The Obama administration was willing to accept some risks to keep global tech markets free and flowing. That era’s over.
The global internet is a lot less global than it was a few years ago.
The U.S. government, which used to be the loudest advocate for knocking down digital barriers, has begun to erect barriers of its own since the 2016 election and the Russian hacking and influence operation that upended it.
U.S. officials and lawmakers once merely condemned Russian and Chinese laws that forced tech companies to share their source code or to store citizens’ data within national borders. Now, they’re developing countervailing laws and policies that limit the ability of those nations’ companies to access and endanger U.S. secrets.
The Obama administration was willing to accept a certain amount of digital risk that Russian and Chinese companies posed to its systems to avoid sparking a tit-for-tat conflict with those nations that might limit the ability of U.S. tech companies to operate across national borders.
The Trump administration is willing to accept far less risk.
The shift is palpable, but it’s also largely non-controversial, according to Nextgov interviews conducted at the RSA Cybersecurity Conference in San Francisco in April.
Current and former officials from Republican and Democratic administrations seem to agree: In an ideal world, global tech companies would be free from undue influence by governments, but this isn’t an ideal world and the U.S. can’t afford to pretend otherwise.
“My priority is to do our best to manage risk to the United States and there are certain countries that have legal frameworks and legal processes that we’re not OK with,” Jeanette Manfra, a top cyber official in the Homeland Security Department, told Nextgov during the conference.
“I want the internet to continue to grow and blossom as a global marketplace and a global forum,” said Manfra, who also worked in the Obama administration, “but it’s naïve to not recognize geopolitical realities.”
Mike McConnell, who led the National Security Agency under President Bill Clinton and was director of national intelligence for President George W. Bush, put things more plainly: “We’re headed toward a balkanized internet and that’s not good for the world,” McConnell said. But “if there’s evidence the wrong thing is going on,” he added, “then we’ve got to deal with it.”
The road since Kaspersky
The clearest evidence of this shift came in October when Homeland Security ordered civilian federal agencies to scrub the Russian anti-virus Kaspersky from their computer networks, citing the company’s close ties to the Russian government and Russian laws that might compel the company to cooperate with Kremlin spying.
Since then, Congress has codified that ban into law and officials have begun openly urging some U.S. companies to remove Kaspersky, as well.
After Kaspersky sued to reverse the ban, saying Homeland Security didn’t give the company a meaningful chance to defend itself, Sen. Dianne Feinstein, D-Calif., introduced legislation that would permit Homeland Security to bar any company from government networks for national security reasons without giving the company any notice at all.
The trend didn’t stop with Kaspersky, which has vehemently denied cooperating with Russian intelligence.
Sens. Marco Rubio, R-Fla., and Tom Cotton, R-Okla., have introduced a bill that would similarly ban the Chinese telecoms Huawei and ZTE from federal contracts, sparked by concern they might spy for Chinese intelligence. The ban also includes any companies that work with Huawei and ZTE or use them in their supply chains.
A Federal Communications Commission measure that would bar federal subsidies to Huawei and ZTE or to any other companies that are deemed threats to national security has unanimous support among FCC commissioners.
The Pentagon announced Wednesday that it’s banning the sale of cellphones made with Huawei and ZTE components on military bases.
The Trump administration is even reportedly considering restricting visas for Chinese researchers and limiting access by Chinese grad students and academics to sensitive research at U.S. universities and research labs.
Rubio and other senators hinted during hearings with intelligence officials that they may support that plan.
Meanwhile, U.S. tech companies abroad are facing Chinese and Russian demands to review source code or other proprietary material before receiving sensitive contracts, knowing that their compliance or refusal could have implications for how they’re viewed back home.
The European Union’s General Data Protection Regulation, which comes into force later this month and which imposes a bevy of new privacy and data protection requirements on global companies, is also likely to result in far more data stored locally, rather than in global computer clouds, and in web services that vary from nation to nation.
What a difference a few years makes
Things looked very different a few years ago, before the furor over Russian meddling in the 2016 elections.
The words “global” and “internet” were a common and natural pair during the Obama administration. The internet, the thinking went, was a global good, and all of the services stacked on top of it should be too.
The U.S. wanted internet companies to spread and compete across the planet, driving their costs down through massive economies of scale. The benefits of cloud-based technologies in particular, it was said, could not be realized if governments burdened companies with “data localization” requirements.
