October 16, 2015 / 11:35 AM / in 2 years

IBM allows Chinese Government to review source code: WSJ

The IBM logo is seen outside the company's offices in Petah Tikva, near Tel Aviv October 24, 2011. REUTERS/Nir Elias/Files

(Reuters) - International Business Machines Corp has agreed to let China review some product source code in a secure room, the Wall Street Journal reported, citing two people briefed on the practice.

It was not clear which products IBM was allowing reviews of or how much time officials of China’s Ministry of Industry and Information Technology can spend looking at the code, the WSJ said on Friday.

U.S. tech companies have been facing increased pressure from Chinese authorities to accept rigorous security checks before their products may be purchased by China’s sprawling, state-run financial institutions.

“IBM does not provide government access to client data or back doors into our technology,” the company said in an emailed statement to Reuters on Friday.

The company said that in several countries it can conduct limited demonstrations of specific aspects of its technology in “highly secure, controlled IBM environments that have no external communication links”.

IBM said such demonstrations were not unique to the company, pointing to Microsoft Corp’s program to provide governments with controlled access to Microsoft Windows source code. Microsoft signed one such Government Security Program (GSP) with China in 2003.

In April, China’s bank regulator temporarily suspended financial industry cyber security rules that would force technology vendors to Chinese banks to hand over secret source code and adopt Chinese encryption algorithms, after feedback from banks.

Beijing has considered its reliance on foreign technology a national security weakness, especially after former National Security Agency contractor Edward Snowden’s revelations that U.S. spy agencies planted code in American-made software to snoop on overseas targets.

Cybersecurity has been a significant irritant in U.S.-China ties, with both sides trading accusations of abuses.

IBM has been more willing to strike closer partnerships with China’s government than many of its fellow U.S. tech companies, WSJ said on Friday, citing people familiar with the company’s strategy.

China’s Ministry of Industry and Information Technology could not immediately be reached for comment.

IBM said on Wednesday it would offer its cloud-computing platform Bluemix in China through a collaboration with Chinese data-center services company 21Vianet Group Inc.

IBM shares were down marginally in afternoon trading.

Reporting by Devika Krishna Kumar in Bengaluru; Editing by Don Sebastian and Savio D'Souza

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