By Spencer Feingold and Rebecca Heilweil
In a major blow to the embattled Chinese telecom giant Huawei, Google confirmed Monday that it is restricting the company's access to its Android licenses.
The decision follows an executive order from President Donald Trump last week that forbids U.S. companies from purchasing goods from sources that could threaten the United States and the Department of Commerce’s decision to add Huawei to its “Entity List” — a list of companies that U.S. businesses are banned from selling American technology to without government approval.
"We are complying with the order and reviewing the implications,” a Google spokesperson told Cheddar. “For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices.”
Huawei, which aspires to be the world’s largest mobile phone provider, will no longer be able to access the Android database or to license Google’s Google Play Store and apps like Gmail. (It will still be able to access the open-source version of Android). The decision from Google ($GOOGL) was first reported by Reuters on Sunday. Huawei will no longer have access to Google’s operating system and security updates.
“The United States has very legitimate complaints about the way China is handling the high tech sector,” Clark Packard, a trade policy manager at the public policy firm R Street Institute, told Cheddar on Monday.
The decision leaves Huawei wrestling with how to keep its business afloat without key access to U.S. hardware and software suppliers amid the escalating trade war between the U.S. and China
“Huawei has made substantial contributions to the development and growth of Android around the world. As one of Android’s key global partners, we have worked closely with their open-source platform to develop an ecosystem that has benefitted both users and the industry,” Huawei said in a statement to Cheddar.
Analysts note, however, that Huawei’s severance from the American market could be an opportunity for China to boost its independence in the technology industry.
“Huawei, and the Chinese government — writ large — have been trying to push for tech independence for several years now. This might actually be the final push that gets them to start sourcing from alternative locations, if not build it indigenously or within China,” Riley Walters, an analyst of technology and economic policy in Asia at the Heritage Foundation, told Cheddar. “Huawei has been stockpiling — if you will — or making contingency plans in case this were to happen. It wasn’t too hard to foresee something like this happening.”
Huawei has supposedly collected enough hardware to keep its business running for at least three months, Bloomberg reported citing anonymous sources.
Last week, the head of security for Huawei USA, Andy Purdy, told Cheddar that the company had already been planning to diversify its suppliers, but that it preferred to purchase from U.S. companies. Purdy said that about 32 percent of Huawei components — which include major chip manufacturers like Qualcomm — come from American firms, and that the company conducts $11 billion worth of business annually in the U.S.
Google's decision also follows weeks of market turmoil after trade negotiations between the U.S. and China deteriorated. Earlier this month, the Trump administration raised tariffs from 10 percent to 25 percent on $200 billion in Chinese goods; China responded by raising tariffs on $60 billion of U.S. goods starting June 1.
“There will be blood in the street between the United States and China if we keep going back and forth with this tit-for-tat,” Packard said.
As of Monday morning, Bloomberg reported that other major tech firms like Intel, Qualcomm, and Broadcom had already stopped selling to Huawei.
“We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally,” Huawei's statement added.
Meanwhile, with its decision to isolate Huawei, Google has again demonstrated its willingness to abide by U.S. regulations as it pushes further into the Chinese market.
“The United States is Google’s biggest market, and so it wants to stay friendly with the U.S. government and the U.S. market more than the concessions its willing to make to the Chinese government,” explained Walters.
— Cheddar’s Hope King contributed to this report.
For full interview click here.