back to article Latest China scare torpedos 3Com takeover

3Com's proposed takeover by a US private equity firm and a Chinese rival lay in tatters today, with the three companies admitting defeat in their attempts to mollify US government national security concerns. 3Com stock plunged 20 per cent today on news that the company, along with wannabe owners Bain Capital and networking …

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  1. Chris
    Flame

    Numbnuts

    The fact that these numbnuts are scared that a Chinese company would acquire a US provider of intrusion detection is a good indication that governmental data security is a fantasy.

    If you don't like who owns a company, replace your devices with another vendor. If this is not relatively easy, it's a red flag that your infrastucture is poorly designed.

    I don't see them complaining about silicon components that are manufactured in China. Who's to say that they don't have secret built in Commie spy mechanisms? Who's to say that Al-Qaeida militants have not infiltrated one of Intel's overseas chip plants?

    Where is McCarthy when you need him?

  2. Robert Hill
    Thumb Up

    About time...

    Kudos to some American government body for actually doing THEIR JOB and ensuring that corporate greed and VC cash don't eclipse sound policy. Somehow, somewhere, they actually figured out that selling the keys to the basic internet infrastructure to a government that is repressive and on a collision course with ours for world resources in a decade or so was a BAD IDEA.

    Give the guys on that team a few cookies...

  3. Anonymous Coward
    Paris Hilton

    @Robert Hill

    Woah. Let's see:

    1) "Sound policy" is letting 3Com wither and die? (maybe nationalise then)?

    2) Making a sale is about "corporate greed and VC cash"?

    3) 3Com has "the keys to basic internet infrastructure"?

    4) The Cinese government will have those Keys after the sale? (It's Sauron's three rings whot are in the logo!)

    5) The Chinese governement is repressive whereas the US government somehow is not?

    6) The US has some kind of right to the world's resources? (What about buying what you need at market prices? Ah, no money left. I see.)

    7) In order to secure its right for the world resources, the US needs those Keys which are held by 3Com?

    The mind boggles.

    Paris because she would, like, understand the logic behind this. Fer sure.

  4. Symrstar
    Paris Hilton

    As much as I hate to admit

    I have to applaud my government for this move.

    Its not that I prefer the homegrown oppression over Chinese psuedo-social-comu-capitalism either.

    And even if I agree with Chris on the idea of national information security being a joke.

    The blokes at 3Com own subsididaries that supply the US military with communications solutions. Large fat government contracts. Contracts that are a pain in the a$$ to change for both sides.

    Some of these 3Com systems are installed in areas that are fairly sensitive. The book and schematic knowledge isn't enough to know how the non-3Com systems in these places operate effectively.

    Just because you mag on Paris doesn't mean you know how to handle her. Same thing applies to complex sensors and weapons control rigs.

  5. Chris C

    re: About time

    Are you actually saying that 3Com provides the "basic internet infrastructure"? By any chance, have you ever heard of a little company called Cisco?

  6. Chris C

    re: About time (2)

    Regarding the "sound policy" comment, don't give the government too much credit. That is, unless you consider economic collapse a sound policy. The government has no problem letting uber-wealthy foreign nationals invest HEAVILY in US companies (think China, Saudi Arabia, etc buying up / investing in energy companies, banks, and credit card companies). If those foreign nationals were to withdraw their investments, the US economy would collapse overnight.

    Let's also not forget that the government has stood by while the typical US citizen has become a metaphor for the country itself -- lazy, overweight, and with little value. We have virtually no industry anymore (aside from agricultural, which is heavily subsized from what I heard), we have few decent jobs, we're earning less value-wise now than our parents did 40 years ago, and we depend on importing for virtually everything (including a lot of the food [such as fruit and vegetables] sold in our supermarkets). Take a look at almost any product and you'll see a small, gold, oval-shaped sticker on the bottom that says "Made in China".

    And as the other Chris wrote in the first comment, why is nobody worried about all the other electronics, such as the various components that make up the computer systems? Like Miss Scarlet said in Clue, "No, Mr. Green, Communism is just a red herring".

  7. Robert Hill

    @Anon Coward

    Yes, the sale of 3COM is just an excersise in corporate greed and VC cash. If it wasn't profitable, then the deal would not be so highly valued, and BAIN would certainly not be involved. Bain only gets involved when they see outsized returns on their investment - so there certainly is money being made, and to be made in, 3COM. So, no, 3COM is not about to wither and die...the execs and board just want to take their pile and move on to their private compounds and gated communities. And they know the economy is headed downwards towards recession, and now would be the best time to do it for the next few years possibly.

    And yes, should a Chinese national company get control of 3COM, it would be outrageously easy for them to install keyloggers, secret backdoors, and all kinds of nasties on a whole generation of equippment that would then be used by US military and commecial interests. That's hard to DO in something like a PC, where the basics of the CPU, Northbridge, Southbridge, etc are all made from existing silicon, but a lot easier to hide in embedded systems that happen to act as data gateways. They would even know which shippment is being sent to what customer...so they could easily target selectively. Already Chinese agents have attacked US government and commercial interests with serious data attacks (the Chinese LOVE espionage, especially commercial variety) - so giving them the final QC check on industrial and military routers and comms gear just doesn't seem smart, does it?

    Well, maybe it does to you. I would say such things are part of strategic technologies, and should be carefully controlled.

