Section I - History and Culture
In the early 1990’s, the United States was in a state of incredible antagonism between the technology community and the government. The passing of the Computer Fraud and Abuse Act in 1986 led to a wave of aggressive prosecutions. The end of the Cold War led to demands to remove export controls, resulting in the so called "Crypto Wars". Advances in processors and mathematics even led to the NSA advocating for the placement of "Clipper Chips" in telecommunication devices in 1993, as a kind of managed backdoor. The raft of laws passed after 9/11 did nothing to ease the tension, and the NSA’s suggestions to NIST, and commentary on certain algorithms is still looked back upon with incredible skepticism by most.
This fear of government surveillance, of overarching and arbitrary power by another, has extensive roots in US history. It is drawn from actual and traumatic experiences in European history, ranging from the Inquisition, to the French Revolution and the Secret Police forces of the early 20th century.
We do not see this skepticism currently applied to China. It should be, and if anything, it is something we owe to the Chinese people. To empower the wrong players in their country by enriching them with the market share of ours... is not a good final result. It will ultimately harm both states, and thus calls for a deeper and more skeptical analysis.
A Different Culture
The treatment of China, I think is often very insulting and ethnocentric. They have a different culture - full stop. Things there cannot be interpreted as things here, and it is up to people in the US, especially those in technology reporting, to know and read about these differences. Studying isn’t viewed the same way there as here. A university is not a university in China. A family in China is not how a family is structured in the US. And so on.
Universities - These are like Athenian city states. Studying and schooling is treated with reverence in China and their reputation as students abroad proceeds them. Because so much effort is put into schooling, it followed the other resources would accrue around such institutions. Whole towns, companies and subsidiaries, even weapons research labs gravitate to the schools whose names, within China, are as famous as the biggest US companies.
Companies - China does not have the extensive corporate history of the US, England, or say the Netherlands. A corporation in China might be viewed like a website in the US. It is not something an identity is attached to. Rarely, almost never, do you see a story about “the founder” on a company’s about page. If a single company needs to transform into 70 companies to get around export compliance restrictions, that is a trivial thing to do in China. In the US, it might be viewed as an Enron-style fraud. Corporations are one thing and should stay that way - in US culture that is.
Lying - Americans lie all the time, but just call it negotiation. We use words like "bluffing", and concepts like “ranges” when discussing what we want to negotiate over, but in a strict computational sense, it is lying. That being said, in America, the concept of “caveat emptor” is widely known, and the issues that usually come about by lying are mitigated by all parties knowing the game. Americans do not know the game when it comes to dealing with Chinese businesspeople. This was lambasted in the movie Gung Ho, then about the Japanese, with Michael Keaton in 1986. It is pretty much the same overall concepts with the Chinese today. What is considered a bold lie in China is not considered (and I do not personally consider) a lie there, but it becomes destructive for both parties when Americans take it seriously.
Section II - Some First Findings
Several nights ago I talked to Eric S Yuan, the CEO and founder of Zoom. I found him extremely charismatic, a very good storyteller, and more than brilliant enough for his role. I learned more about technology and business simply from talking with him for an hour, and I owe him for that without doubt. I will also say, I can see why he left Cisco to found Zoom. Technology transfer aside, I think he was superior to most of Cisco’s leadership at the time.
That being said, the following paragraphs should raise some concern in the minds of US readers. If Zoom were used by the NSA, by all of the military academies, and was also being pushed by the company Mylan, (responsible for extraordinarily expensive Epipen dispensers) plus a corporate Who’s Who roster of American society... the pushback would be extraordinary.
Tsinghua University - Center of Cyber Espionage
If there is a single name that is associated with cybersecurity, hacking, and espionage in China, it is “Tsinghua University”. This university, actually a gift from the Rockefellers in the early 20th century, began to rise to international prominence in the late 1980s. It conducts some of the most cutting edge work for the People’s Liberation Army, Navy, and various key government networking companies.
Because of all this, it was somewhat astonishing to see Zoom’s CEO, in a blog post 4 weeks ago, disclose Tsinghua University as a major customer.
As universities in China are like their own cities, (in some respects, nearly their own government departments and patronage networks) this is a significant disclosure. If the NSA had a military academy attached to it, and that academy used Zoom, no one in the US would hear the end of it (and rightfully so) until some sort of partition was enacted.
The other three universities mentioned, University of Science and Technology of China, Nanjing University, and Shenzhen University, all have significant ties to the Chinese military as well.
Lastly, Eric Yuan, the CEO of Zoom (and a person I have enormous respect for) was interviewed in May 2019 by the Tsinghua Management Review.
The Seven Sons of National Defense
The ‘Seven Sons of National Defense’ (国防七子) are the leading Chinese universities with deep roots in the military and defense space. All of them are subordinate to the Ministry of Industry and Information Technology (工业和信息化部). They are often referred to as ‘defense science, technology and industry work units’, which makes their declaration as ‘Universities’ somewhat tenuous.
An analogy to think about these organizations is if not only were they military academies like in the US, but also they all rolled up ultimately to a Defense Department / Northrop Grummann / Intelligence Community strange hybrid.
