Deals and IPOs

Lenovo-Motorola deal may raise espionage concerns

Concerns over Lenovo & Google deal

Not so fast, Lenovo?

Google said Wednesday it plans to sell its smartphone business Motorola Mobility for $2.91 billion to Lenovo, the Chinese technology company. But experts in Washington say the deal faces a key hurdle Wall Street may not be aware of: the Committee on Foreign Investment in the United States, a federal entity that has the authority to block any corporate transactions it decides are not in the nation's interest.

There's enormous concern in Washington about Chinese cyberspying, and the Motorola deal will likely raise a series of red flags for the committee. First, it's a telecommunications deal. Second, it's China. Although Lenovo has long maintained that it is not a state-owned company, like many in China, its nationality will still be eyebrow-raising in Washington.

Lenovo Group Ltd. advertising on display at the IFA consumer electronics show in Berlin.
Krisztian Bocsi | Bloomberg | Getty Images

One committee expert contacted by CNBC said he expected a "serious review" of the deal, and predicted Lenovo's attempt "may be a bridge too far."

Another said there are major issues, adding: "I expect there will be some heavy opposition within some quarters of the U.S. government, and I expect there will be lobbying against the deal on the Hill."

(Read more: Google selling Motorola phone business to Lenovo)

The committee has asserted itself aggressively on Chinese deals in recent years. In 2011, for example, Chinese-owned Huawei backed off of an attempted acquisition of assets of the server technology company 3Leafk after it said committee told the Chinese firm to divest the assets.

So what does Lenovo have to do to get approval? These days, foreign companies seeking to acquire U.S. assets are usually advised to approach the committee before it approaches them. Lawyers suggest alerting the agency to the deal, and laying out the argument for why it should not impact U.S. security.

(Read more: Cyber espionage: The Chinese threat)

For Lenovo, one expert said the company will have to stress its transparency and lack of connection to the Chinese government, and its ability to follow U.S. technology transfer rules. What's more, the expert said the company should expect to have to give the U.S. government a "wide open window into its technology development" to assure that it isn't adding any secret back doors that could give the Chinese access to U.S. telecom networks.

The revelations of NSA capabilities by leaker Edward Snowden have revealed just how advanced U.S. cyber espionage capabilities are, and that's a geo-political advantage that the U.S. government does not want to see eroded.

But even if Lenovo can successfully navigate the committee process, it can take time. The process begins with an initial 30-day review period and can include an additional 45-day investigation. In some circumstances, it can be referred to the president for an executive decision.

—By CNBC's Eamon Javers. Follow him on Twitter .