The Aug. 6 national security probe follows a January order for Chinese firms to replace Palo Alto Networks and other foreign cybersecurity tools with domestic alternatives in the first half of 2026.
China has opened a formal review of Palo Alto Networks products sold in the country, escalating pressure months after ordering domestic firms to stop using the company's software and other foreign cybersecurity tools. The Cybersecurity Review Office said the Aug. 6 step is intended to protect critical information infrastructure and national security, but gave no details on what triggered the probe, how broad it will be or when it may conclude. Palo Alto Networks shares fell more than 4% at one point in U.S. premarket trading before narrowing the loss to 1.76%, while Check Point Software Technologies and Fortinet also edged lower. A January 2026 directive had already set a first-half 2026 deadline for Chinese companies to shift to domestic alternatives, with earlier reporting describing the affected group as roughly 12 U.S. and Israeli suppliers and the latest account saying Palo Alto Networks and more than a dozen other companies were covered, including Fortinet, Check Point, CrowdStrike and VMware. Analysts previously said China accounted for only 1% to 2% of revenue for Palo Alto Networks, Check Point and Fortinet, but Palo Alto Networks maintains offices in China and the widening restrictions represent a tangible headwind as U.S.-China technology tensions deepen.