GP Insights

GP Insights # 139, 31 August 2019

Huawei vs Google: The Saga Continues
Harini Madhusudan

What happened?

Mate 30, Huawei's flagship model will be deprived of licensed access to any of the Google apps. This is the direct outcome of the ongoing trade dispute between the US and China, which sees Huawei as the centre of the dispute. Google is obligated to comply with the ban on Huawei where the open-source android version would be available; however, the entity list will bar Huawei from access to licensed versions that include technical support and pre-installation of apps such as Google Maps and Gmail. A company spokesperson has stated that Huawei still prefers Android as their first choice, and it is unlikely that HarmonyOS- Huawei's self-developed operating system will be used. 

Through the week, it was unclear if the company would go ahead with their scheduled launch of the Mate 30 model, which is a flagship model relating to 5G technology. Huawei has not officially revealed what their plan of action would be, and what would be on the device in place of Google's apps but it was revealed on 31 August 2019 that the company would go ahead with the launch event. The date is set for 19 September 2019, at Munich Germany. All eyes would be on this event because what happens there could change the way the mobile phone market works. 

 

What is the background? 

The drama around Huawei began with the arrest of the daughter of the CEO of Huawei in Canada. Following a series of issues surrounding the company and the adamancy of the US administration to ensure the delay of the launch of 5G. This was seen in how the US tried to influence its allies not to allow Huawei to help with 5G development for their respective countries. This was also seen the ban that was imposed on Huawei, that stopped them buying from US companies. 

In May 2019, Trump administration escalated its approach on Huawei with two moves. One, an executive order that allowed the government to ban technology from "foreign adversaries" if they are seen to pose "unacceptable risks" to national security. Second, the placement of Huawei on a commerce department "entity list" that bans it from acquiring components or technology from US companies without government approval. However, the commerce department granted Huawei two 90-day reprieves, allowing it to maintain their existing infrastructure and provide support to existing Huawei devices, the temporary agreement would expire on 19 November.

After Huawei was on the entity list, many American chipmakers confirmed that they would stop their supplies to Huawei. This included Intel, Qualcomm, Xilinx and Broadcom. The ban also extends to software products and services, such as Google's Android, the operating system used by Huawei's smartphones.

 

What does it mean?

Huawei is probably the most spoken of, the outcome of the trade dispute between the US and China. It all boils down to two facts: first, China is way ahead of US in its development of 5G, and second, China has existing infrastructure and is prepared to face the US pressure.

Keeping China's policy of technology-sharing in the picture, one can assume that the outcome of this dispute would break the role that Google plays in the technology market. 

The uncertainty would encourage Huawei to develop their systems and reduce their dependence on the US systems. This would also mean that the existing systems in Russia, Japan and South Korea would get some relevance in markets that they have not reached. The question remains, what will happen on 19 September 2019? Either outcome will have far-reaching implications. 

 

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