When other nations, such as Russia, China and Brazil, wanted to bar some tech companies or to force them to store citizens’ data inside national borders it was considered highly suspect–the work of a paranoid regime that was more interested in controlling its citizens than providing them with all the internet could offer.
During a 2014 Council on Foreign Relations event, sponsored in part by Google and Intel, State Department Coordinator for International Communications and Information Policy Daniel Sepulveda declared that countries that demand tech companies store data locally or use local supply chains for their products were accomplishing little more than raising prices for their citizens.
“At the end of the day, you're destroying the utility of the service for the end user, for your people,” said Sepulveda, who was frequently called America’s “ambassador to the internet.” Instead, he said, nations should embrace the internet “as a platform for social and economic development, that is not an end in itself, but a utility for the greater empowerment of human beings everywhere.”
The calculus has changed
To be clear, the government was not Pollyannaish about the threat of adversary governments using their policy and legal regimes to leverage tech companies as spying tools prior to the 2016 election.
The House Intelligence Committee prepared an exhaustive report about the threat Huawei and ZTE pose to government systems in 2012, long before the current uproar. U.S. companies, including Verizon, also lost European government contracts in 2014 after documents from NSA leaker Edward Snowden revealed they’d cooperated with U.S. spying.
U.S. concerns about Kaspersky’s ties to Russian intelligence also did not begin in 2016.
Kaspersky software was informally barred from defense, intelligence and national security systems long before the Homeland Security directive, according to congressional testimony.
Founder Eugene Kaspersky’s friendships with Russian intelligence officials–and the fact he studied cryptology at a school funded by the KGB, predecessor to Russia’s modern security service–have been documented in numerous news articles dating back to 2012 and earlier.
Officials in the Obama administration, however, were willing to accept more risk for the sake of ensuring the internet remained as open as possible–and to ensure U.S. companies weren’t barred from foreign markets in retaliation, former officials said.
That changed after 2016.
“Certainly, given the Russian activity that we saw in 2015 and 2016 and then into 2017, clearly the calculus on the government’s part has changed,” said Michael Daniel, who led cybersecurity policy for the Obama White House. “They said: This is now no longer a risk we can tolerate. The downside is too high compared to the advantages.”
There’s balkanization and then there’s balkanization
It’s important to note, Daniel and other former officials said, that while these geopolitical conflicts may damage some companies’ bottom lines and raise consumer prices, they have not, thus far, affected the basic building blocks of the internet.
The global agreements that allow smartphones, websites and other internet-dependent tools to operate basically the same from country to country–such as internet protocol addresses, the domain name system and 5G wireless systems–are largely intact and unthreatened.
“I think even in this administration there seems to be a pretty clear view that you don’t want the governance of the internet to be run in such a way that would balkanize it more than it is already,” said Chris Painter, who was the top cyber diplomat under Obama and, briefly under Trump.
“I think these are often difficult but fair decisions that say: ‘look, we’re taking a risk management approach,’” said Painter, whose position was eliminated by former Secretary of State Rex Tillerson.
There are also some developments that could forestall data localization, most notably the CLOUD Act, which clarifies how and when U.S. law enforcement can demand data that U.S.-based companies are storing overseas and how foreign governments can request U.S.-stored data.
The bill became law in March as part of a major spending measure, just ahead of a likely Supreme Court ruling that would have covered similar territory.
Prior to the CLOUD Act, even U.S. allies had to request law enforcement data using a cumbersome process known as a mutual legal assistance treaty that could take months to complete.
That fact caused many European justice officials to press for more locally stored citizen data to speed up investigations, said John Carlin, former assistant attorney general for the Justice Department’s national security division.
“Countries that share our values need to have the ability to execute their own laws,” Carlin said. “If they can’t do that in an agreed upon process, then they tend to move toward data localization.”
Politics always intrudes
While security concerns may force the U.S. government to be more restrictive about which companies it allows on its networks, officials should be sure they’re making decisions such as the Kaspersky ban with a full understanding of how adversary nations are likely to respond, said Daniel, the Obama White House cyber coordinator.
Security measures that hurt Chinese companies’ U.S. sales, for example, are likely to be followed by Chinese measures that hurt U.S. companies.
“Inevitably, politics is going to intrude into this industry the same way it intrudes into any other industry,” Daniel said. “Does anyone think the aircraft sales industry is free of politics? Or steel or agriculture? So, the fact there’s a political overlay coming into this industry shouldn’t surprise anyone.”