Daily Management Review

US Blocks SoftBank-backed CloudMinds From Transferring American Tech To China: Reuters


US Blocks SoftBank-backed CloudMinds From Transferring American Tech To China: Reuters
The United States has blocked startup CloudMinds, backed by SoftBank, from sharing technology developed in the US with its China business, claimed a report published by the news agency Reuters. This incident shows how the increased interference by the US government is creating issues for tech companies and investors of the firms.
According to a company training video and internal communications reviewed by Reuters, the company was barred from transferring technology or technical information - even software bugs, to its office in Beijing from its business unit in the US without obtaining a special license issued by the US Commerce Department, according to a letter sent to the company by the Department in July.
Knowledge about such restrictions on transfer of technology was not previously available with the company and this restricted the company from the chance of convincing its investors about a proposed initial public offering (IPO) in the US for the company that offers cloud-based systems for robots.
According to the Reuters report quoting a source with knowledge of the matter, the US government had issued no licenses to the company. 
“CloudMinds could not even export office furniture or iPhones from the U.S. to China at this time without a license,” Washington attorney Douglas Jacobson, an expert in export controls and sanctions told Reuters.
This incident reflects that the risks that American companies as well as their investors such as SoftBank face in relation to the ongoing technology war between the United States and China. The Japanese investment company SoftBank has launched its $100 billion Vision Fund which is already under pressure after reporting losses for two quarters because of fall in valuation of the tech companies that it is invested in.
SoftBank has a number of Chinese companies in which it has invested large amounts and includes the artificial intelligence firm SenseTime that was added to the trade blacklist in October by the US and Bytedance – the owner and operator of immensely popular social media app TikTok - which has been criticized in the US over concerns for the security and privacy of the personal data of its users that it handles.
This latest incident of restricting transfer of American developed technology to China as faced by CloudMinds also shows that length to which the US government is willing to go to prevent Chinese companies from laying their hands on US technology through pressure tactics on US companies. CloudMinds was founded by a former researcher associated with the state-owned telcom company China Mobile Ltd.
A range of gods are included in the list of restrictions that is dictated by the Commerce Department’s Bureau of Industry and Security (BIS), which also has the authority to prevent access to any US developed technology by Chinese nationals working for the company in the United States.
National security or foreign policy concerns generally forms the basis of such restrictions.
Kevin Wolf, a Washington-based lawyer and former Commerce Department official, said that the US Commerce Department has the power to demand that companies should obtain export licenses form it if it “believes that the item is intended in whole or in part for military end use in China.”