Amazon’s Deal With China Is A National Security DISASTER

Denison E. Smith | Investment banker and former assistant attorney general for the state of Idaho

The Defense Department is working on a massive 10-year contract worth tens of billions for Amazon to handle all the cloud computing for the Department. One problem is that this contract may put American national security data immediately at risk, because of a different deal that Amazon made with the Chinese government.

Business Insider reported on April 4, 2018 that “the Pentagon is close to awarding a cloud-services contract worth as much as $10 billion to Amazon.” An Amazon partner company had already locked down the contract to start migrating Defense Department data to the cloud, and Amazon Web Services locked down a massive contract from the CIA under the Obama Administration.

While President Trump has been hostile to Amazon because of liberal activist Jeff Bezos’ ownership of the Washington Post, others in the Trump Administration have a cozy relationship with Bezos, and he has a history of gaming the contracting system to get his way. Secretary of Defense James Mattis talks to Amazon CEO Jeff Bezos frequently, according to an April 22, 2018 edition of the Washingtonian which provides the appearance of a cozy relationship between a possible contractor and decision maker.

The Washingtonian story documents Bezos mingling with “Defense Secretary James Mattis, who, the Pentagon has acknowledged, receives individual advice from Bezos from time to time.”

Mattis made a trip to hang out with Bezos in Seattle last year, because Bezos has his own “rocket company, Blue Origin—which plans to pursue national-security launch contracts.” The evidence is strong that the fix is in for Amazon to get this contract.

The wild card in this almost done deal is China. National security would be harmed by putting all Defense Department data on the Amazon cloud computing platform because of a deal Amazon made with the Chinese government.

According to a Wall Street Journal report last November, Amazon sold technology that the company would use for the Pentagon cloud computing to the Chinese government. Giving cloud technology to the Chinese that is expected to be used by the American Defense Department seems to put the data held on the Amazon Web Services cloud right in the crosshairs of a strategic competitor.

China is a protectionist nation accused by the Trump administration of stealing intellectual property from American companies.  The cost of doing business in China many times is for companies to hand over intellectual property to the Chinese government.

Even though Amazon claims it has not handed over all the intellectual property to the cloud, the Chinese goal is to take foreign technology and put it under control of a Chinese company. Americans would consider this intellectual property theft, while the Chinese government considers this the price of doing business in China. Amazon would make it easier for Chinese hackers to get American defense data if Amazon ends up administering the data in its cloud.

China is one of the few communist countries still run under authoritarianism, with government control of companies. The Wall Street Journal reported last November, “Amazon.com Inc. said it has sold computing equipment used for its cloud services in China to its local partner, Beijing Sinnet Technology Co., in a move analysts said underscores the increasingly chilly atmosphere for foreign companies in the country.” In other words, they gave it right to a company controlled by the Chinese government.

Amazon Web Services was quoted in the story saying that “Chinese law forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services. As a result, in order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet, its longtime Chinese partner.” This deal with the U.S. Defense Department is dangerous, because of the deal Amazon made with Sinnet.

The Department of Defense wants to make the case that it is safer for cybersecurity to put all the data on one cloud at the Pentagon. Now that Amazon technology is in the hands of a strategic enemy, it makes hacking the system to get this sensitive defense data far easier. It is a false distraction to say that Amazon’s cloud is limited and protected.

When you add up the friendly relationship between Bezos and Mattis, the history of computing contracts being given to Amazon and Amazon partners, and the Amazon deal with the Chinese government, this seems like a recipe for a national security disaster.

Denison Smith is a former assistant attorney general for the state of Idaho, staffer for Sen. James McClure (R-Idaho) and trustee of the Reason Foundation. He has over three decades of experience in investment banking specializing in high tech. He is also chairman of Longevity Health Foundation, a new start-up devoted to lowering health care costs.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.

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