Chinese Firms Take Aim at International Cloud Computing

VOA

An attendee sits near a diagram illustrating cloud security during the 4th China Internet Security Conference (ISC) in Beijing, Aug. 16, 2016.

BEIJING — 

A cloud war could be in the offing, with Chinese companies trying to take on giants like Google, Amazon and Apple in the crucial data management market. The moves come in the midst of an intensifying dispute between the U.S. and China over issues like data hacking and network security.

The entry of Chinese vendors like Alibaba, Baidu, and Huawei will give a new twist to the dispute over cybersecurity as they compete with international players for control over data.

China's home grown firms are not only grabbing domestic businesses but also venturing to different countries across the world. On the other hand, foreign players face regulatory walls that make it difficult to tap businesses in China.

Intensifying competition in the business of cloud computing has also raised serious questions about security of operational data, analysts said. Civilian use of this technology spans wide areas, like data driven machinery, telecommunications, banking and transport systems, including plans for driverless vehicles.

FILE - A woman uses her smartphone near a booth promoting cloud services during the Global Mobile Internet Conference in Beijing, China.

Data concerns

"Many multinationals have serious concerns about the protection of their intellectual property in China, on and off line, and there have been a number of recent cases of international firms coming to believe that valuable information has been stolen from them through cyber means," Lee Branstetter, Associate Professor of Economics at the Heinz School of Policy and Management of the Carnegie Mellon University told VOA.

"All of this would give non-Chinese multinationals pause before entrusting their critical data to Chinese cloud computing service providers," he said.

But foreign companies with limited technology budgets, and those operating in China, may not have the luxury of higher priced services offered elsewhere, analysts said.

Chinese vendors are establishing data centers in different countries, and trying to tap sensitive data management business across the globe. Alibaba has established data centers in the U.S., parts of Asia, the Middle East and Europe.

But Branstetter does not think Chinese cloud vendors would pose a major challenge to the likes of Google, Microsoft and Amazon in the data management business.

"China’s efforts to keep out foreign digital players are actually a real global outlier – it is certainly the most digitally protectionist major economy. For this reason, I expect Chinese digital players to continue to be dominant at home, but I do not expect them to be very successful abroad," he said.

Growing behind the wall

Government restrictions on foreign data vendors has left the field more or less clear for home made cloud computing firms, who are able to get major business opportunities without facing severe competition from international players. This is a massive chunk of business considering that over one-fifth of the Fortune 500 companies are of Chinese origin.

Under the rules, foreign cloud vendors can operate in China only if they have local partners, and use servers located in the country. But the Chinese market is too big for foreign companies to ignore.

Sheila Jasanoff, director, program on science, technology and society at Harvard Kennedy School, is worried that the unruly competition in the cloud computing business may result in a major accident before people wake up to the need for having strict rules.

"Cloud computing is still an unruly territory. People (in the business) are making rules as they go along or taking advantage of the lack of rules. I would think a big tragedy might happen in a large airport or other facility, like a hospital system, and it would result in loss of life," she said.

Security safeguards promised to customers by cloud computing compares are "extremely opaque", she said. An internationally accepted set of rules on data security is necessary. But she does not think that an international agreement would happen anytime soon.