THE GHOST IN THE IOT — First came Huawei, then TikTok, and now — perhaps — Quectel and Fibocom. The two little-known Chinese companies dominate the global market for so-called IoT modules, the tiny bits of embedded hardware that enable “smart” devices to connect to the internet. And, beltway tech and security hawks are increasingly beginning to speak about the West's heavy dependence on them, much like they once did Beijing’s other notorious tech giants. The Commerce Department should “keep Chinese-made IoT cellular modules contained in some devices – ranging from body cameras to kitchen appliances — out of critical sectors in the U.S.,” Rep. Mike McCaul (R-Texas), the chair of the House Foreign Affairs Committee, said in a statement on X on Friday. — Join the club: McCaul’s comments make him the latest to sound the alarm on the national security risks of those two companies. FCC Chair Jessica Rosenworcel and the top lawmakers on the House China Committee have previously warned that Quectel and Fibocom could give Beijing a foothold to spy on the U.S. — or shut down IoT devices used in a myriad of critical industries. Quectel, Fibocom and smaller Chinese manufacturers control 64 percent of the global IoT module market as of late 2022, according to a paper by former British diplomat Charles Parton. — Prying eye: McCaul's post followed an article out Thursday from POLITICO’s Alfred Ng and (to a much lesser extent) your MC host. Alfred reported then about a new lawsuit that aims to ban Axon police body cameras from all presidential campaign events because they include Quectel's IoT modules. Axon happens to be the nation’s largest supplier of those cams. — Undermining the grid: The suit, filed by a competitor of Axon, mainly focuses on the risk of espionage. But the concerns harbored by China hawks extend much further. For the Thursday story, your MC host scooped that a multibillion-dollar home appliance manufacturer briefed staff on the House China Committee this summer about their own risky reliance on Chinese-made IoT modules. They relayed fears Beijing could trigger power outages in the U.S. by surging electricity to a fleet of their smart devices, according to two people familiar with the briefing. — Nothing to see here: Quectel’s head of communications, Phil Rawcliffe, told Alfred the company’s products do not present a risk to national security and that Quectel customers “own and control all data flowing through their devices.” Fibocom did not reply to a request for comment on this story. — Trust problems: As with Huawei and TikTok, the concerns about Fibocom and Quectel are really about trust. By design, IoT modules can transmit and receive data over the internet, including from their manufacturers. In theory, that means Beijing could try to cripple or subvert its devices in U.S. networks if relations with the West ever went very south. “I suspect there's a heavy IoT nexus” in the Biden administration’s warnings about Chinese efforts to burrow into and hold at risk U.S. critical infrastructure, said Matt Pottinger, the former deputy national security adviser to Donald Trump. In addition to hacking, Pottinger said, Beijing also has “hardware and firmware embedded in U.S. infrastructure that they can exploit.” — What’s next: The Commerce Department didn’t reply to a request for comment about barring Chinese IoT module manufacturers in the U.S., as urged by McCaul. But keep an eye on the agency’s forthcoming rule on Chinese electric vehicles. It could touch on IoT issues — or signal the agency’s willingness to take on big new tech firms from China.
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