Huawei Symantec: Fear of Chinese Espionage Ends Venture

Tuesday, March 27, 2012

Plagiarist Paganini


(Translated from the original Italian)

It is official, the joint venture between Symantec and Huawei Technologies has ended because the American IT security firm feared that the collaboration with the Chinese telecommunications producer could have a serious impact on its business.

In particular, the US Government could not give to Symantec access to its classified information regarding cyber threats

The joint venture, called Huawei Symantec Technologies, was established in 2007 for the purpose of developing and distributing security appliances to telecommunications carriers. Symantec will sell its share of 49% to Huawei for US$530 million.

Symantec CEO and President Enrique Salem has declared:

"Symantec achieved the objectives we set four years ago and exit the joint venture with a good returns on our investment, increased penetration into China, and a growing appliance business."

Confronted with 10 million cyber attacks per day, the U.S. Defense Department is changing its approach to the problem by placing greater emphasis on its relations to those which are the main providers of services and equipment.

Groups of cyber criminals are aware of the huge demand for information about the military sector, for this reason they continuously trying to acquire and sell information about each country’s military and intelligence agencies through several techniques: espionage, phishing, extortion, cyber attacks, and the hacking of major government contractors.

The risks are really serious, as this information could be used by hostile governments in cyber attacks and cyber espionage activities in the short term. While on the domestic front, the US Government is aware of its vulnerability, and is moving to define and implement cyber strategies aimed at strengthening its systems after the events of recent months have shown that relationships with contractors are the weakest link in the security chain.

The contractors and governmental exchange sensitive information, and therefore it is expected that the government will seek assurances regarding arrangements employed for the management of information.

Cyberespionage is one of the most common forms of cybercrime, and is of great concern to both private industry and the military as a growing number of companies have become victims of computer attacks for the purpose of stealing corporate secrets and intellectual property with the intent to benefit in economic terms.

The information acquired may in fact be resold by criminals to competitor companies and governments interested to the strategic know-how. The line between cyber crime and cyber warfare is thin, and we now understand that one of the main strategies pursued by governments around the world is to undertake intelligence operations to gather sensitive information related to private industry and military sectors, which represent the backbone of a nation.

Cyberespionage is a terrible cyber threat that can have devastating effects on the social fabric of a nation as well as on the viability of private companies. It is sneaky and silent and for this reason unlike other crimes, as it may be conducted for years without the victim being aware of it, as happened in the case of Nortel.

The biggest threat in term of cyber-espionage against American businesses are China and Russia, which are engaged in efforts to obtain sensitive business and technology information. Report projects that China and Russia will “remain aggressive and capable collectors of sensitive US economic information and technologies, particularly in cyberspace.”

The New York Times reported on Monday that Symantec's decision came as a political move to coincide with the US government's efforts in the fight against cyber threats. The source has not been declared because it was not authorized to speak.

Huawei (Officially Huawei Technologies Co. Ltd.) is a Chinese multinational networking and telecommunications equipment and services company. It is the second-largest supplier of mobile telecommunications infrastructure equipment in the world (after Ericsson).

The Chinese company has been disputed as being too close to the Chinese government and the Chinese People’s Liberation Army. Do not forget that the government of Beijing has often is accused of meddling in the private affairs of the nation's companies. Many Huawei is fully under Chinese government control - pointing out that Ren Zhengfei, the founder of the company, served as an engineer in the Chinese People’s Liberation Army in the early 1980s.

The Chinese company has been the subject of numerous allegations in the past regarding its proximity to the government, as the company has provided support in the implementation of systems of censorship. Also, Huawei has been questioned in the past for having supported numerous operations of cyber espionage and cyber attacks such as the operation GhostNet.

According to The New York Times report, Huawei is leaving the US market due to increased American government oversight.

The news comes at a historic moment where the majority of Western states, while interested in working with Chinese companies, fear the impact on their business. China is accused of being responsible for the majority of attacks against foreign companies and agencies, and many experts believe that these attacks are directly sponsored by Beijing.

Huawei is not the only company to be damaged by such a protectionist policy, the U.S. government initiated an investigation in November to assess national security threats China's presence from the networking vendors in the country, including other companies such as ZTE.

Complicating the situation is that the same Chinese companies are in collaboration with governments considered hostile like Iran, and the US Government has started an investigation on Chinese companies for supplying sensitive technology to Iran and violating international agreements.

In 2011, United Against Nuclear Iran (UANI), an independent agency, questioned Huawei about its business being aligned with the Iranian Government. UANI alleges that Huawei provides the Iranian regime with  surveillance systems for cellular and electronic technology to spy on its citizens, and to track down human rights activists and dissidents.

The distrust of Chinese companies is high despite the desierable Asian market, and this shows the overall awareness of potential cyber threats and in the possible damage related. Huawei is still facing similar problems in telecom markets in India and Australia, in this last case the federal government has banned the company from participating in multi-billion dollar tenders to supply equipment for a broadband network.

While I understand the defensive approach, I believe that such behavior could have serious repercussions on the global market. Chinese companies are those that have considerable capital, and at this time to close the door permanently is not the right approach. The real problem is the inability to cope with the cyber threat and opting for the escape.

I think that in terms of security, little will change by breaking these strategic alliances. The attacks will continue, will increase in frequency and efficiency, and so the only way out is to prepare to face them.

Stopping profitable business relationships I think it is a serious mistake.

Cross-posted from Security Affairs

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