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Tuesday, 27 May 2014 11:33

Banks should avoid Big Blue, warns China

Written by Nick Farrell

Hands over data to the NSA

The Chinese government has warned its banks not to use gear or software made by IBM because it might have backdoors that will allow the US spooks access. 

The sources told the news agency that banking authorities in China are reviewing if the country's financial security is impacted due to the banks' reliance on IBM servers. The review's results will be submitted to a working group on internet security chaired by President Xi Jinping.

The move is believed to have followed the arrest of five Chinese military officers for allegedly hacking servers of US companies and stealing vital trade information. China has denied the allegations. It accused the US government of being "deceitful" and employing double standards. China ordered state-owned companies to cut ties with US consultants and warned it will scrutinise US technology companies operating in the country.

It looks like Biggish Blue will be one of the hardest-hit companies in the row between the world's two largest economies. China accounts for about 5 per cent of IBM's business, about 40 per cent of which is hardware sales. IBM's revenue from Systems and Technology segment, representing hardware sales, declined 19 per cent to $14.4bn in 2013. The company relies on China's government-owned corporations for a large chunk of its revenues.

Edward Snowden’s documents revealed that the NSA had made use of data from tech giants including Google, Facebook, Apple, AOL and IBM.

Chinese authorities are planning a high-profile probe into US tech firms IBM, Oracle and EMC following revelations that the NSA hacked critical network systems at certain universities in China and Hong Kong.

Nick Farrell

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