Beijing tells Chinese firms to stop using US and Israeli cybersecurity software

Defence affairs - Reuters - Def-Geopolitics on X

Chinese authorities have told domestic companies to stop using cybersecurity software made by more than a dozen firms from the U.S. and Israel due to national security concerns, three people briefed on the matter said.

As trade and diplomatic tensions flare between China and the U.S. and both sides vie for tech supremacy, Beijing has been keen to replace Western-made technology with domestic alternatives.

The U.S. companies whose cybersecurity software has been banned include Broadcom-owned (AVGO.O), opens new tab VMware, Palo Alto Networks (PANW.O), opens new tab and Fortinet (FTNT.O), opens new tab, while the Israeli companies include Check Point Software Technologies (CHKP.O), opens new tab, two of the sources said.

The third source said other companies whose software was banned included Alphabet (GOOGL.O), opens new tab-owned Mandiant and Wiz, whose purchase Alphabet announced last year, as well as U.S. firms CrowdStrike (CRWD.O), opens new tab, SentinelOne (S.N), opens new tab, Recorded Future, McAfee, Claroty, and Rapid7 (RPD.O)

Israeli firm CyberArk, whose purchase was announced by Palo Alto last year, was also on the list, as were Orca Security and Cato Networks, two Israeli firms, and Imperva, which was purchased by French defense firm Thales (TCFP.PA), opens new tab in 2023.

SHARES SLIDE FOLLOWING SOFTWARE BAN

Recorded Future said in an email that it did no business in China and had no intention of doing so. McAfee said it is a consumer-focused company whose technology "is not built for government or enterprise use."

CrowdStrike said it did not sell into China and did not have offices, hire people or host infrastructure there, and thus could "only be negligibly affected." SentinelOne said it had "no direct revenue exposure to China," citing similar reasons.

Claroty said it did not sell to China. In a statement, Orca Security CEO Gil Geron said his company had not been notified of the move. Geron added that his company was focused on defense and that a ban "would be a step in the wrong direction."

The other blacklisted companies did not respond to Reuters' requests for comment. Shares of Broadcom fell more than 4% in Wednesday trading, while Palo Alto's share price stayed virtually flat. Check Point's shares closed up slightly. Fortinet shares fell more than 2%. Rapid7 shares fell more than 1%. Reuters was unable to establish how many Chinese companies received the notice that the sources said was issued in recent days.

Chinese authorities expressed concern the software could collect and transmit confidential information abroad, the sources said. They declined to be named due to the sensitivity of the situation.