Issue 33

Huawei go again

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

Some follow-up Huawei articles

I couldn't link to them all in the text above so if you're after a little bit more information, try one of these.

Learn more:

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:


Other bits of interest


Image of the week

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 33: Huawei go again was compiled by 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 their Riot.im account.