U.S. judge suspends Xiaomi investment ban or trigger a chain effect

A Xiaomi phone displayed during a press conference in Hong Kong on June 23, 2018.

Last Friday (March 12), Judge Rudolph Contreras of the U.S. District Court for the District of Columbia issued a preliminary injunction temporarily halting the enforcement of an investment ban against Xiaomi Group. Xiaomi’s preliminary legal victory may trigger a ripple effect.

According to Reuters on Wednesday (17), Xiaomi is “very pleased” with the U.S. court’s decision and said it will continue to ask for a full reversal of the investment ban.

However, the U.S. government said in a joint filing released on Tuesday that it had not yet chosen “the future path of application” in the Xiaomi case. A spokeswoman for the U.S. Department of Justice is defending the case, but declined to comment.

In January, the U.S. Department of Defense designated Xiaomi as a “Chinese Communist Military Corporation” (CCMC), prohibiting U.S. investment in such companies under former President Trump‘s Executive Order 13959. Xiaomi has been added to the blacklist, along with 43 other CCP companies.

After being blacklisted, Xiaomi’s market value shrank by $10 billion and its stock price fell 9.5 percent in January.

Contreras challenged the Trump Administration‘s argument in the ruling, saying the court somehow suspected that Xiaomi was actually implicated in important national security interests.

Forbes, a U.S. business magazine, reported last April 30 that Xiaomi sent all of its users’ private data to servers hosted by Chinese Communist tech giant Alibaba. Even if users browse in incognito mode, search data will still be collected by the Chinese Communist tech giant.

Gabi Cirlig, a cybersecurity researcher, noted that “this is a backdoor to the phone feature.” He warned that he found his behavior tracked, data from multiple devices collected and his identity and private Life exposed to the Chinese company.

When he browsed the Web on the device’s default Xiaomi browser, it recorded all the sites he visited, and the tracking appeared to be happening even though he was using what he called a private “incognito” mode, Sirig said.

Sirrig warned that the private data sent to its servers could easily be used by specific users.

Judge Contreras’ preliminary order appears to have greatly encouraged Xiaomi and other banned companies, and Basket Technologies, one of the world’s leading spatio-temporal big data technology companies and a leading provider of related services in China, has sued U.S. authorities this month, hoping to get a preliminary lifting of the ban, as Xiaomi did.

The blacklist also includes major companies such as Chinese video surveillance equipment company Hikvision, China National Offshore Oil Corporation (CNOOC, or CNOOC) and Semiconductor Manufacturing International. They did not immediately respond to Reuters’ request for comment.