Silicon Valley companies are stepping up their security vetting of staff and potential recruits as U.S. officials express heightened concerns about the threat of Chinese espionage.
Tech giants like Google and high-profile startups like OpenAI have stepped up their screening of personnel, according to several people who work directly with the groups.
The move comes amid fears that foreign governments are trying to use compromised employees to gain access to intellectual property and corporate data.
Venture capital firms such as Sequoia Capital, which backs dozens of startups including Elon Musk’s xAI, have also encouraged some portfolio companies to tighten controls over their workforces after warnings that spy agencies are targeting U.S. technology developers, the people said.
Sequoia spun off its own Chinese operations last year after almost twenty years under geopolitical pressure.
Alex Karp, CEO of Palantir, the US defense industry’s $53 billion data analytics contractor, said Chinese spying on US technology companies was “a huge problem”, especially for makers of enterprise software, major language models and weapons systems.
“We have smart opponents,” Karp said. “Our enemies are ancient cultures fighting for their survival, not just now but for the next thousand years.”
The increased security efforts come as U.S. officials have increasingly warned companies about the threat of Chinese espionage over the past two years.
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 advanced technologies, including in artificial intelligence and advanced chips.
However, there are also concerns about a rise in xenophobia among U.S. tech companies, given the prevalence of skilled workers of Asian descent.
HR McMaster, a former US national security adviser who has advised technology companies and investment firms on foreign espionage risks since leaving the government, said the threat from Chinese intelligence services was “absolutely real and persistent”.
“The companies I speak to and work with are very aware of this at the moment and are doing everything they can to reduce this,” he said.
Google said it had “strict safeguards in place to prevent the theft of our confidential commercial information and trade secrets.” Sequoia declined to comment. OpenAI did not respond to requests for comment.
Chinese espionage cases go back decades but appear to have multiplied in recent years. In March, US prosecutors charged a former software engineer at Google with stealing AI trade secrets while secretly working with two China-based companies. According to the US, Tesla, Micron and Motorola have all been victims of “serious” intellectual property theft by China in the past five years.
Bill Priestap, former head of counterintelligence at the FBI and now leader of the consulting firm Trenchcoat Advisors, advises on “man-made risks” from foreign adversaries. He said he had seen “high numbers” of cases in which foreign intelligence groups exploited employees of U.S. 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 need to take into account,” he said. “Simply maintaining ties with certain countries means [an individual] can be vulnerable to exploitation even if they do not want to harm the company.”
A handful of private companies have emerged to provide companies with strategic intelligence on Chinese espionage threats. Launched in 2019 by twins Greg and Eric Levesque, Utah-based Strider Technologies offers a data tool to companies aimed at preventing nation-state targeting of their employees and infiltration of third-party vendors and suppliers.
Greg Levesque, CEO, said Strider has recently seen a surge in adoption of its tools by startups working on emerging technologies such as quantum computing, AI and synthetic biology “that are at the top of the shopping list of countries like China”.
Strider’s system uses AI to collect data about the methods foreign intelligence services use to target companies and their personnel. For example, it tracks hundreds of Chinese “talent schemes,” which allegedly recruit foreign scientists and professors and direct them to steal technologies to further China’s military and economic goals. Priestap and McMaster are advisors to Strider.
If an individual is flagged by the Strider system, companies can conduct additional screening, such as due diligence on an individual’s family or financial ties abroad, as well as on their travel history to countries where foreign intelligence services have conducted recruitment.
“We see this across the Fortune 500,” says Greg Levesque. “Everyone becomes goal-oriented. There is a geopolitical battle going on and the industry is the front line.”
The U.S. Justice Department in 2022 scrapped a controversial program called the “China Initiative,” which was started during the Trump administration after criticism from civil rights groups that it engaged in racial profiling. It also came under scrutiny after several cases against academics, particularly scientists, with a Chinese background collapsed in court.
But the initiative also led to the conviction of chemistry professor Charles Lieber of Harvard University, among others. He was found to have secretly accepted money from China through a state-sponsored program designed to help the country access scientific knowledge and expertise in the US and elsewhere.
In November, FBI Director Christopher Wray held a public event in Silicon Valley with his colleagues from the Five Eyes intelligence network, which includes Australia, Canada, New Zealand, the UK and the US. He urged tech companies to “face an unprecedented threat” from China.
Silicon Valley groups bidding for contracts with the US Department of Defense have been encouraged to expand the scope and scale of their due diligence against Chinese espionage threats. Commercial technology companies that work with U.S. defense agencies are required to submit to strict security measures.
McMaster, who is also a retired US Army lieutenant general, said: “The vast majority of research and development with national security implications used to be government programs, and now it’s happening in the private sector, so these companies became real potential lucrative. targets from a Chinese perspective.”
Additional reporting by Hannah Murphy in San Francisco