The war between Huawei and Trump heats up.
November 8, 2016: The world watched amused as the first results from the US presidential elections started to trickle in. The initial reports came from the ‘red’ states (the primarily Republican ones). For a large section of the population, the amusement soon turned into discomfort, which turned into worry, which turned into panic, which turned into horror and finally into shock and denial as Donald J. Trump stood victorious as the president-elect of the USA.
Trump’s meteoric rise and the impossible feat of winning the presidency in his first stint as a politician was stunning. His antics are those of a closet white supremacist, racist, misogynist and protectionist. He was at war with the East Coast and the West Coast of the US as well as with the rest of the world. His worldview was based on decades-old notions of the Eastern Bloc/Western Bloc.
The elephant in the room was and is China. It is the world’s production line. Chinese companies are moving into a position of intellectual leadership in terms of technology. Even before Huawei started bothering Trump and his voter base due to their growth and ambition, another company was in their sights due to their irrefutable dependence on Chinese technology: Apple. Yes, THAT Apple.
Apple source their screens and processors from Samsung and other companies in the Far East, their cameras from Sony, and a Chinese behemoth called FoxConn puts them all together. FoxConn also manufacture gadgets for a host of other US companies.
Trump started to apply pressure on US companies to shift their manufacturing operations back to the US. He started an aggressive trade war with China, gave the cold shoulder to the EU and adopted a combative stance (at least on Twitter) against anyone and everyone, except, curiously, Vladimir Putin and Kim Jong-Un. While the Brexit fiasco unfolded across the pond, the message was clear: serve the US’s interests first or suffer the consequences.
Meanwhile, Huawei’s rise to the upper echelons of the smartphone world continued apace. At the end of Q1 2019, the company accounted for approximately a 19% share of worldwide smartphone shipments, within striking distance of Samsung (23%) and comfortably above the third-placed Apple (12%). From their early days as an Apple wannabe to becoming one of the dominant global forces in terms of smartphone hardware, design and photography, Huawei went from strength to strength. Huawei is also a major player in networking equipment and is leading the charge in 5G rollout across the world.
Who wins in this childish war of stakes? Let’s hear Huawei’s answer to that: The Chinese firm is of the opinion that preventing the sale of their devices in the US “will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.
The problem is that Chinese companies do not enjoy a sterling reputation in terms of data privacy and intellectual property. Several devices produced by BBK Electronics (owner of brands such as OnePlus, Oppo and Vivo) were, it was discovered, sending user data to Chinese servers. IP theft is rampant and the relevant laws do not provide enough protection to foreign companies. The Trump administration built on the inherent mistrust of anything not American in a large section of the US populace.
It began on February 13, 2018, before the Senate Committee when officials from the CIA, the FBI and NSA advised Americans against using Huawei products. Huawei’s infrastructure prowess was publicly declared to be a threat by Director of the FBI, due to the fact that the company is spearheading a 5G rollout across the world through their networking equipment.
Then, in December 2018, Meng Wanzhou, Huawei’s CFO, was arrested in Canada on charges of violating US sanctions against Iran and in January criminal investigations against Huawei were formally opened. Then on May 15, 2019 President Trump signed an executive order, ordering US companies to cut their ties with Huawei. (As a result Google announced they will be withdrawing their Android license from Huawei).
What does this mean for the consumers?
Well, if you have a Huawei set right now, you probably don’t need to worry – it will not suddenly stop working. As for the access to Play Store and other Google services (and let’s face it, Android is just another OS without Google’s AI-powered, seamless integration), that will remain safe for the next few months. However, if you are thinking about buying a Huawei device, it is a tricky pitch. It would be safer to wait for the chips to fall in place.
According to several news reports, Huawei have been working on their own mobile operating system called HongMeng for several years. They are also developing an alternative to Windows (as Microsoft is likely to follow suit after Google), although for current Huawei owners, this is no consolation as the OS is rumoured to be ready only later in the year, and the way these things work, it is unlikely that there will be a migration path for existing devices. As for the chances of HongMeng being a viable alternative to Android and iOS, it may take several years, and it may even fizzle out like the Windows Phone.
You do need to worry if you are contemplating buying an Apple device. Why? Because retaliation from China will certainly mean that Apple will have to shift their production elsewhere, which may come with higher costs, quality compromises and product delays.
Who wins in this childish war of stakes? Let’s hear Huawei’s answer to that: The Chinese firm is of the opinion that preventing the sale of their devices in the US “will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives, leaving the US lagging behind in 5G deployment, and eventually harming the interests of US companies and consumers.”
So what will be the results of this rapidly escalating trade war between the world’s largest consumer and world’s biggest producer? My guess is that the following will happen:
- Android will lose at least a fifth of their user base in the form of Huawei users. Consequently, Google will no longer be able to push their services to them and lose the associated ad revenue.
- Twenty percent of world’s smartphone owners who use Huawei phones will have compromised devices.
- Apple’s dwindling fortunes will shrink further as Chinese iPhone users switch devices in retaliation.
- If FoxConn refuses to or is forbidden from manufacturing iOS devices due to retaliation by the Chinese government, shifting the production to anywhere else on the planet will result in increased costs, decreased margins and supply chain headaches for Apple.
- Android and iOS app developers will lose a significant chunk of their user base.
It is also likely that other American software vendors, and, for that matter, every other American company, is on a path to losing users in China – the world’s largest market. Given these factors, it is safe to say that in this war, there are no winners. But you can bet Mr Trump will be re-elected in 2020.
Talha bin Hamid is an accountant by day and an opinionated observer of pop culture, an avid reader, a gamer and an all-around nerd by night. email@example.com