By imposing
restrictions on Huawei Technologies Co., the administration of U.S. President
Donald Trump may force the Chinese company to do something that no one in tech
has dared to do for a long time: Challenge Google’s control of the Android
universe, which earned the U.S. company a huge European fine last year.
Huawei faces two big
threats from U.S. technology export restrictions. One is the loss of American
components for its products, a blow it cannot parry immediately if it wants to
keep making top-flight smartphones. The other is the potential withdrawal of
its Android license, which would stop Huawei from preinstalling the latest
Google-approved version of the operating system and some key services Western
users see as necessary — above all Google’s Play Store, the biggest repository
of Android apps. This particular obstacle could, under the right conditions,
turn into a Huawei strength in Europe, a market that accounts for almost a
third of the company’s smartphone unit sales, according to market analytics
company IDC.
Last July, the
European Commission fined Google 4.34 billion euros ($4.85 billion) for
imposing illegal restrictions on smartphone manufacturers. In exchange for the
right to preinstall the Play Store, they had to agree, among other things, not
to sell devices running versions of Android not approved by Google: so-called
Android forks. These operating systems are developed from the open source
version of Android, which anyone can use, including Huawei if the U.S. bans it
from using American technology. Amazon.com Inc.’s Fire OS is the best-known
Android fork today, though there are others around.
The commission wrote
that by obstructing the development of Android forks, Google and its parent
company Alphabet Inc. “closed off an important channel for competitors to
introduce apps and services, in particular general search services, which could
be pre-installed on Android forks.” In its ruling, it made a strong case for
forks as platforms for Google-independent innovation that, if they were allowed
to spread widely, could have curbed Google’s market dominance in various areas.
Google has appealed
the ruling, but it has also removed restrictions on handset makers to avoid
further fines. This, however, hasn’t led to the proliferation of alternative
platforms based on open-source Android: Big phone makers are locked into
comfortable relationships with Google and see no need to experiment. Days after
the European Union fined Google, Huawei, at the time the biggest phone
manufacturer that provided an easy opportunity to install alternative
Android-based operating systems on its devices, ended the program without
explanation.
If Google takes away
the Android license, it’ll yank Huawei out of its comfort zone. The company
isn’t likely to give up the European market without a fight, after spending
billions of dollars developing a customer base. Consumers in some European
countries now appear to be put off Huawei by the U.S. attack, although,
paradoxically, it appears to have fueled the brand’s popularity in France.
The company has said
it developed its own operating system (likely an Android fork), and it’s been
trying to lure developers to its app store. If the U.S. stops Huawei from
preinstalling the Play Store, the Chinese manufacturer probably won’t spend
much time educating consumers on how to install it on their own (the way people
do now with phones bought in China). That’s not what most users expect on a
new, expensive device. Instead, Huawei will want to offer developers an easy
way to sell apps not just in the Google store but also in one preinstalled on
Huawei devices — to “multi-home” them.
Huawei hasn’t been
eager to get into an open confrontation with Google, which was a valued
partner. But a breakup ordered by the U.S. government changes things. Huawei,
with plenty of resources of its own (and most likely with support from the
Chinese government, determined to fight back against the U.S.), could soon be
investing heavily in the marketing and improvement of an Android fork. Given
Huawei’s marketing potential, the effort isn’t necessarily doomed. And it could
boost Asian and European developers deterred from competing in some areas —
such as mapping, video services or even search — by Google’s enormous power.
Given the pushback in
recent years against U.S. tech companies’ relentless data collection and the
widespread mistrust of Trump’s administration in Europe, there could well be
demand for a Google-free phone from a major manufacturer known for superior
hardware. I know I’d be interested, and the French would probably lap it up,
judging by their reaction to the U.S. threats. The EU regulators, too, might be
intrigued to see evidence that perhaps the Google antitrust ruling didn’t come
too late.
This is something of a
utopian scenario, I know. Huawei may never need to go on the warpath against
Google: The U.S. and China could strike a trade deal that would make the
specter of restrictions go away. Or, if Huawei is banned from buying U.S.
technology, it could find itself unable to produce marketable phones for a
while. And, of course, it is a company from Communist China, making it
difficult for European regulators, and even for private developers, to embrace
it as a savior from the overly dominant U.S. tech companies.
Monopolies in tech
don’t last forever, however. Sometimes they just need a push to start showing
cracks. If the U.S. moves against Huawei, it might be unknowingly giving such a
push to Google in the smartphone market.
This column does not
necessarily reflect the opinion of the editorial board or Bloomberg LP and its
owners.
By Leonid Bershidsky –
Bloomberg
24 May 2019
No comments:
Post a Comment