Huawei has reiterated its warnings to the U.S. government and Google that the time is fast running out for a return to business as usual, that once the company launches an alternative to U.S. tech, there is no turning back. The implications for the U.S., the company says, will be stark. If Huawei is forced to “resort to alternatives” to Google, CEO Ren Zhengfei told CNN, if a Plan B gains momentum, returning to previous versions becomes less likely. And we know that any return would, at best, be in parallel with the newer alternatives. At issue is the loss of Google—the theme of the blacklist. Ren described this as “a critical moment for all of us,” suggesting “the U.S. government considers what’s best for American companies.”
In an interview with CNN, released on November 26, Ren also warned Samsung and Apple that it still intends to capture the global top spot for smartphone shipments—despite the U.S. blacklist. “I don’t think this will be a problem, but it will take time.”
Google is the one technology Huawei can’t “un-Americanize.” This has softened sales outside China, but, Huawei is now emphasising, may hit Google harder in the long term. If Huawei is forced into a Plan B, the company and the U.S. more broadly risk losing their monopoly influence over key elements of worldwide technology standards. Six months after the blacklist hit, Huawei’ should have been reeling, that was the plan. But the company has been shored up by sales in China, where Huawei has built a 42% market share. This has become the new theme of Huawei’s message platform—the blacklist isn’t working, and you will now pay the long-term price.
As I reported on November 22, Microsoft has now secured a U.S. Commerce Department license to renew its mass-market software supples to Huawei. There remains no word as to whether Google will receive the same, but Ren confirmed that the Google situation remains wait and see, with no decision one way or the other on its license. The lobbying continues and Google has not commented.
And so to the warning. Ren talks of a backup plan. What he means is significant investment in Huawei’s own mobile services to compete with Google’s—the Play Store, Maps, Gmail, Pay. And underpinning this, an ecosystem of app developers and service providers creating a third-way alternative to full-fat Android and iOS. Huawei has committed more than $1 billion to the incubation of this ecosystem, and importantly has signalled that it will offer price breaks to app developers—essentially asking for as little as half of the commissions taken by Google and Apple in their own stores.
Ren referred to this backup plan as “very large scale.” The CEO and other company execs have acknowledged that this is the greatest impediment to continued international growth—convincing an international Android consumer base to shift from the familiarity of Google is no mean feat. Attempts in recent years to carve any alternatives to Google (and Apple) in the mobile sphere have failed. There has been stability for a decade—Huawei would need to change that.
If that happens, if an app ecosystem can be nurtured that competes with the two global operating systems, and if manufacturers from China and South East Asia jump onboard, the tech landscape will have changed materially. None of the U.S. tech giants want to see this, a new landscape driven by Washington’s actions that has a drastic impact on the country’s own tech sector. As I’ve written before, this latest interview is part of a well-orchestrated media campaign. Yes, the company says, the blacklist is having an impact—but not one that is going to change the global technology landscape in the way you want.
Huawei twist has been to shift from touting an alternative to Android with its new HarmonyOS, and instead suggesting an evolution. An alternative ecosystem built around the open-source version of Android that is not restricted. “Harmony is not a replacement for Android,” Huawei VP Vincent Pang told the press a week ago. “It’s a next generation of Android,” but one without Google. And so this is a pivotal moment. If Google does receive a license, even with caveats and qualifiers, Huawei will be back onboard—but not exclusively if it’s alternative is ready. And so the implied threat is that time is fast running out for a return to business as usual. “We cannot wait more, we missed one flagship,” Peng said, referring to the Mate 30. By next year’s releases there needs to be a resolution, there needs to be certainty.
Since the blacklist hit, Huawei has continued to grow its consumer business, leaving Apple further behind and chasing down Samsung for the global crown. Huawei also still leads the pack for network equipment sales, despite a relentless U.S. campaign claiming the company is a national security risk. But with the impact of the blacklist being called into question at a macro level, would Washington be better served using it as leverage in wider negotiations with Beijing? That’s the key question.
Shenzhen has reason for optimism. The company is bullish again, staking claims as to what the next year will hold. Ren told CNN that Huawei will be expanding its international business next year and the year after. There are also rumblings from China that even if Google is restored, the company might continue its efforts to shore up a “break glass in case of emergency” plan for any repeat of the U.S. action. I would venture that what we have seen in the last six months will change the technical landscape for years to come.