Foreign Spies and Silicon Valley

There was a fascinating story in Politico this month that detailed the real severe threat to Silicon Valley from spies especially from Russia and China seeking to steal intellectual property. The Politico Piece is a long story that was well researched, and I encourage you to read it when you have time. Here are two excerpts from the piece that lays out what these spies do and the challenges Silicon Valley Faces in identifying and curbing this type of activity:

“We tend to think of espionage in the United States as an East Coast phenomenon: shadowy foreign spies working out of embassies in Washington, or at missions to the United Nations in New York; dead drops in local Virginia woodlands, and private meetings on park benches in Manhattan’s gray dusk. But foreign spies have been showing up uninvited to San Francisco and Silicon Valley for a very long time. According to former U.S. intelligence officials, that’s true today more than ever. In fact, they warn— primarily because of increasing Russian and Chinese aggressiveness, and the local concentration of world-leading science and technology firms—there’s a full-on epidemic of espionage on the West Coast right now. And even more worrisome, many of its targets are unprepared to deal with the growing threat.”

“At the Aspen Security Forum last week, FBI director Chris Wray acknowledged the threat Chinese spying in particular poses, saying, “China from a counterintelligence perspective represents the broadest, most pervasive, most threatening challenge we face as a country.”

Making it even more complicated, said multiple former U.S. intel officials, many foreign intel “collectors” in the Bay Area are not spies in the traditional sense of the term. They aren’t based out of embassies or consulates and may be associated with a state-owned business or research institute rather than an intelligence agency. Chinese officials, in particular, often cajole or outright threaten Chinese nationals (or U.S. citizens with family members in China) working or studying locally to provide them with valuable technological information.”

I have had to deal with Russian spies on numerous occasions going back to 1973. That year I was with a group of young people who planned to go to Russia to protest their lack of religious freedom. The youth involved came from 13 countries to participate, and we started out in London and drove to Russia via Helsinki. We did not do a lot of screening of the people who were part of this group, and unbeknownst to us, Russian leaders somehow had gotten wind of this and planted a spy in our group. His goal was to find out what we were up to and at some point, turn us into the Russian authorities before we could reach Moscow to hold our rally.

We had gone in under the guise of a tourist group, and the night before we were to go into Moscow, we stayed in Kalanin, Russia, about 70 miles from Moscow. But overnight, this young man, who was British, stole one of our vehicles and went to the authorities and the next morning when we went to our cars to start our drive to Moscow we saw one missing. A few minutes later it showed up, with this British chap and about 50 KGB officers who arrested us and put us under house arrest as they escorted us out of the country.

The second time I dealt with Russian Spies was in 1984 when Intel was about to release their 80386 processor. At that time, Creative Strategies was owned by a global econometric company who did a great deal of work for the US Govt. We were their tech arm, and I got a call from a Sr official from DOD asking me to set up a meeting with them and Intel. While the US Govt had dealt with Intel for years at various levels, DOD wanted a stealthier way to warn them of two key things? First was the fact Russian agents were anxious to get their hands on this new chip, and second was to tell them that they could not sell this chip for use in a computer outside the US.

Then during the Comdex days, while I was on their advisory board, on two occasions, I watched some very suspicious activity on the show floor and brought that to the attention of the Comdex Officials and local authorities. It turned out that in both cases the individuals who were somewhat suspicious in their actions were Russian agents who came to the show to try and steal IP from three specific major semiconductor companies and one PC company. That happened pretty much every year that Comdex ran.

In those days, these agents used what I would call old school techniques to try and steal intellectual property. But as the Politico article points out, these days their methods are more fine-tuned and in a lot of cases use ordinary citizens who work with these tech companies to do their spying for them.

The article also points out that in a lot of cases the companies with proprietary IP are not prepared to deal with this challenge.

These days, with Silicon Valley being at the center of our tech revolution and some of the most critical advances in AI, Data Security, biometric engineering, medical advances and AR and VR, etc., the Valley is attracting more Russian and Chinese spies than ever before. It behooves all of the tech companies here and around the US to be more on guard and aware that these agents of foreign governments are working hard to get our proprietary IP. In many cases, they will use any method available to reach their goals. As the Politico article points out, this has been going on for decades but has accelerated in the last five years. While I don’t think every company should be paranoid all of the time, they must be diligent in the protection of their IP. If not, it could get into the hands of these foreign governments who do want to beat us in tech and use it to advance their tech programs that could have real ramifications for the US and its partners in the future