The Biden administration is currently investigating three Chinese telecom giants – China Telecom, China Mobile, and China Unicom – over concerns that these firms could exploit access to American data through their U.S. cloud and internet businesses, potentially providing it to Beijing. This investigation, led by the Commerce Department, is a previously unreported development in the ongoing tech war between the U.S. and China.

Despite having a relatively small presence in the U.S., these companies still provide cloud services and route wholesale U.S. internet traffic, giving them access to American data. This access remains even after telecom regulators barred them from providing telephone and retail internet services in the U.S.

The investigation is part of Washington’s broader effort to prevent Beijing from exploiting Chinese firms’ access to U.S. data, which could potentially harm American companies, citizens, or national security. The administration is trying to shut down all remaining avenues for Chinese companies already targeted by Washington to obtain U.S. data.

Regulators have not yet decided how to address the potential threat. However, they could block transactions allowing these companies to operate in data centers and route data for internet providers. This could degrade the Chinese firms’ ability to offer competitive American-facing cloud and internet services to global customers, potentially crippling their remaining U.S. businesses.

The Chinese telecom companies’ reach extends deep inside the U.S. internet infrastructure. For instance, China Telecom has 8 American Points of Presence (PoPs) that sit at internet exchange points, allowing large-scale networks to connect to each other and share routing information. These PoPs pose “serious national security and law enforcement risks,” according to the FCC.

The Commerce Department is also investigating the companies’ U.S. cloud offerings. Regulators fear that the companies could access personal information and intellectual property stored in their clouds and provide it to the Chinese government or disrupt Americans’ access to it.

In conclusion, the ongoing investigation into these Chinese telecom giants underscores the escalating tech war between the U.S. and China, with data security at its core.