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Buried beneath the sand in the ocean are more than 400 internet cables, carrying around 99 per cent of global internet traffic. More than $10tn in financial transactions flows over these cables each day. While for decades the sector was driven by investments from state-owned telecoms operators, over the past decade their role has been rapidly superseded by tech giants.
US tech behemoths, including Google, Meta, and Microsoft, have invested around $2bn in cables between 2016 and 2022, accounting for 15 per cent of global investment. But over the next three years alone they will pump in another $3.9bn, or 35 per cent of the total.
Since around 2019 the US government has aggressively sought to extricate China from new international subsea cable projects, citing concerns about espionage. The US government's Defense Department has blocked proposed cables connecting to either China or Hong Kong as well as banning the use of Chinese equipment by US-led consortiums.
But splitting apart such an incredibly globalised and interwoven network that has developed over more than 100 years is proving to be a Sisyphean task. Even as the US government wages its battle, boats owned and manned by the biggest Asian nation are undertaking complex repair work on fibre lines owned by US companies.
Industry insiders say Chinese companies have renewed their focus on regions where they do still have commercial and political influence, most notably within Asia, Africa, the Middle East, and Latin America. Investing in internet equipment around the globe is seen as a core pillar of China's so-called Digital Silk Road, through which it offers attractive investments in digital infrastructure to parts of the developing world.
Western competitors say that Chinese companies often offer anywhere between 20 per cent and 30 per cent lower prices than rivals during the bidding process. Though China's ambitions to become a major contender in the global market for subsea cables is being thwarted by hostile governments in the west, Beijing is finding ways to gain ground where it does have leverage.
