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ALPHABET INC.

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U.S. Allows Google Internet Project to Advance Only if Hong Kong Is Cut Out

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04/08/2020 | 04:43pm EDT

By Drew FitzGerald and Kate O'Keeffe

U.S. officials granted Google permission to turn on a high-speed internet link to Taiwan but not to the Chinese territory of Hong Kong, citing national-security concerns in a ruling that underscores fraying ties between Washington and Beijing.

"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," the U.S. Department of Justice said in its Wednesday decision, which was backed by the departments of Homeland Security and Defense.

The agencies instead urged the Federal Communications Commission to grant Google owner Alphabet Inc. permission to start using the portion of its 8,000-mile underwater Pacific Light cable that connects California to Taiwan.

Crews have already built the multimillion-dollar cable with branches to Taiwan and Hong Kong, but it remains dormant. The FCC has final authority over licenses to operate submarine cables, though it usually defers to other agencies on projects' national-security reviews.

The decision threatens to end Hong Kong's dominance as a top destination for U.S. internet cables and puts at risk several ongoing projects, including a Facebook Inc.-backed fiber-optic line linking Los Angeles to Hong Kong and a Google-backed project linking Hong Kong to the U.S. territory of Guam.

Chinese authorities have blocked U.S. companies like Facebook and Google from operating on the mainland, but the semiautonomous territory of Hong Kong has unfiltered access to the web and has served as a stopping-off point for global companies seeking connections to the region.

But U.S. officials are souring on the territory as Beijing uses a heavier hand there. Hong Kongers have spent months resisting Beijing's efforts to integrate the territory more closely with mainland China.

Washington is turning to the self-ruling island of Taiwan, which the U.S. supports with arms sales and unofficial political ties despite Beijing's claims that it is part of China.

U.S. officials are also considering alternatives. In their Wednesday decision, the agencies said their approval was conditioned on Google pursuing "diversification of interconnection points in Asia, including but not limited to Indonesia, Philippines, Thailand, and Vietnam."

A Google spokeswoman said the company welcomed the decision, adding that it recognizes "the importance of Google services at a time like this" and is "committed to adding capacity to stay ahead of demand."

A Facebook spokeswoman said the company is still navigating the licensing and permitting process.

Google and Facebook originally teamed up to build Pacific Light to Hong Kong in 2016, continuing the Silicon Valley giants' long-term strategy to take more control of the network pipes that connect their data centers. The web companies and their Chinese investment partners kept building the cable even as U.S. authorities withheld the regulatory approvals they needed to start using it.

In January, Google retooled its approach and asked for authorities' initial permission to turn on the portions of the cable that don't touch Hong Kong. The cable's operators had mostly finished building the undersea lines and its anchor stations on land but lacked permission to power up the system. The companies again tweaked their proposal last week to fast-track Google's Taiwan link while construction continued on Facebook's branch to the Philippines.

Major international data projects are subject to review by Team Telecom, a coalition of federal agencies with national-security oversight. The panel has taken a hard line against China in recent years. Team Telecom in 2018 recommended for the first time the denial of a Chinese application -- that of China Mobile Ltd. -- to provide telecom services through U.S. networks, citing national-security and law-enforcement concerns.

President Trump this month signed an executive order that puts the attorney general in charge of overseeing Team Telecom and gives the panel direct authority to review existing licenses to provide such services, including those issued earlier to Chinese state-owned operators China Telecom Corp. and China Unicom.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Kate O'Keeffe at kathryn.okeeffe@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -0.21% 1439.25 Delayed Quote.7.46%
BYD COMPANY LIMITED 0.00% 47.7 End-of-day quote.22.78%
CHINA MOBILE LIMITED 0.00% 54.95 End-of-day quote.-16.11%
EURO / US DOLLAR (EUR/USD) 0.27% 1.12411 Delayed Quote.-0.24%
TEAM, INC. -4.08% 5.41 Delayed Quote.-66.12%
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