IBM Allows Chinese Government to Review Source Code
IBM Allows Chinese Government to Review Source Code
China has been pressuring U.S. tech companies to hand over
source code to prove there are no security risks
By EVA DOU Updated Oct. 16, 2015 9:27 p.m. ET
BEIJING— International Business Machines Corp. has agreed
to let China review some product source code in a secure room, according to two
people briefed on the practice, making it the first major U.S. tech company to
comply with Beijing’s recent demands for a stronger hand in foreign technology
there.
IBM has begun allowing officials from China’s Ministry of
Industry and Information Technology to examine proprietary source code—the
secret sauce behind its software—in a controlled space without the ability to
remove it from the room, the people said. It wasn’t clear which products IBM
was allowing reviews of or how much time ministry officials can spend looking
at the code. The people said the practice was new and implemented recently.
IBM said in a statement Friday that it had established in
several countries the capability to conduct limited tests in a controlled IBM
environment to reassure clients and others that there was no way for third
parties to access its technology.
“Strict procedures are in place within these technology
demonstration centers to ensure that no software source code is released,
copied or altered in any way,” the statement said.
IBM reiterated it didn’t give government access to client
data or build “back doors” into its technology.
Chinese media reported that IBM Senior Vice President
Steve Mills disclosed the source-code sharing in a speech in Beijing Thursday,
saying that IBM needed government support to continue its growth in China. Mr.
Mills’ remarks couldn’t be immediately confirmed.
IBM’s move could rile the Obama administration and some
other U.S. tech firms, which have been trying to present a united front against
Beijing’s demands for technology sharing. Many U.S. companies are drawn to the
massive Chinese information-technology market, which research firm Forrester
estimated is worth $136 billion this year. But they worry that allowing access
to sensitive material like source codes will put their proprietary information
in the hands of Chinese rivals and essentially help future competitors.
IBM has been willing to strike closer partnerships with
China’s government than many of its fellow U.S. tech companies, people familiar
with the company’s strategy said.
Still, it isn’t clear to what extent IBM’s move might be
a symbolic gesture. The people briefed on the practice said Chinese officials
can look at the code only during visits and can’t remove it for a thorough
review. In a short amount of time, it would be extremely difficult to comb through
all the code for a product for potential “backdoors” that would allow spying on
users.
China has been pressuring U.S. tech companies to hand
over source code for its products to prove there are no security risks, after
former U.S. security contractor Edward Snowden disclosed in 2013 that the U.S.
government tapped into overseas electronic gear to spy on other governments.
U.S. tech firms have grappled with a sales chill in China since then.
“U.S. companies have to think of new ways to get back their
market share in China,” said Nicole Peng, an analyst for research firm Canalys.
“That includes letting the authorities check they don’t have backdoors.”
China has long tried to get access to source code and
other sensitive material from foreign tech companies. In 2010, years before Mr.
Snowden’s disclosures intensified Beijing’s efforts, Microsoft said it would
share source code for Windows 7 and other products with the Chinese government.
U.S. tech companies are striking more alliances with
Chinese counterparts to retain market share. Examples include Hewlett-Packard
Co.’s sale of a controlling stake in its China networking gear unit to
state-owned Tsinghua Unigroup in May, and Qualcomm Inc. establishing a joint
venture in June with Chinese chip foundry Semiconductor Manufacturing
International Corp. to help it develop more advanced chips.
IBM said Wednesday it will offer its cloud-computing
platform Bluemix in China through a collaboration with 21Vianet Group Inc., a
Chinese company that also partners with Microsoft Corp. IBM also co-founded the
China Power Technology Alliance with China’s technology ministry in 2014 to
license IBM technology to more Chinese companies.
But U.S. companies have largely resisted pressure from
Beijing to share source code. Disclosing source code would reveal the
companies’ core intellectual property and raise the risk that Chinese
competitors could copy their products. Earlier this year, under pressure from
the U.S. government and trade groups, China’s banking regulator suspended the
implementation of rules that would force Chinese banks’ equipment suppliers to
open their source code for review.
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