mutual interdependence could stabilize bilateral ties." He said companies should also develop contingency plans addressing scenarios like a conflict between China and Taiwan.
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining TechTarget Editorial, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
