The US government is determined to limit the stateside business presence of cell-phone and wireless technology manufacturer, Huawei. The concern emanating from intelligence agencies in Washington D.C. are allegations that Chinese privatize companies may be spying for its communist government. They fear the company uses software backdoors into its phones and other telecom equipment, that could be used to spy on Americans or worse. The existence of these backdoors to taking control of digital equipment could be discovered and exploited by hackers anywhere in the world, posing a potentially bigger threat to US security than the Chinese government.
But Washington claims to be protecting Americans from having their personal data collected by the Chinese, after all – that’s already the job of tech companies in Silicon Valley and the National Security Agency (NSA).
Huawei of course, denies these allegations.
Huawei is a private firm founded in 1987 in Shenzhen by Ren Zhengfei. Company representatives maintain that it operates completely independent of its government. But a majority of the company’s shares are held by its Chinese employees. Foreigners are generally barred from holding shares in Chinese companies, and this may hold the real problem the US government has with Chinese technology. The troubles with Huawei would probably evaporate if the company listed its shares on a public American or EU stock exchange.
US Government Pushes Back on Huawei
US government agencies suspicion of Huawei has been building for years. Back in 2012, Huawei was blocked from fulfilling multi-billion dollar supply contracts for broadband services in the United States. But the current administration has taken its suspicion of Huawei to new heights. At the January 2018 Consumer Electronics Show (CES), AT&T was set to announce a partnership with Huawei. A distribution deal would see Huawei phones showing up at AT&T stores across the US. But the deal crumbled due to pressure from the newly minted FCC chairman Ajit Pai, even as both companies were about to present at CES.
Despite concerns from US security agencies, there has never been any evidence that Huawei phones or digital equipment has ever had a back-door. Huawei phones and telecom equipment is in use across the world in nearly every country.
Are Huawei Security Concerns Valid?
Huawei is the world’s second largest provider of telecom equipment, it also recently surpassed the Apple as the second largest cell phone manufacturer. So, who stands to benefit from keeping Huawei out of the US market? Besides US telecom equipment suppliers like Cisco, it also helps established communications companies like AT&T, Verizon and Comcast. With limited options for back-end equipment that makes wireless and broadband networks possible, smaller Internet Service Providers (ISPs) must look at more expensive infrastructure options (like Cisco) to build their networks.
FCC Chairman Ajit Pai, a former Verizon attorney has already established a history of passing policy that favors the established ISPs. Pai’s infamous rollback of net neutrality rules has resulted in a modest boon for the nations big telcos. But blocking companies like Huawei from the US market will only hurt smaller, up-and-coming communication companies ability to be competitive.
Last week, the US Senate Intelligence Committee, informed by the heads of US every intelligence agency, advised Americans not to use phones from Huawei or fellow Chinese manufacturer ZTE.
FBI Director Chris Wray said. “We’re deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks.”
Wray adds. “[Huawei and ZTE] provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage.”
Wray describes exactly what the FBI famously requested of Apple back in 2016 when Apple CEO Tim Cook took a principled high-road and refused to grant the US government a backdoor to its equipment to help in an investigation.
The hypocrisy is astounding. What if Tim Cook had agreed to creating an iPhone backdoor? Taking the advice of US intelligence agencies, governments around the world would have a strong case to ban Apple from competing in the global market.
Shutting out globally recognized and respected companies from competing in the American market is protectionism and xenophobia at its worst. The winners are the big telecom companies who enjoy less competition, while unfortunately the losers are the American people with limited freedom of choice.