Chinese Hackers

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Microsoft Defends Its Intimate Relationship with China to Congress After Chinese Hackers Infiltrated Its Software

Microsoft President Brad Smith acknowledged the company’s role in major security breaches that allowed China-linked hackers to infiltrate federal government computer networks in a Congressional hearing this week. The executive also defended the company’s operations in the communist dictatorship.

CNBC reports that during his testimony before the House Homeland Security Committee, Smith struck a contrite tone, promising that the tech giant would address the security gaps in its products, which are widely used across federal agencies. However, Republican lawmakers shifted their focus to Microsoft’s activities in China, questioning the company’s ability to enhance its cybersecurity while operating in a country where the government demands access to data from businesses and other organizations by law.

Smith claimed that Microsoft’s data centers and cloud services in China primarily serve American and other non-Chinese corporations, helping to protect their trade secrets. He also noted that Microsoft’s business in China accounts for only 1.4 percent to 1.5 percent of the company’s total revenue. When pressed by Rep. Carlos Gimenez (R-FL) about whether it was worth operating in China, Smith maintained that Microsoft does not comply with a 2017 Chinese national intelligence law requiring firms to hand over information requested by the government, and has refused some requests from Beijing, although he did not provide specific details.

The hearing was organized in response to a scathing government report in April, which found “a cascade of errors” by Microsoft that allowed state-backed Chinese hackers to breach email accounts used by government employees and senior officials, including the email of Commerce Secretary Gina Raimondo. The report, issued by the Cyber Safety Review Board, concluded that the breach was “preventable” and criticized Microsoft’s corporate culture for deprioritizing enterprise security investments and rigorous risk management.

Smith assured lawmakers that Microsoft fully accepted the report’s findings and is implementing its recommendations. The company has deployed approximately 34,000 engineers to focus on security, which Smith described as “the single largest cybersecurity engineering project in the history of digital technology.” He acknowledged that while Microsoft had not lost sight of the importance of security, much of the workforce had become overly reliant on a large team of security experts to address potential cyberthreats, rather than viewing it as a collective responsibility.