Enrique Dans
May 20 · 4 min read
IMAGE: Mohamed Hassan — Pxhere

A Reuters exclusive has confirmed that Google has suspended all commercial ties with Huawei after the Chinese company was blacklisted by the Trump administration as Washington ramps up its trade war with China.

Google is only the most visible of US tech companies that are or will be affected by the Donald Trump’s decision: others such as Intel, Qualcomm, Xilinx, Broadcom or Corning, manufacturer of the legendary Gorilla Glass, will all have to stop doing business with Huawei, which means direct losses in turnover for these companies of around $11 billion.

It’s not hard to see what Trump’s latest move could mean for Huawei, but US companies will no longer be able to supply products and services to one of the largest technology companies in the world, which also happens to be an unlisted company and therefore will not suffer the impact of market instability.

Contrary to what some media are reporting, Google’s decision will not affect phones Huawei has already sold or that are still in the shops or online. All these terminals will continue to be able to access the version of Android they already have installed, along with Google apps such as Gmail, Google Maps, YouTube, etc., or Play Market, including security services such as Google Play Protect, which protects users against malware.

From now on, Huawei could be forced to look for alternatives for certain components and lose the possibility of incorporating apps that, in any market other than China, are pretty much why people buy a phone these days. Huawei has been preparing for such an event for some time and says it has stored large quantities of critical components sold by US companies, as well as preparing a plan B to use its own operating system in its terminals, presumably some type of Android fork. This might make its smartphones and other products less attractive and could hit sales. The alternative of continuing to use the free version of Android, Android Open Source Project (AOSP), would be equally valid, although it would mean having to wait at the back of the line to receive critical updates or new features.

Is this similar to what happened to ZTE, which ended up accepting sanctions to avoid closure? Not at all. ZTE is a minnow compared to Huawei and its consumer sales are a small part of its turnover. In contrast, while Huawei is a leader in some markets in the consumer segment at all levels, from relatively cheap smartphones under its own brand or Honor to monsters like the P30, considered by some analysts to be superior to the iPhone, most of its profits come from supplying components to large telecommunications companies and governments around the world. For this reason, as well as being an unlisted company, Huawei is less vulnerable than other companies, although trade blockade and inclusion on a blacklist is not good news.

Of course, trade wars are never good for anybody. The story behind today’s headlines is that Google will lose advertising and other revenue from the millions of terminals manufactured by the company that makes more smartphones than anybody else; while other US companies will lose billions in sales to Huawei which will send their share price and profits tumbling; meanwhile, some US states that were building their 5G networks with Huawei components will be set back; and above all, the idea of ​​a global Internet is disintegrating and what comes next will undoubtedly be much worse.

These are the obvious consequences of allowing an idiot like Donald Trump, who doesn’t do details, to be in charge of the world’s largest economy: he can destroy things he doesn’t understand.

China is currently involved in more than 80 telecommunication projects all over the world, from laying cables to building networks, which means that many countries, forced to choose and with significant investments already committed, will join China in developing its infrastructure and end up isolating themselves from the internet in the West. Donald Trump’s America First means “Your stupid country is pretty much secondary” and could end up doing a lot of harm, and not only in terms of technology, but a whole range of important issues, not least among them, the climate emergency he denies exists.

Is the US ban on Huawei a response to years of restrictions and bans on foreign companies by the Chinese government? In part. But responding by hitting a company like Huawei, which has more patents on technologies such as 5G and which has always been a symbol of China’s openness to the world, is likely to do more harm than good. Let’s be clear: China was wrong to adopt protectionist strategies to shield its market from foreign companies but the United States trying to isolate Chinese companies and put them on blacklists is equally mistaken. Trade wars, I repeat, are never good, especially in the long term.

Huawei’s response, emphasizing its contribution to the Android ecosystem, its commitment to security updates and after-sales service for all its products and its interest in building a safe and sustainable software ecosystem that offers the best experience to users all over the world, makes it clear that the company sees way beyond the current horizon than Donald Trump with his irrational protectionist measures, and that the nightmare and instability of the last three years will soon end.

In the meantime, fasten your safety belts, it’s going to be a rough ride.

(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

Enrique Dans

Written by

Professor of Innovation at IE Business School and blogger at enriquedans.com

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

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