  8. Anonymous Coward
    Anonymous Coward

    It IS BS - for two reasons

    One: What information exchange has already taken place in the Due Diligence phase of such a takeover? Don't expect anyone just to bid because the company has a cute logo or something or just market evaluation - those days are over and the Chinese are far from stupid.

    Two: from a strategic point of view, what 3Com is doing (actually virtually every supplier of network security kit) is actually behind the time. I've done some strategy evaluation and especially when you start talking about large scale networking you're barking up the wrong tree with network level protection - that's yesterday's solution.

    The true reason is simply that the US has made itself ripe for complete hostile takeover by astoundingly bad policy work - ripping the country into a huge deficit is akin to zapping a company's value so that it can be taken over, only on a much larger scale. The only way a hostile takeover can be prevented of the US industry is indeed now the "national security" card, but that won't hold up that much longer unless the US will also want to renege on international trade agreements and that will only dig the hole deeper..

    It's interesting that Bush + cronies have actually created the problem he was allegedly trying to prevent. I hope the US will choose a president who is willing to make the US again a proper, law abiding trading party instead of a global bully who will use bombs to get his/her way. There is still huge potential in the country, and Bush has caused immense damage to it. It needs a firm hand to undo that. Like Britain.

  9. Anonymous Coward
    Anonymous Coward

    And the next story is.....

    Isn't the the Chinese government the bigest source of internet base intrusion attempts.

    And a couple of questions:

    Which network appliance provider became persona non-grata when it was discovered that their common criteria evaluated devices had suddenly aquired some components they didn't know about.

    Which telco lost its ability to carry goverment data when it switched from using nationally produced kit to cheap chinese gear.

    Ultimately, if you want secure network infrastructure and security products, you have to go to vendors you can trust, and domestic suppliers are much more likely to be secure than products from competitor nations. The US has China, and Russia to worry about, so you really wouldn't want those countries supplying critical national infrastructure. in fact there are a couple of its allies it wouldn't want either.

  10. Matt

    Who to trust

    I'd rather trust the Chinese with 3COM than the US, who are far more likely to coerce companies into putting spy software/hardware in their products. In fact they'll not only do it against their "enemies" but also their allies and own citizens.

    I'd also like to point out that there's been no real evidence that the Chinese have made any attacks against any networks.

    The only attacks I've had have been from Turkey and the US.

  11. The Other Steve
    Coat

    Hypocrisy, paranoia, cluelessness, and yet...

    Hmm, OK, It's OK for the US to supply IT kit to China. Like say Cisco, selling all them the it they use to run the Great Firewall, a clear cut case of the US aiding oppression, or all those copies of MS Windows and so on and so so forth, but it's not OK for the Chinese to take a commercial interest in one US networking company ?

    I detect the sweetly sick scent of US trade hypocrisy here.

    Paranoia, well, the US isn't actually at war with China, nor is it likely to be. They have to much in common, both are oppressive regimes who like to torture people and spy on their own citizens, both have pseudo capitalist economic frameworks that favour a small ruling elite while forcing the masses into effective slavery, etc, etc. If it wasn't for the Yank's irrational fear of the god damned Godless Commies, they'd be best buds, for sure.

    Lets break the cluelessness down then, Firstly, if you're relying on a single vendor IDS solution (or just IDS appliances of any sort) for the security of your infrastructure, if you think that security comes in a magic box that you can just plug in and forget about, then you're already fucked. If your network is set up such that compromising such boxes is enough to FUBAR all your security measures, ditto. If you have failed to understand the concept of defence in depth to such an extent then the Chinese are the least of your worries, your "national security infrastructure" is already home to vast numbers of sKript Kiddies and bot-herders. Oh wait...

    In addition to that, for a systematic compromise of kit at the silicone or software level, the controlling interest would have to have not just financial but operational control of 3Com such that they could corrupt the entire manufacturing process. Perhaps I'm naively optimistic, but I rather suspect that 3Com's employees would notice a bunch of ChiComs running about their production environment and fiddling with things. Add to that what ought to be a fairly rigorous QA process (just for the fact that they manufacture security critical kit, never mind the government contracts) and it seems a bit unlikely that such a large scale compromise could be accomplished without anyone noticing.

    Still, I can see how selling a US company to a venture firm run by a former Red Army officer would make the average dumb yank apoplectic with rage, since they still seem to think of "communism" as some kind of awful communicable disease.

    Anyway, the whole idea is dodgy isn't it, I mean it's not like there are any former US forces types working for VCs is it ? What ? There are ? Lots of them ? Oh well, that's that argument down the pisser then eh ?

    In all fairness though, if I were the US military industrial complex, I'm fairly sure I'd react the same way, since 'difficult' is not the same as 'impossible', and the easiest (and cheapest) way to mitigate the risk is simply not to let the deal go ahead, so fair play to them really.

  12. This post has been deleted by its author

  13. JEAN
    Happy

    US vetos China deal

    I am writing from NYC. The United States is rightly concerned about China's gaining access to security information. It is already known that thousands of Chinese hackers are attempting every day to get military information from our government computers. When the Chinese government shot down one of their own satellites in January, 2007, they gave no warning to the world. Now they want the US government to provide details of our missile. No way, Jose.

    My parents are from the UK, so hello to all of our friends there.

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