A Walled Wide Web for Nervous Autocrats
Beijing and Moscow see American information technology as a threat. They want systems of their own. What does all of this mean for the future of America’s technology industry? If China’s expansion into Africa and Russia’s into Latin America and the former Soviet Union are any indication, Silicon Valley’s ability to expand globally will be severely limited, if only because Beijing and Moscow have no qualms about blending politics and business.
The real Internet trade wars will begin once Russian and Chinese technology giants, with their poorly veiled government connections and piles of cash, come looking for American and European acquisitions. How will officials in Washington or Brussels react when China’s Tencent (with a market capitalization of $42 billion, almost twice that of Yahoo) or Russia’s Yandex makes a bid for AOL or Skype?
At the end of 2010, the “open-source” software movement, whose activists tend to be fringe academics and ponytailed computer geeks, found an unusual ally: the Russian government. Vladimir Putin signed a 20-page executive order requiring all public institutions in Russia to replace proprietary software, developed by companies like Microsoft and Adobe, with free open-source alternatives by 2015.
The move will save billions of dollars in licensing fees, but Mr. Putin’s motives are not strictly economic. In all likelihood, his real fear is that Russia’s growing dependence on proprietary software, especially programs sold by foreign vendors, has immense implications for the country’s national security. Free open-source software, by its nature, is unlikely to feature secret back doors that lead directly to Langley, Va.
Nor is Russia alone in its distrust of commercial software from abroad. Just two weeks after Mr. Putin’s executive order, Iran’s minister of information technology, citing security concerns, announced plans for a national open-source operating system. China has also expressed a growing interest. When state-owned China Mobile recently joined the Linux Foundation, the nonprofit entity behind the most famous open-source project, one of the company’s executives announced—ominously to the ears of some—that the company was “looking forward to contributing to Linux on a global scale.”
Open-source software can allay some of these security concerns. Though such systems are more democratic than closed ones, they are also easier to manipulate, especially for governments with vast resources at their command. But open-source solutions can’t deal with every perceived threat. As Google learned, the Chinese government continues to see Western search engines as a challenge to its carefully managed presentation of controversial subjects. Similarly, email can be read by the host government of the company offering the service, and the transmission of sensitive data can be intercepted via secret back doors and sent to WikiLeaks or its numerous local equivalents.
Judging by last year’s standoff between the BlackBerry maker Research in Motion and the governments of India, Saudi Arabia and the United Arab Emirates, questions of access also will play a growing role in shaping technology. If a government suspects that the U.S. National Security Agency has arranged to be able to retrieve private emails sent with BlackBerry’s secure encryption technology, it starts to wonder why it doesn’t have similar streams of intelligence data, from BlackBerry as well as from services like Gmail and Skype. At a minimum, more governments will demand that data servers base their operations in their own jurisdictions, inconveniencing global Internet companies that have based their business plans on the assumption that they could run their Indian operations from Iowa.
Even if they are spurned by the U.S. and Europe, China’s tech giants are likely to resurface elsewhere. For several years China has been using its huge cash reserves to hand out loans—mostly to governments in Africa, but also to neighbors like Cambodia—with the condition that those governments only do business with China’s telecom companies. With or without secret access to that data, the fact that China controls so much of the communications infrastructure in the developing world gives it political leverage.
The global triumph of American technology has been predicated on the implicit separation between the business interests of Silicon Valley and the political interests of Washington. In the past, foreign governments have rushed to install the latest version of Microsoft Office or Google’s Chrome browser because it was hard to imagine that Washington would tinker with technology to advance its strategic interests.
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But just a few weeks before Mr. Putin publicly endorsed open-source software, FBI Director Robert Mueller toured Silicon Valley’s leading companies to ask their CEOs to build back doors into their software, making it easier for American law enforcement and intelligence gathering agencies to eavesdrop on online conversations. The very possibility of such talks is likely to force foreign governments to reconsider their dependence on American technology. Whatever the outcome of Washington’s engagement with the Internet, Silicon Valley will be the one to bear the costs.