Huawei go again

Issue 24/2019

If you're a Chinese technology company or an American consumer, last week was not a good week for you. A refresher:

  • The United States added Huawei and 70 affiliates to its "Entity List", effectively labelling the company as acting "contrary to US national security".
  • President Donald Trump declared a national emergency, barring US companies from transacting with companies on the "Entity List" on national security grounds.

Huawei isn't just banned from doing business in the United States; American companies are banned from buying from or selling to it (and ZTE) at any point along the supply chain. That includes software, which means no more Google Maps or YouTube on new Huawei phones. Huawei was understandably not happy and issued this response:

"If the US restricts Huawei, it will not make the US safer, nor will it make the US stronger. It will only force the US to use inferior and expensive alternative equipment, lagging behind other countries ... and ultimately harming US companies and consumers."

Regular readers know which side of the fence I sit on this issue. I wouldn't trust nor support a Chinese government-sponsored company any more than I would a US-sponsored company, but in this case even if Huawei were a government spy-pawn, there are relatively cheap and easy methods to mitigate the risks involved (and no, a "no-spy contract" is not sufficient).

What I am in favour of is competition and cheaper network infrastructure for consumers the world over, and if the Chinese government is happy to subsidise that then more power to it. Trump was supposedly on board with that, until he started to lose his 'trade war' with China. Here's a tweet of his from two months ago, when negotiations with China were going well:

"I want the United States to win through competition, not by blocking out currently more advanced technologies. We must always be the leader in everything we do, especially when it comes to the very exciting world of technology!" - President Donald Trump, 21 Feb 2019.

But his attitude started to change when it became clear China was not as amicable to the US' terms as he initially thought, so he needed another avenue down which he could pressure China: national security.

It's vague enough that you don't need any actual evidence of espionage, or intent to commit espionage, and it really appeals to his voter base. When you break it down, banning Huawei (and its affiliates) is simply part of a broader political play, with national security a red herring used to slap China into submission over the ongoing trade dispute, which itself is the result of an erroneous view that there is something wrong with bilateral trade deficits.

Sadly, the entire dispute with China stems from a misunderstanding of basic economics. That misunderstanding is also about the only consistent belief Trump has held throughout his adult life. The Huawei ban is just the latest step in Trump's revival of old school - and long discredited - mercantilism, with the United States trying to protect local companies at the expense of its own consumers. World Trade Organisation rules dictate that a country can't use protectionism as a justification to restrict competition so Trump needed something else, so national security it was.

If you need a blueprint as to how this whole saga plays out from here, just read a summary of mercantilism. It's an old, fallacious theory that much like measles won't die out because of a vocal, ill-informed minority. As with measles, those who cannot be vaccinated - or those exposed to China's supply chain - will pay the highest price.

Enjoy the rest of this week's issue. Cheers,

— Justin


The bits



Apple will lobby hard

Not only did Apple lose a Supreme Court case which may eventually force it to lower fees on App Store sales, but the latest round of Trump tariffs - which could be in effect as soon as 24 June - could seriously hurt its profit margins.

Learn more:


Another Facebook app, another security breach

Facebook is almost as bad at securing its applications as it is at protecting its users' privacy. In other news, never leave cryptocurrencies on an exchange. They're even worse at security than Facebook.

Learn more:


Europe's privacy trade-off

I don't think Europe will create a more privacy friendly internet. Its mountains of regulations will eventually form a less-innovative, more politically correct parallel internet that savvy users will actively try to circumvent (e.g. through VPNs).

Learn more:



Image of the week

View source

Polls fail at predicting another election

Another election, another failure by polling companies to predict the result. Brexit in the UK, Trump in the US and now Morrison in Australia, who hadn't won a single poll in years. There's a clear lesson here: don't trust the pollsters (or the bookies, which were also predicting a comfortable Labor win).


That's all for now. If you enjoyed this issue, feel free to share it via email


Issue 24/2019: Huawei go again was compiled by Dr Justin Pyvis and delivered on 21 May, 2019. Feel free to send feedback, suggestions for future issues, ideas, insults, or pretty much anything that crosses your mind to his Keybase or Twitter account.