CloudMinds have been banned by the United States government from sharing US technology with its China business. Documents showed that the US government has been increasing restrictions for tech firms that have alarmed investors over the future growth of their ventures.
Softbank-backed tech startup CloudMinds released a report that investors have grown wary over the proposed US initial public offering (IPO) after the US government imposed a ban on the company to stop sharing US technology with its China business.
The US Commerce Department confirmed last July through a notice that CloudMinds would be restricted from transferring or sharing US technology, technical information, or similar attributes including software bugs. The restriction covered transactions it had with its Beijing office especially those that have not garnered licenses.
According to a company training video and international communications mandate, CloudMinds was imposed to halt the transfer of information immediately. The said restriction has generated 'headaches' for the brand's tech firms including their investors.
The report claimed that licenses have not been issued and that the matter or issue between CloudMinds and the US government is not to open for public review.
According to export control and sanction expert Douglas Jacobson, CloudMinds is also restricted from exporting office furniture or iPhone mobile handsets to its office in China. The said constraint would continue unless transactions of CloudMinds from the US to China would be granted licenses for such purpose.
The report then claimed that the highlighted security risks by the US government and its Commerce Department were indications that tensions between the US and China over tech investors are agitated.
It was discussed that CloudMinds investors, Japan's SoftBank Group Corp including its 100 billion USD Vision Fund have been incurring losses in the last two quarters. It was also revealed that these funds have also experienced falling valuations on their portfolio.
The report further explained that several China-linked investments of SoftBank including Bytedance who is the operator of social media app TikTok has also received scrutiny. It was revealed that the company was reprimanded on its personal data handling measures.
Apart from TikTok, companies such as SenseTime also received the same scrutiny and was added by the US government to its trade blacklist last October 2019.
The letter sent to CloudMinds by the US government was also reported to be an attempt by the latter to defeat aggressive efforts of China-linked companies in obtaining US technology by all means.
