Facebook board member and Trump supporter Peter Thiel made explosive comments Sunday about Google at the National Conservatism Conference in Washington D.C., setting off a wave of skepticism and drawing attention from the president.

Among other things, Thiel said that the FBI and CIA should investigate Google and ask whether any foreign spies, particularly Chinese spies, have infiltrated its research into artificial intelligence.

It was a fiery political speech by a firebrand with an interest in deflecting regulators’ attention from Facebook. Facebook is under scrutiny for its privacy lapses and initiative to build a new cryptocurrency, and drawing it toward Google, which competes with Facebook for billions of dollars in advertising revenue.

Google has said repeatedly that it does not work with the Chinese military.

But the rhetoric about foreign spies infiltrating U.S. companies is not new or surprising to people in the intelligence community, and it based in reality.

Facebook’s former chief security officer Alex Stamos honed in those realities Tuesday, tweeting that it’s “completely reasonable” to imagine Chinese intelligence has worked to recruit technology employees at big companies.

It’s important to separate this very real threat from Thiel’s allegations about Google, which were presented without specifics or proof, and from his claims that Google has participated in “treasonous” activity.

Intelligence gathering in the enterprise

Many nations, even some that are not hostile toward the U.S., seek to place spies or recruit agents in top industrial companies, including technology companies.

China participates in this kind of activity, according to media reports and people in the intelligence community . China has the scale, will and resources to pull off larger-scale spy operations within U.S. companies than most countries, as numerous intelligence agencies have asserted at various times in the last several decades.

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Odds are that China has almost certainly attempted to recruit people working at Google, including high-ranking executives. It might have had some success. Google did not immediately respond to request for comment about its insider threat detection program.

The U.S. also takes part in this form of spying, including recruiting foreign businessmen and women working in the U.S. to work as spies when they return to their home countries. Presumably, the U.S. is also successful at this.

China has also created rules, norms and official regulations, including a sweeping cybersecurity law that went into effect in 2018, that compels companies doing business there — including large tech companies — to use locally-sourced database storage options and provide source code, among other tasks that seem tailor-made to grab intelligence or intellectual property. It is very difficult, if not impossible, for companies doing business there to escape this level of “government cooperation,” which falls under China’s legal framework.

Thiel suggested his statements were partly in reference to Google nixing its contract to work on a Pentagon artificial intelligence endeavor called “Project Maven” after employees objected, while simultaneously exploring plans for a new, censored version of its search engine for China. (Employees also loudly opposed this project, and Google has since drawn back.)

The contrast is notable. But Thiel’s quotes about Google’s alleged “treasonous” activities go too far. Falling victim to one of the world’s biggest spy programs, doing business in China by the country’s rules and eschewing certain government contracts for ideological reasons don’t come close to any responsible definition of “treason.”

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Kudlow: I think Google is working for America

Tweeting Tuesday about Thiel’s comments, Trump said his administration would consider the allegations saying of Thiel, “A great and brilliant guy who knows this subject better than anyone! The Trump Administration will take a look!”

Trump’s reaction is not surprising. Thiel has been one of his most ardent supporters, and Trump has been hammering away at Google and other tech giants for many other reasons, including his assertion the tech companies are tamping down conservative voices unfairly on social media or rigging search functions to disfavor him and other Republicans.

But Trump’s national economic advisor, Larry Kudlow, downplayed any future action stemming directly from the allegations on Tuesday.

“I’m not sure where [Thiel’s] going; what he’s pointing to. I meet with Google, I meet with Google’s CEO on a regular basis. I think they’re working for America, for our military, not for China. I guess it’s very fashionable to pick on these big tech companies. Maybe some deserve it, maybe some don’t. I’ve had long discussions with Google’s CEO, their new CEO, long discussions with Tim Cook of Apple. But my sense is they’re very supportive of this country, this president and his agenda. I think they’re working hard. I don’t believe for one minute Google is committing ‘treason.’ “

Despite the dust-up, it’s unlikely that anything has changed with Thiel’s or Trump’s comments. Tech companies will be under intense scrutiny for dealings in China, anti-competitive practices, dabbling in the financial markets with new currencies and privacy violations by any administration in power, as well as globally, whether Trump throws these allegations into the mix or not.

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Tech stocks were mixed on Tuesday, with Google up very slightly.

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