Why did AT&T pull out of Huawei deal?
US telephone operator AT&T is pulling out of the negotiations for an agreement with Huawei that would have seen it sell the Chinese company’s devices in the lucrative contract package market, still the leading segment despite the growth of open terminals.
According to June 2017 figures, sales of open terminals in the United States were around 30 million, about 12.5% of the market, and is a highly competitive sector. But the figure is clearly insufficient for Huawei, the third global competitor in the smartphone segment after Samsung and Apple, and which has a significant presence in many countries around the world, but which remains in a minority position in the US market precisely due to the lack of agreements with operators such as was about to go through with AT&T.
The US operator has not said why it pulled out of the deal with Huawei, but most sources blame possible pressures from two sides: on the one hand, the US government, concerned about a 2012 Congressional report saying the devices and equipment produced by Huawei and another Chinese company, ZTE, pose a threat to national security due to the possibility of being used in espionage operations. Huawei has denied this. The company is one of the world’s leading manufacturers of telecommunications equipment and has a particularly strong position in 5G networks, which US operators are investing heavily in. At the same time, AT & T could also have been under pressure from the US technology industry, which sees Huawei as a formidable competitor at all levels and wants to keep it out of the market, while refusing to admit its technological superiority. Some analysts say Huawei’s top-end Mate 10 Pro gives the iPhone X a run for its money.
On Tuesday, at what was going to be the unveiling of the new Mate 10 Pro at CES, Richard Yu, CEO of Huawei’s consumer products division, expressed his disagreement with AT&T’s decision and his overall unhappiness with US operators, and took a few minutes without a script or teleprompter in front of a screen reading “Something I Want to Share”, detailing the negative impact on the company to be deprived of access to the US market, and the bad news for consumers to be denied access to Huawei’s products, speaking with total spontaneity about his 25 years in the company and how Huawei had been gaining the trust of operators, companies and users around the world.
Is AT&T’s withdrawal from the Huawei talks purely a commercial question, an attempt to protect the US market from an increasingly competitive China? Or is it simply doing what China does: imposing restrictions and obligations on foreign companies that make them uncompetitive in their territory or force them to comply with requirements they consider unacceptable? If the Chinese government blocks all foreign companies that try to access its huge technology market, be it search engines, social networks, instant messaging or digital mapping, why wouldn’t other countries do the same, either as established government policy or by pressuring companies looking to help their Chinese counterparts enter their markets? Will this news prompt US consumers to seek out Huawei’s devices, despite US operators’ attempts to deprive them, or will Huawei maintain its relatively marginal presence by not being present in the most popular channels? What will be the consequences for the technological industry of increasingly protectionist trade policies? Is Huawei paying for the sins of the Chinese government? And in that case, who fired first?
(En español, aquí)