China's Ministry of Public Security and a cabinet-level research centre are preparing to investigate IBM Corp, Oracle Corp and EMC Corp over security issues, the official Shanghai Securities News said on Friday.
The report follows revelations by former US spy agency contractor Edward Snowden of widespread surveillance, including a program known as PRISM, by the National Security Agency and his assertion that the agency hacked into critical network infrastructure at universities in China and in Hong Kong.
Documents leaked by Snowden revealed that the NSA has had access to vast amounts of Internet data such as emails, chat rooms and video from large companies, including Facebook and Google, under a government program known as Prism.
"At present, thanks to their technological superiority, many of our core information technology systems are basically dominated by foreign hardware and software firms, but the Prism scandal implies security problems," the newspaper quoted an anonymous source as saying.
China's Ministry of Public Security declined to comment on the reported probe, and the State Council's Development Research Centre, one of the groups reportedly involved, told Reuters they were not carrying out such an investigation.
A spokesperson for the Ministry of Industry and Information Technology (MIIT), which oversees China's IT industry, said it could not confirm anything because of the matter's sensitivity. Another MIIT official told Reuters they were unaware of the reported probe.
IBM said in an emailed statement to Reuters that the company was unable to comment. Oracle and EMC were not immediately available for comment.
China, repeatedly accused by the United States of hacking, was given considerable ammunition by Snowden's allegations, which Beijing has used to point the finger at Washington for hypocrisy.
Chinese regulators and the police have begun a series of investigations in recent weeks into how foreign and domestic companies do business in the world's second-biggest economy.
"The Prism scandal certainly provides ample material for real concern," said Mark Natkin, managing director of Beijing-based market intelligence firm Marbridge Consulting.
"What the scandal has done is make it increasingly difficult to ascertain what is being done out of legitimate concern and what may be being done for any sort of political reasons," said Natkin.