Google’s (GOOG, GOOGL) decision to revoke Huawei’s operating license for its Android phones is “not really separate from the trade war,” Parag Khanna, author of “The Future is Asian,” said in an interview on The First Trade.
“These are intimately connected issues,” he added.
The American tech giant dealt a big blow to the Chinese firm by blocking Huawei from some updates to its Android operating system. New designs of Huawei smartphones will lose access to some of Google apps and services—raising the question of whether consumers will choose a mobile device from the Chinese smartphone maker if they are unable to update applications like YouTube or Maps.
Much of the Huawei’s brand recognition is built on its smartphone business. The second-largest smartphone maker in the world, Huawei owns 14.6% of that market, according to International Data Corp. Only Samsung has a larger market share with 20.3% of the market.
While Google’s move will likely hurt Huawei in the short term, Khanna noted the firm has been preparing a new operating system as a “Plan B” for a few years and eventually may be able to find a path forward without Google.
“The further out you look though what we see is even technologies like Android are substitutable,” Khanna said. “They (Huawei) are going to find a way to go on their own, so to speak – they will either rely on their own operating system, use Linux or a variance of that to make sure they have that business continuity for their company and for their customers.”
Statement regarding U.S. Commerce Department’s addition of Huawei on the so-called Entity List pic.twitter.com/XgwS6AXc8G— Huawei Technologies (@Huawei) May 16, 2019
The block comes on the heels of the Commerce Department’s announcement last week that Huawei and nearly 70 of its affiliates were being added to its “Entity List,” requiring licenses and official approval for exports or transfers. In a report, the Trump administration stated that the End-User Review committee, which includes representatives from the State, Defense, Commerce and Energy Departments, “has determined there is reasonable cause to believe that Huawei has been involved in activities contrary to the national security or foreign policy interests of the United States.”
In a statement posted on Twitter, Huawei said it “is against the decision” by the U.S. to add the company to the list and that it will “seek remedies immediately and find a resolution to this matter.”
Other companies have followed suit on cutting Huawei off: Chipmakers including Intel, Qualcomm, and Xilinx, which make components for smartphones, have begun complying with Trump’s order and stopped shipments to Huawei.
Jillian Harding is a producer at Yahoo Finance.
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