- All of the schools have a Zoom account or feature Zoom prominently on their website.
- This is significant, and runs extremely counter to the narrative of Zoom not being a company with significant Chinese government support.
Below is a limited sample of mentions or login portals of Zoom at these schools. Additional screenshots can be made available on request:
Northwest Polytechnical University [Nuclear Weapons]
Harbin Institute of Technology [EM Communications and Jamming]
Nanjin University of Aeronautics and Armanents [Long Range Bombers]
Beihang University [Biomedical Weaponry and Armaments]
Beijing Institute of Technology [Missile Propulsion Systems]
Additionally, we find that Tianjin University uses Zoom. Though not a “Seven Sons”, this is still significant. In 2018, one of their professors was awarded a prize by the Ministry of State Security. . This would be the near equivalent of the CIA awarding an American professor some honor. In the below screenshot, we can see mentions of Zoom alongside Tencent when discussing coping with the recent epidemic outbreak:
Many Military Officers Employed
It can be argued that all universities in China are extensions of the government. The majority of government in China, it also can be argued, is comprised of internal security forces, military, external intelligence agencies, and R&D that contribute to the previous three. Universities increase the ability of the PRC to assert its right to rule, maintain a monopoly on violence, and control its citizens to a degree not seen elsewhere in the world.
Zoom obviously hires the 80% of its engineering talent in China... from within China. They also seem to put forth great effort to be comprised of graduates from some of the most elite military, communications, and intelligence schools in China.
A couple of things should be noted. First, other tech companies in the United States, if they are important enough, will also have graduates from these schools. The extent of their make-up in the Zoom work force, combined with everything else we have covered, is what makes it concerning here. Second, many of them are based in China and extremely susceptible to the influence of the Chinese military and intelligence community.
And below we have a list of employees of Zoom from these schools, which was quickly composed with minimal effort on LinkedIn in 15 minutes. Specifically we should note spelling in Chinese, when converted to Western characters, is subtle, and can change without being obvious to an English speaker. Additionally, LinkedIn is not the end-all be-all of information. So mistakes can and will be made and this should be seen as a general highlight of the workforce and not a biography of Zoom workers. As the CEO of Zoom pointed out, there is a world of difference between Shandong University and Shandong University of Science and Technology.
Connection to Human Organ Harvesting
Above is another screenshot from the CEO of Zoom’s February 26th blog post. It is tragic, deeply saddening, and these sentences hide enormous cruelty by the Chinese government.
For some years now, it has been extensively documented that China has illegally procured transplant organs. What started in the early 2000’s with simply gathering the organs of executed prisons for transplant / sale, then slowly morphed into an extremely lucrative industry generating hundreds of billions.
As the hunt for bodies and inner chest pieces grew, the need for an actual “guilty” prisoner slowly vanished. This was replaced by Falun Gong converts, Uyghurs, and may include key members of the Hong Kong independence movement or other political dissidents.
Any use of Zoom to provide treatment at Chinese hospitals is likely very bad for human rights in general and should concern all. Additionally many of these hospitals are directly run by the PLA, and surgeons will walk the corridors in their officer attire.
Attempts to Sell Into US Government
I will simply say that if we view things the government does with skepticism, then we should also view those who sell it with skepticism; doubly so if they go through with the sale.
A Final Plea For Skepticism
Zoom has said for years that the driver of its profit is having engineers offshored in China that do work at lower costs. This sounds extraordinarily reasonable. Yet the entire experience of the industry runs counter to this claim. San Francisco is a very expensive space that is hard to find living quarters in, hard to survive the cost of living in, and hard to drive in. Nonetheless for 25 years+ companies, despite having the rest of the United States to do business in, have mostly demanded that engineers move West.
Why should Zoom be different? They are a great company, but they aren’t a special company. This claim about somehow “magically” discovering that laborers in other regions work for less is part of their success should be greeted with enormous skepticism. Someone else would have discovered this years ago. Cisco has had offices in China for decades. Amazon and Google, with similar competing services to Zoom, also have offices. Zoom was not the first to discover labor arbitrage and there is much more than a “cost reduction” issue behind having 80% of their engineers in China.
We are not hinting at some deeper darker conspiracy here. But clearly the story of Zoom does not add up when summed from left to right. Because of this, it is normal and prudent to proceed cautiously, particularly in light of all else shown in this document.
Section III - Summing Some of This Up
Zoom is an attempt to capture as much American market share for the Chinese government as possible, to establish dominance over technology important to communications.
The power of this platform cannot be in the hands of a foreign totalitarian state. It does not have any systems or institutions that could resist the mass aggrandizement of power. At least, not anymore. These do exist in other countries, where some have resisted, with good success, attempts to do this in the years following 9/11. So again, this should also not be left unchecked in the hands of the US government.
Zoom is an attractive product, a good marketing effort, and certainly better than Webex was in every way when it first launched. It can remain a competitive force, but it should quickly transfer the majority of development work to the US. The Chinese market should be left to another local competitor. Ultimately, both countries will exchange roughly the same number of jobs. This is reasonable, doable, and best path forward for eliminating future suspicion and hostilities between the United States and China.
In the next post we will look at the Zoom network backbone.