How Huawei Could End Up Challenging Google’s Dominance

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

Huawei Beyond Smokescreen

The issue of Huawei first floated when the Chairman’s daughter, who is also the CFO of Huawei, was arrested in Canada. The Americans claimed that she has violated sanctions and wanted her to be extradited to US for trial.

This is not the first time Americans had extended its legal arms outside of its country’s boundary. Huawei is not an American company. Why should it be subjected to American political sanctions? It was not very clear why American government wanted to do that at the very beginning. But later on, it becomes clear that the Americans have reverted back to their dirty tricks.

This is not the first time the American government had used its political dominance to attack foreign companies to curb their growth, or even forcing them to be sold to American companies.

Toshiba was once a fast growing Japanese company but it was targeted in the 1980s, with two senior executives jailed on the charge of selling high precision machinery to Russia. Chinese ZTE was forced to the knees with political administrative means and $1 billion fine was extorted before it was let off. There were also European companies subjected to American pressures in the past.

The coordinated attack on Huawei started from a charge of “breaching American sanction on Iran” to charge of “espionage via Huawei’s hardware”.

It is no secret that Americans have been spying on the whole world, including its allies in Europe over the past decades via communication infrastructures installed using American products or technology. Snowden had actually leaked information on how NSA spies on each and every country through the use of backdoor implemented in communication hardware.

So it is not something new but simply hypocrisy on Americans’ part in playing dirty on Huawei.

Perhaps the Americans have found out that they can no longer have an easy hack on Huawei’s equipment to spy on other countries, which is why they are making so much noise.

I would not be surprised if the Chinese government emulates what the American government NSA has been doing all this while, spying on other countries through similar method. But at this very moment, there is absolutely Zero evidence provided by the Americans except the speculative insinuation put on Huawei’s Chairman, who is an ex-PRC army personnel.
This may be one of the minor reasons why Trump wants to attack or even destroy Huawei at all cost, even if it means hurting American companies which supplied over $11 billion worth of components to Huawei.

Yes, it might be the 5G technology that they are so afraid of. But this is not only about the commercial dominance of Huawei’s 5G technology.

Ultimately, it points to military supremacy. US is able to bully its way through the world for all these decades simply because of its military supremacy. It can have trillions or zillions of deficits but it doesn’t care at all.

But Huawei’s advanced 5G technology has the potential of tilting the balance of Military strength towards China. In modern warfare, more and more sensors will be used and there will be a revolutionized war communication technology to enhance battlefront monitoring and controls.

Huawei’s advancement on 5G technology or even faster hidden technology will give PLA a boost and multi-level upgrades in war theater command and management.

This is the greatest fear of USA, a potential adversary having more advanced military communication capabilities. This is why no matter how damaging it is towards its own Americans companies, Trump has to destroy Huawei.

However, I suspect that Huawei does have the Chinese government’s support for the simple reason that it has critical technological assets that could help it modernize its military.

It is not an exaggeration for Chairman Ren to say that Trump had underestimated the strength of Huawei. This is because it would most probably had secured full support from Chinese government to protect its critical technological assets.

It would be interesting to see how Huawei could turn the table around and build up its own in-house components manufacturing capability within one year. The problems of operating systems are just smokescreen to the bigger picture.

Make no mistake about it. It is Cold War II in the making.

Goh Meng Seng