It was the latest saga in a love story gone sour when this month, US supergiant Oracle announced the firing of 900 staff from their China team. The cull, which would cut 60% of the software behemoth’s research and development workforce in the region, shifts the struggle between the two superpowers firmly onto the digital battlefield.
And it all started so well. 2016 was full of declarations of love from the US president. But the honeymoon period ended, and along came investigations into Chinese trade policies, a back and forth of increased tariffs, and then, the blacklisting of Huawei.
Now the timing of Oracle’s withdrawal is telling: it comes as Beijing plans to beef up its control over Cloud computing, the Internet of Things, and data governance through a series of cybersecurity crackdowns. According to unreleased documents seen by the FT, the government is set to implement a strengthened regime of cyber rules in the interest of “fortifying national security”. China’s current laws require all “critical” network operators to cooperate with Chinese crime or security investigators, allow them full access to data, and provide elusively phrased “technical support” to the authorities. Data which could be interpreted as “a threat to national security or public interest” is banned from export out of the country.
The aim may be to keep data in, rather than foreign companies out, but turned off by the stringency of the laws and the vagueness of certain conditions, increasingly more companies like Oracle may decide they would rather get out of the game than play when they don’t know the rules.
If Silicon Valley is leaving their bite of the $5.1 billion apple to the 2,681 home-grown enterprises settled in China, what comes next? They say nothing heals a broken heart like a rebound and this could be the nation’s punchy little sister, South-east Asia. In Singapore in particular, Silicon Valley tech start-ups have proved a primary target of interest for local venture capitalists. And investment in cyber is high. Last year total Southeast Asian spend into cybersecurity was estimated at US $1.9 billion, and is set to hit US $5.4 billion by 2025.
They say that all’s fair in technology war and the course of political power dynamics never did run smooth. But if the country with one of the most enigmatic approaches to data governance is using cybersecurity as the latest pawn in the trenches of critical national infrastructure, then Oracle’s cut-backs may be a premonition of things to come. And as companies digitalise and this “creates a lot of risk without sufficient cybersecurity”, to quote one Chinese CEO, this may have greater consequences for both economies than any game of tariff tag.