Huawei, the world’s largest telecom equipment maker is on the bleeding edge of many technological innovations, backs well-intended academic work, and is an ever-rising presence in the mobile space thanks to a number of critically acclaimed Android smartphones in recent years. Yet, the amount of negative publicity surrounding the company, and on an almost daily basis is quite remarkable. Surely Huawei is doing many things right?
That depends on who you ask and especially when it comes to the topic of security.
Huawei has been at odds with the United States government for what’s essentially been the entirety of this century, having clashed with Washington over a broad range of issues including spying threats and trade activity. While the tensions between the two varied over the years, leading up to the point that Huawei was even able to launch some smartphones in the U.S., things recently took a turn to where the relationship between the two became more stained than ever before. A situation that means all of the good work done by the company was not only undone, but is now further hurting Huawei’s reputation in the U.S.
The ‘Huawei issue’ is an infectious one
In many ways, AT&T proved to be a catalyst for the most recent issue with the U.S. carrier reportedly faced significant regulatory scrutiny in late 2017 when it agreed a distribution collaboration with Huawei to carry the Mate 10 series. That quickly changed after being informed its lucrative federal procurement contracts will all be re-examined should it choose to align itself with the Shenzen-based company.
This in itself was but a single episode in what feels like a truly endless stream of obstacles Huawei faced in the U.S. and while time can certainly heal all wounds, in this instance it acted as a proponent for the spread of the ‘fear of Huawei’ idea.
Another Huawei-related ordeal that ended up causing a full-fledged diplomatic incident occurred in December 2018 when the company’s Chief Financial Officer, Meng Wanzhou was arrested by Canadian authorities after the U.S. Department of Justice revealed it suspecting her of plotting an illegal banking scheme and pursuing a conspiracy to violate the Commerce Department’s trade sanctions imposed on Iran. She’s now facing an extradition request and numerous criminal charges that could see her end up in federal prison until the 2050s.
Huawei’s defense was this move represented a political ploy aimed at destabilizing what many American tech companies, such as Qualcomm and Apple consider one of their largest rivals.
While the argument doesn’t account for the fact that the likes of Samsung, LG, Ericsson, and many other non-American companies with valuable technologies aren’t being targeted by Washington agents, the very concept is not that far-fetched seeing how U.S.-China relations are presently at a 21st-century low: largely due to trade-related tensions.
The White House didn’t exactly try to dispel that notion either, with President Donald Trump going on record to state he would intervene in the case of Huawei’s detained CFO if he believed such a course of action would benefit his administration’s efforts to negotiate a better set of trade deals with China.
Unsurprisingly, that remark prompted China to accuse the U.S. legal system of being nothing more than yet another tool of the U.S. political machine instead of an impartial arbitrator of justice, while simultaneously accusing Canada of being a puppet, and a willing participant in a scandalous political conspiracy.
Huawei is a victim, but also of itself
As far as any phone maker’s potential to erode diplomatic relations and cause massive geopolitical shifts in a swift manner goes, Huawei is certainly a unique company. That’s no mean feat given how not even ZTE managed to cause nearly as much drama after violating U.S. trade sanctions against Iran, lying about it, settling, violating that settlement, lying about it again, and coming to the verge of bankruptcy while peddling conspiracy theories. If there’s one thing to learn from all of this, it’s that conspiring to violate embargoes imposed by the world’s number one economic powerhouse can actually be bad for business.
When there’s a long string of evidence tying Huawei to two companies with Middle Eastern operations that look like fronts, behave like fronts, went defunct overnight as fronts, and with some of those connections directly implicating a C-suite executive to the point of getting them arrested abroad and facing the prospect of decades in a top-security prison, that could certainly be a consequence of a giant corporation with strong political backing overplaying its hand in global affairs. If you think that sounds like an appetizer for some humble pie, you’re not the right profile of people Huawei considers for senior management positions, especially those pertaining to expansion.
The underlying power of 5G adds to the issue
Not only is the firm still denying having close ties to a number of fronts in the Middle East that have already been proven, but it is now trying to take advantage of the record-weak relations between the U.S. and China in order to associate countless allegations against it as political propaganda and not something that’s been a consistent trend for close to two decades now, even at times when most significant geopolitical circumstances were much more conducive to Chinese tech penetrating critical systems in the West.
The issue at hand has little to do with smartphones and revolves around 5G, the next generation of wireless connectivity expected to serve as a backbone of autonomous cars, intelligent cities, remote surgery services, and many other technologies of the future.
As it turns out, the U.S. isn’t thrilled with the idea of handing the keys to its critical infrastructure to a company that could shut it down or abuse that access at Beijing’s whim, not necessarily because it would be happy to do so but because it could hardly resist complying with any such requests. That’s precisely why Huawei wouldn’t enjoy U.S. trust even if it had a perfect track record with cybersecurity and it’s not like it does despite managing to avoid major incidents in recent years.
Huawei recently avoided one such a scenario after pledging to invest the equivalent of $2 billion in addressing vulnerability concerns surrounding some of its equipment used in the United Kingdom. The British government appears to dislike the idea of wireless companies using Huawei 5G tech as much as they relied on its LTE solutions and is now doubling down on its scrutiny.
The US and UK are also not alone considering Australia has now essentially outlawed 5G network equipment from the company, and the likes of Canada, Japan, and South Korea are presently considering doing the same. The U.S. started the trend last summer by including a spending bill provision that prevented federal agencies from acquiring technologies produced by or merely associated with Huawei and ZTE.
As Washington’s relations with Beijing grow tenser, the White House is also considering banning the private sector from using Huawei tech, and that’s assuming someone would be brave enough to do so in the first place. As AT&T proved, no stateside corporation appears to be so brazen to risk its existing government contracts or kills its chances of being awarded new ones in the future.
Threats come in many forms
Ties to Middle Eastern operations and a consistent pattern of clashes with both regulators and private entities over intellectual property disputes is something Huawei has never addressed in a consistent manner, always opting to dismiss concerns about its track record but often admitting wrongdoing in individual cases such as the one T-Mobile won in 2017 after proving Huawei engineers attempted to steal the technology behind its mobile user experience testing robot “Tappy.”
That isn’t to say Huawei has a long history of guilty verdicts, Huawei’s issue in part is the result of its tendency to always pursue settlements in an aggressive manner, agreeing to a broad range of concessions that are equivalent to complete losses but with one notable exception – not having to admit to any kind of transgressions in any official capacity. This has happened on numerous occasions and how its disputes with Cisco and Motorola both ended.
A level of stubbornness that’s working against the company now more than ever, with regulatory scrutiny over its operations increasing the world over and China not being in a great shape to back it – as the trade war the U.S. waged against China has already taken its toll on the Far Eastern country’s economy.
Between the rising geopolitical tensions, concerning history of trade secret theft allegations coming from all directions, newly emerged accusations of its CFO being personally implicated in a high-profile banking scheme aimed at breaking stateside trade sanctions placed on Iran, and the fact that China could feasibly compel the company to spy on its foreign customers, disable their critical infrastructure, or compromise them in a number of other ways, there is essentially no chance the U.S. cuts Huawei any slack, now or ever.
Many factors have lead to the current status quo but regardless of anything else, the threat is real. Sometimes the possibility that something might be an issue is enough to warrant moves to protect against a threat. Even if there’s no motivation on either China or Huawei’s behalf to be perceived as a threat, let alone act on one.