With the passage of time, the continuous advancement of technology, and the fierce competition between China and the United States, new areas are gradually becoming the focus. Recently, the Wall Street Journal published a high-profile article saying that the Biden administration is considering restrictions on Chinese companies' access to cloud computing services. According to people familiar with the matter, the core requirement of the policy is that cloud computing service providers using advanced artificial intelligence chips must obtain approval from the US government before opening up to the Chinese market. The introduction of this policy means that the focus of the technology competition between China and the United States is shifting to cloud computing, highlighting the Biden administration's focus on China's influence in Internet infrastructure and digital services.
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Recently, a new policy has attracted widespread attention: the Biden administration plans to impose restrictions on Chinese companies' access to cloud computing services. According to the Wall Street Journal, citing people familiar with the matter, the proposed policy requires cloud computing service providers to obtain approval from the US government before opening up to the Chinese market. The main motivation behind this restriction is to prevent Chinese companies from using cloud computing services to obtain cutting-edge AI chips. This means that the tech competition between China and the United States is rapidly spreading to cloud computing, and the Biden administration has shifted its focus from the traditional tech competition field to a more comprehensive "ecosystem."
Not long ago, Emily Weinstein, a researcher at the Center for Security and Emerging Technology in Georgia City, mentioned in an interview the legal operation of Chinese companies to bypass export controls. She pointed out that Chinese companies have successfully circumvented export control restrictions by acquiring NVIDIA's A100 chips from various cloud service providers. CSET also mentioned the issue of access to controlled chips through cloud computing in previous reports, and believes that this is one of the driving forces behind the Biden administration's restrictive policies.
In a report titled "Controlling Access to Advanced Computing through the Cloud: Choices for U.S. Policies," CSET provides a detailed analysis of the current state of U.S. export controls and vulnerabilities. The report notes that Chinese companies have found ways to bypass semiconductor export controls by accessing controlled chips through cloud computing services. This development may lead to Chinese companies increasingly using overseas cloud services to circumvent regulations.
The report also mentioned that some Chinese companies sanctioned by the United States, such as iFLYTEK, have signed lease agreements with third parties to use cloud service providers' computer clusters to train datasets. This approach allows these companies to circumvent new export control rules and get the computing power they need to perform calculations without owning the actual physical chip.
The report further suggests two possible policy paths to limit Chinese companies' access to controlled chips. The first path is to impose extensive technical controls on all Chinese entities, but this path is problematic in terms of feasibility and practical effectiveness. The second path is to restrict U.S. communications service providers from providing China with cloud computing services related to military, security or intelligence services. The analysis concluded that a more targeted second approach is more feasible than broad control, although there may be some complexities and limitations in implementation.
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However, this policy is not only to restrict the development of Chinese companies, it also reflects the strategic adjustment of the United States in the field of cloud computing. According to the New York Times, the Biden administration and members of Congress are actively exploring ways to address the security concerns of the cloud computing arm of Chinese tech giants, and new measures to limit Chinese cloud enterprises have been included in the study.
The U.S. government recently spoke to cloud giants such as Google, Microsoft and Amazon to understand the specifics of their Chinese competitors' operations. In addition, U.S. officials discussed whether stricter rules could be enacted to restrict Chinese companies from operating in the United States and curb their growth in third countries. Nine Republican U.S. senators have also sent letters to government officials demanding that Chinese cloud companies, such as Huawei, Alibaba, Tencent and Baidu, be investigated and punished for posing threats to national security.
As the engine of the digital economy, cloud computing companies have become an integral part of providing computing power and software support to enterprises. In the context of China's rise, the United States realized that in order to maintain its technological superiority, it must have a more comprehensive control of areas such as cloud computing.
However, in addition to national security and the burden of "theft" of sensitive data
Economic factors are also driving the U.S. to shift its goals to cloud computing. Despite the economic setback during the global pandemic, the cloud computing market has bucked the trend. According to forecasts, the public cloud market will be worth more than $800 billion by 2025, and enterprise cloud platform spending will grow by 14%. The potential of this market has sparked concern in the United States, which wants to protect the market share of local cloud service giants by limiting the growth of Chinese companies.
In the United States, restrictions on Chinese cloud computing companies are already emerging. Although companies such as Alibaba Cloud and Tencent Cloud operate data centers on the west and east coasts of the United States, their market share has shrunk significantly. They are struggling to compete head-on with U.S. cloud service giants, and can only serve small and medium-sized businesses, as well as provide additional cloud capacity to Chinese customers in the United States. However, once the customers of Chinese cloud providers expand, they may be censored and threatened to turn to US cloud providers such as Oracle.
However, the cloud computing competition between China and the United States is not limited to the domestic stage, but also extends to the international stage. According to research by Canalys and Synergy Research Group, U.S. cloud giants such as Microsoft's Azure and Amazon's AWS currently control more than 50 percent of spending on cloud infrastructure services worldwide. Still, it's unclear who will win outside the U.S., and the EU has become a target region for Chinese companies.
The European Commission is ambitious about the digital transformation of European businesses, with plans to have 75% of European businesses adopt technologies such as cloud computing by 2030. However, U.S. tech giants currently dominate the European cloud computing market, with about 70% of cloud services provided by U.S. companies. EU politicians and regulators hope to reduce the share of U.S. cloud services in the European market through regulatory rules.
Through the enforcement of laws such as GDPR, the EU has begun to target US cloud service companies, increasing their compliance costs. The EU's upcoming Digital Markets Law and Digital Services Law, as well as the Digital Act and Cloud Service Cybersecurity Certification under discussion