South China Sea tensions have just begun
With the US and Philippines holding the largest ever military drills in the South China Sea, followed by China and Singapore holding their own, tensions over control of the strategic waterway are heating up.
As one of the world’s most important shipping lanes for oil, minerals and food, whoever dominates the South China Sea will control over a fifth of global trade.
But the biggest economic asset up for grabs in the region is Big Data – and the future of the entire internet will depend on which countries dominate the South China Sea.
Over 486 undersea cables carry over 99% of all international internet traffic globally, according to the Washington-based research firm TeleGeography. The US has first-mover advantage: the bulk of them are controlled by a handful American technology giants, namely Google-owner Alphabet, Facebook-owner Meta, Amazon and Microsoft.
Transmitting everything from emails and banking transactions to military secrets, these data flows are more valuable than oil. With information at the centre of technological innovation, controlling data is the key to economic productivity.
As such, the world’s subsea cabling infrastructure is increasingly vulnerable not only to sabotage, but also to espionage – spy agencies can easily tap into cables on their own territory.
That’s why over the last decade, geopolitical rivalry between the US and China has increasingly focused on control of the world’s subsea cabling networks. Southeast Asia’s internet economy is forecast to reach USD$1 trillion in value by 2030.
Whoever controls the Asia-Pacific’s subsea cabling infrastructure will not only dominate this booming economy, but have de facto control over the global internet.
China is now planning a USD$500 million undersea internet cable network to create a superfast connection linking up Asia with the Middle East and Europe. It has also begun to impede US-backed projects to lay and maintain subsea internet cables through the South China Sea, by delaying licensing approvals and creating stricter operating restrictions.
On its part, the US government has thwarted several Chinese subsea cabling projects in the Asia-Pacific over concerns about Beijing’s surveillance capabilities. At least six private undersea cable deals led by Google, Meta and Amazon that would have connected the US with Hong Kong, were blocked by Washington to keep HMN Tech, a subsidiary of the sanctioned Chinese firm Huawei, at bay.
US fears that the Chinese cabling advance is a trojan horse for military and economic expansion are germane. HMN Tech has won praise from the Chinese government for being a model of “civil-military integration,” and a press release available only on the Chinese-language version of its website notes the company will “offer powerful support for the modernization of our country’s national defense” and “advance into the international market.”
To bypass Chinese control, American tech giants Facebook and Google are building Apricot, the first intra-Asian subsea cable avoiding Hong Kong. Slated for launch in 2024, Apricot is part of a new infrastructure of US-backed subsea cabling in the Asia-Pacific.
The 12,000km long submarine cable will connects Japan, Taiwan, Guam, the Philippines, Indonesia and Singapore – conspicuously missing from this list is Malaysia, an influential member of the 10-member Association of Southeast Asian Nations (ASEAN) which has fast become the lynchpin of US and Chinese competition to dominate the global internet.
Malaysia’s involvement in Apricot was scuppered due to a 2020 ‘cabotage’ ban on foreign vessels operating in the autonomous Sabah region of eastern Malaysia to protect local shipping industry from foreign competition.
In response, US tech giants Facebook, Google, Microsoft and Amazon wrote to the Malaysian government complaining that the ban would obstruct the new cable venture, and requesting an urgent meeting with the incumbent Prime Minister.
The meeting never happened, and the government refused to change course. As a result Malaysia has been excluded not only from the Apricot route, but also from the Echo and Bifrost cable routes across the South China Sea also backed by Facebook and Google.
Local frustration over Malaysia’s ‘cabotage’ ban has revived demands in Sabah for greater autonomy from the federal government. This dovetails with a major international legal case challenging Malaysia’s sovereignty over Sabah on behalf of nine heirs of a colonial-era Sultanate in the remote Sulu archipelago of the Philippines.
The Sultanate purportedly leased the region of Sabah to British colonists in 1878 in return for an annual payment which the petitioners have used to justify claiming a percentage of Malaysia’s oil and gas profits from production in Sabah.
The lawyers representing the Sulu heirs have deep ties with the same US tech giants embroiled in competition to dominate subsea internet cables in the South China Sea. Paul Cohen, who was previously a speechwriter on the Clinton/Gore Presidential Campaign, currently serves as President of the Silicon Valley Arbitration and Mediation Center based in Palo Alto, California, where he works in “dialogue” with these US tech firms.
Cohen’s colleague, Elisabeth Mason, has similar ties, having launched the Stanford Poverty and Technology Lab with financial support from both the Obama White House and Facebook founder Mark Zuckerberg through his and his wife’s Chan Zuckerberg Initiative. Mason is also a board member of US charity All Star Code alongside three senior Google executives.
This close proximity of the Sulu heirs’ lawyers to US tech giants raises the question of whether the lawsuit is serving wider interests linked to geopolitical rivalry unfolding in the Asia-Pacific over Big Data.
The case has been financed by Therium Capital Management, a London-based law firm which raises money for lawsuits from unidentified third party investors who usually take the lion’s share of any proceeds.
In any case, there can be little doubt that as long as Malaysia refuses to budge on exemptions for foreign vessels operating in Sabah, major American tech firms may well have an underlying interest in undermining federal control over Sabah.
Unfortunately, Malaysia’s exclusion from the US-backed subsea cabling projects has accelerated the country’s alliance with China. Malaysia has been involved in previous China-based subsea cabling projects in the Asia-Pacific, such as one announced in 2015 connecting Malaysia with Cambodia and Thailand.
By 2022, Malaysia was part of a newly announced Chinese project, the South East Asia Hainan Hong Kong Express Cable System (SEA-H2X), a 5,000 km internet cable system linking Hong Kong, China, the Philippines, and Thailand to eastern Malaysia (Sarawak) and Singapore. The system would be potentially expandable to West Malaysia as well as Indonesia, Vietnam and Cambodia.
A business-as-usual approach by America’s tech giants is likely to backfire – indirectly incentivising Malaysia to move closer into China’s orbit. And the Sulu heirs’ lawsuit will only exacerbate Malaysian perceptions of a Western system hostile to its national interests.
The future of the global internet is at stake. The battle to dominate digital infrastructure in the South China Sea could result in either two mutually-exclusive internet realms each dominated by the US and China, or a severely compromised worldwide web in which data flows breakdown amidst exorbitant costs.
These scenarios are not a foregone conclusion, but the US needs to act fast – and Malaysia’s position in the region makes it a deciding player in the outcome. If Malaysia falls under Chinese dominance, it will have major repercussions across ASEAN, potentially inspiring other regional powers to follow suit in a domino effect.
Yet with a new government in place under the premiership of longtime democracy activist Anwar Ibrahim, the US has a fresh opportunity for rapprochement. This would also be an opportune time for Meta, Google, Microsoft and Amazon to reach out to Malaysia’s new political establishment where it could encounter a more receptive response than in previous years.
Time is of the essence, though. Prime Minister Ibrahim’s first global trip was to China in March where he met with his counterpart President Xi Jinping. The meeting resulted in a modest but not insignificant USD$38 billion in Chinese investment pledges.
To avoid this outcome, the allies should act early – but that means a much more active role in the region to ensure that partners like Malaysia stay the course.
Dr Maurizio Geri is a former senior NATO analyst, an Italian Navy Lieutenant reservist and EU Marie Curie postdoctoral fellow on "NATO-EU cooperation on emerging and disruptive technologies in the Energy-Resources-Climate Security nexus".
