Google subsidiary agrees to pursue internet ‘diversification’ in Asia to block China access to U.S. market

The global internet continues to disintegrate into regional internets.

Yesterday, the FCC authorized a Google subsidiary, GU Holdings, to open a submarine fiber optic link between the U.S. and Taiwan, while continuing to block the company’s expansion of the cable to Hong Kong.

The cable, operated by Pacific Light Data Communication, has faced years of delays over its ties to the Chinese mainland. The Trump administration, through the Team Telecom review process, has placed an exacting magnifying glass on the deal structure and its operating processes, arguing that a direct link between Hong Kong and the U.S. would pose grave risks to the security of America’s internet infrastructure.

Team Telecom has been a quiet bureaucratic group within the federal government reviewing internet infrastructure and telecom business licenses as our reporter Mark Harris has described, and the working group only received formal approval for its operations earlier this week in an executive order signed by President Trump.

The original goal of the cable was to connect the U.S. to Taiwan, Hong Kong and the Philippines, offering Google and other tech companies like Facebook the ability to move large quantities of information from their data centers domestically to the fast-growing Asia-Pacific region. That sort of bandwidth is even more acutely needed today in the context of the global pandemic of the novel coronavirus and the rapid increase in work-from-home activities that are driving record internet usage.

Yet, when Dr Peng Telecom & Media Group bought a stake in the cable’s operating company in late 2017, concerns intensified among DC national security professionals that the cable could come under the sway of Beijing’s influence.

Those delays have proven costly for GU Holdings, which has argued in filings with the FCC that the project was increasingly non-viable given the extensive review process.

With today’s announcement, Google’s subsidiary has agreed to an extensive set of national security constraints on the project, including extensive disclosure of the network’s operating processes to the U.S. federal government and using security-cleared personnel in operating the cable. The company’s application for a connection to Hong Kong remains pending before the FCC.

In the government’s filing, the Team Telecom agencies, which include Justice, Homeland Security, and Defense, said that they “believe that in the current national security environment, there is a significant risk that the grant of a direct cable connection between the United States and Hong Kong would seriously jeopardize the national security and law enforcement interests of the United States.”

As part of the national security agreement, “Google will pursue diversification of interconnection points in Asia, including but not limited to Indonesia, Philippines, Thailand, and Vietnam. This diversification will include pursuing the establishment of network facilities that allow delivery of traffic on Google’s network as close as practicable to the traffic’s ultimate destination.” In other words, internet traffic will not be relayed through China or Hong Kong, which is a special administrative region of China.

A Google spokesperson said that “We recognize the importance of Google services at a time like this and are committed to adding capacity to stay ahead of demand. Our dedicated global network deployment and operations team is continually increasing capacity to meet the needs of our users, and that includes our subsea cable system. We are pleased to see the FCC grant approval for us to begin using this cable to connect the US to Taiwan.”

The agreement will ultimately allow Google and other large tech companies to advance their interests in this important region, but it does underscore the increasing disintegration of the vision of one, global internet. Data sovereignty rules in Europe, India, China, and Russia are forcing tech companies to offer specialized cloud services tailored to each region’s privacy and censorship interests rather than offering one open and free infrastructure for global internet users.

According to GU Holdings’ filing, the U.S.-Taiwan segment of the cable is operationally ready, and will presumably start handling traffic in relatively short order.

Update April 9, 2020: Added statement from Google about the fiber cable approval. Also noted that the company’s Hong Kong petition remains pending before the FCC, and is not a permanent moratorium.