Google and Facebook have dropped their plans to build an undersea cable connecting the US and Hong Kong, two months after the Department of Justice warned that it could be used by the Chinese government to steal Americans’ sensitive personal data, Bloomberg reported. However, the two companies have reportedly filed a revised proposal that includes links to Taiwan and the Philippines, exactly as the DOJ had recommended in June.

Pacific Light Cable Network (PLCN), a Hong Kong-based company which is a subsidiary of the fourth largest telecommunications company in China — Dr Peng Telecom and Media Group Co. Ltd —, is at the heart of the issue. The DOJ had in June advised the Federal Communications Commission (FCC) to deny PLCN’s subsea cable system application that sought to directly link the US and Hong Kong, citing national security concerns and the Dr Peng Group’s relationship with Chinese intelligence and security services under Chinese intelligence and cybersecurity laws. It feared that if the cable goes via Hong Kong, a significant amount of American internet, data and telecommunications traffic would traverse through Chinese territory before it reached its ultimate destination in other parts of Asia.

The DOJ had, however, said that the FCC could approve PLCN’s application that sought to connect the US, Taiwan and the Philippines, which do not have any China-based ownership and are separately owned and controlled subsidiaries of Google and Facebook.

In April 2020, the DOJ had approved Google’s application, through its subsidiary GU Holdings Inc., to the FCC to operate a portion of the PLCN system that connected the US and Taiwan for six months. On April 4, US President Donald Trump had signed an executive order through which the FCC had to refer licence applications, that could have an impact on USA’s national security, to a DOJ-led special committee, called Team Telecom, for recommendations. Under American law, a company needs to get a licence from the FCC to connect the US to a foreign country with an undersea cable.