U.S. Enacts Sales Ban of Huawei Products

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For some time, U.S. and other world intelligence agencies have known that Huawei was a tool of the Chinese government for spying. They believe that, like many Chinese companies, the government has infiltrated key sections of the manufacturing and software development process. Those leverages allowed the government to install backdoors. This is supposedly what happened to a few motherboards from Supermicro.

The British government, which is currently using Huawei infrastructure, has consistently found small but significant security concerns at Huawei, some that have gone unchanged year to year. This year, researchers discovered that Huawei was the source for a Microsoft security flaw that seemed to serve no purpose but to open the computer up to hackers. Finally, we have word from a leaker claiming the CIA knows Huawei is backed by the Chinese government, a fact that neither the Chinese government nor Huawei have denied.

Why haven’t countries banned Huawei already? The U.S. government went part-way, banning sales of Huawei to government departments or contractors. However, no one wanted to incur the wrath of China, which is directly tied to Huawei. Huawei, being China’s darling (and potential espionage tool), is a vital export for the country. It’s what makes China more than just a manufacturer, but also an innovator. The 10x zoom and other camera features of their phones are ahead of their time. China has great pride in Huawei—as well they should—and may need it for its foreign espionage plans. Banning Huawei goods entirely could hurt trade between the two countries.

But when has conflict or potential damage to U.S. consumers ever stopped Donald Trump?

Amid a trade war, the U.S. is now banning all telecom equipment from Huawei, including consumer devices. But is it for consumer safety or is it just a bargaining chip for Trump?

Huawei Ban

Shortly after announcing the Huawei ban, Trump backpedaled, giving the company 90 days to close operations. It’s more likely he’s doing this for the opportunity to negotiate with China. He’s now given the country a 90 day period to comply with his demands. Of course, the U.S. already has quite a few bans on China. The government banned government based purchases of Huawei devices, sure, but ZTE, another Chinese cellular device manufacturer as well.

This latest ban, now set to go into effect in 90 days, goes further than a government ban. In fact, it goes much further than even a sales ban. Huawei is now on an entity list. If a company, say Google, Qualcomm, or Intel, wants to sell their products to Huawei, they’ll have to apply for a license through the U.S. government to do so. The license could take weeks or months to get approval, and the government may decide to never approve them.

You won’t be able to buy a Huawei phone from Verizon. Qualcomm won’t be able to sell their chips to one of the world’s largest manufacturers of cellular devices. This is a measure usually done for consumer and national security. However, it’s clear that, while Huawei is a risk to national security, Trump’s using this only as a bargaining chip with China. This is using a sledgehammer when a screwdriver was needed.

Google’s Reaction

Google had perhaps the most rapid response. Google announced that it will comply with the law, and that means they’ll pull Huawei’s Android license. Huawei devices made in the future will not have Google Play Services or use Google software. The company will have to rely on open source Android projects, or make their own fork of Android. They’ll have to host their own store as well. It could be a huge setback for Huawei in the short term.

However, this likely won’t hurt Huawei in China in the long term. China has taken to supporting Huawei as a matter of patriotism. Some companies even punish their employees if they’re found buying non-Huawei devices. China’s a huge market, and could likely keep Huawei afloat. That’ll boost sales of apps through their own Huawei app store. It’ll improve Huawei’s data collection abilities, and give them a new source of profitability in the years to come. Creating their own infrastructure will be a large upfront cost, but it could play out as a smart investment in the future. Huawei and China won’t need the U.S. anymore.

Trump’s Trade War: Giving U.S. Companies a Boost?

There’s an idea that this could help U.S. companies. After all, Huawei is at the forefront of the 5G rollout, they’ll soon have a foldable phone on the market that looks to be the best attempt at a foldable device, and they’re making advancements in camera technology. Only one other manufacturer has anything that comes close to Huawei’s 10x optical zoom, and not one of them is a U.S. smartphone manufacturer. Although Apple’s the only U.S. based company that makes their own phones and is not owned by a company outside of the country.

This could be a chance for U.S. based Apple, Google, or Motorola to play catch up. They could introduce 5G phones, foldable phones, and 10x zoom cameras. Maybe even more! Huawei’s odd facial smoothing has always held the cameras back, maybe this is a chance for Apple and Google to match Huawei’s camera hardware, without the odd smoothing features.

More Likely: Hurting U.S. Suppliers

However, this is going to hurt U.S. companies like Intel and Qualcomm. It could also hurt Google in the long run, as Huawei could find they don’t need Google Play Services at all to sell their devices to an international consumer base. According to Huawei, they already have a version of their OS, ready to run without Google, in case this happened. This will further fragment Android’s platform, making it even more difficult to develop and test for, thus reducing developers willing to work on the platform.

Apple is feeling retaliatory effects in China already. Those are only going to get worse. Buying an iPhone in China used to be a thing of luxury. It was the AirPods flex before the AirPods flex. Now, however, it’s taboo. Owning an iPhone is seen as unpatriotic, even traitorous. This will hurt sales of Apple’s products in one of the largest markets in the world. Chinese companies that manufacturer parts for Apple’s iPhone could also decide to no longer do business with the company. China could retaliate against Trump by banning sales or manufacture of Apple products. This trade war dispute could be devastating to U.S. companies.

Rocking the Boat

You know those lazy river rides at amusement parks? The kind where, you’re in the water, but you’re likely not going to get that wet. It’s nice, relaxing, and often refreshing on a hot day. But then you have a younger brother. And he intentionally rocks the boat, getting everyone soaked. No one wins.

These tariffs, Trump’s trade war, are having lasting effects on farmers, U.S. manufacturing companies, and now U.S. tech companies. As Chinese companies find new supply chains outside of the U.S., we could lose their business forever. Trump’s rocking the boat, and most U.S. companies, farmers, and manufacturers don’t understand why.

This undermines the seriousness of the threat Huawei imposes.

Banning sales of Huawei infrastructure would be a good thing, from a security standpoint. But doing so as part of trade negotiations? This undermines the seriousness of the threat Huawei imposes. It undermines the advise of our national security agencies, making their warnings seem like nothing more than political tools. This will empower Huawei globally. Eventually, when Trump decides to allow sales of Huawei goods again, it’ll boost Huawei’s image. They will have found a way to deal without U.S. companies, and look to international expansion. Consumers won’t believe warnings from security agencies, as Trump will have proven that this is all a political ploy. Huawei’s reach will grow.

There’s only one winner here. It’s not U.S. companies, manufacturers, or farmers, it’s not U.S. intelligence agencies, and it’s certainly not Trump, who comes off looking inexperienced and childish. It’s Huawei.

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Sources:

• Bloomberg Editorial Board
• Yawen Chen and Se Young Lee, Reuters
• Tim Culpan, Bloomberg
• Jon Fingas, Engadget
• Ivan Mehta, The Next Web
• Jackie Northam, NPR
• T.C. Sottek, The Verge