Silicon Valley companies are stepping up their security checks on employees and potential recruits as US officials raise concerns about the threat of Chinese espionage.
Tech giants like Google and high-profile startups like OpenAI have stepped up employee vetting, according to several people who work directly with the groups.
The move comes amid concerns that foreign governments are trying to use compromised workers to access intellectual property and corporate data.
Venture capital firms such as Sequoia Capital, which backs dozens of startups including Elon Musk’s xAI, also called on some portfolio companies to tighten employee background checks after warnings that spy agencies were targeting U.S. tech developers, the people said.
Sequoia spun off its own China business last year after nearly two decades due to geopolitical pressure.
Alex Karp, chief executive of Palantir, a $53 billion supplier of data analytics to the US defense industry, said Chinese spying on US technology companies is a “huge problem”, particularly for makers of enterprise software, large language models and weapons systems.
“We have smart opponents,” Karp said. “Our enemies are ancient cultures fighting for their survival not only now, but for the next thousand years.
The heightened security efforts come as U.S. officials have increased warnings to businesses over the past two years about the threat of Chinese espionage.
Washington and Beijing are locked in a growing strategic competition, with the US imposing export controls to make it harder for China to acquire and develop cutting-edge technology, including artificial intelligence and advanced chips.
However, there are also concerns about the rise of xenophobia in American technology companies due to the preponderance of skilled workers of Asian descent.
HR McMaster, a former US national security adviser who has advised technology companies and investment firms on the risks of foreign espionage since leaving government, said the threat posed by Chinese intelligence agencies was “absolutely real and persistent”.
“Companies that I talk to and work with are very aware of this right now and are doing everything they can to reduce it,” he said.
Google said it has “strict safeguards to prevent the theft of our confidential business information and trade secrets.” Sequoia declined to comment. OpenAI did not respond to requests for comment.
Chinese espionage cases go back decades, but seem to have multiplied in recent years. In March, US prosecutors charged a former Google software engineer with allegedly stealing AI trade secrets while secretly working with two China-based companies. Tesla, Micron and Motorola have been subjected to “egregious” intellectual property theft by China over the past five years, according to the US.
Bill Priestap, a former FBI counterintelligence chief who now runs Trenchcoat Advisors, advises on the “human-induced risk” of foreign adversaries. He said he has seen a “high number” of cases where overseas intelligence groups have exploited employees of American companies to steal valuable assets.
“Some employers have realized that when they hire people, they need to understand if they have any vulnerabilities that they should be aware of,” he said. “Simply maintaining ties to certain countries means [an individual] they may be vulnerable to exploitation even if they do not want to cause harm to society.”
A handful of private companies have sprung up to offer businesses strategic intelligence about Chinese espionage threats. Utah-based Strider Technologies, launched in 2019 by twins Greg and Eric Levesque, provides a data tool to companies that aim to prevent nation states from targeting their employees and infiltrating outside contractors and suppliers.
Greg Levesque, CEO, said Strider has recently seen an uptick in adoption of its tools by start-ups working on new technologies such as quantum computing, artificial intelligence and synthetic biology, “which are at the top of the shopping list in countries like China “. .
Strider’s system uses AI to collect data on the methods foreign intelligence agencies deploy on target companies and their employees. For example, it tracks hundreds of Chinese “talent schemes” that allegedly recruit foreign scientists and professors and incentivize them to steal technology to advance China’s military and economic goals. Pristap and McMaster are advisers to Strider.
If an individual is flagged by the Strider system, companies may conduct additional screening, such as due diligence on the individual’s family or financial ties abroad, as well as their travel history to countries where foreign intelligence agencies have been recruiting.
“We’re seeing it across the Fortune 500,” Greg Levesque said. “Everyone is becoming a target. There is a geopolitical battle going on and industry is on the front lines.”
In 2022, the US Department of Justice scrapped a controversial program called the “China Initiative” launched during the Trump administration following criticism from human rights groups that it engaged in racial profiling. It has also come under scrutiny after several cases against academics, particularly scientists, of Chinese descent collapsed in court.
But the initiative led, among other things, to the condemnation of Charles Lieber, professor of chemistry at Harvard University. He was found to have secretly received money from China through a state-sponsored program to help the country gain access to scientific knowledge and expertise in the US and elsewhere.
In November, FBI Director Christopher Wray held a public event in Silicon Valley with his counterparts from the Five Eyes intelligence network, which includes Australia, Canada, New Zealand, the UK and the US. He urged tech companies to “face the unprecedented threat” from China.
Silicon Valley groups bidding for contracts with the US Department of Defense have been urged to expand the scope and scope of their due diligence against Chinese espionage threats. Commercial technology companies that work with US defense agencies are subject to strict security measures.
McMaster, who is also a retired US Army lieutenant general, said: “The vast majority of research and development that has national security implications used to be government programs and now it’s done in the private sector, so these companies have become really potentially lucrative. goals from a Chinese perspective.”
More news from Hannah Murphy in San Francisco