Trump Hits Huawei In the Mouth: How Can That Hit You In the Pocket?

Last week, as trade tensions continued to rise between China and the US, the Trump administration landed one of the heaviest blows yet on Beijing, moving to severely restrict the Chinese tech and telecoms giant Huawei's ability to do business with American firms.

What happened? Two things: The Trump administration formally banned sales of Huawei telecoms equipment in the US. More importantly, it also prohibited American firms from selling their technology to Huawei without a special license.

Why? It's complicated. Technically, Huawei was blacklisted from acquiring US technology due to alleged violations of US sanctions against Iran. But the US is also concerned that Huawei could allow Beijing to spy on or disrupt data flowing across the next-generation 5G data networks of the US or its allies. President Trump may also believe the moves will give him extra leverage in his broader fight with Beijing over trade and technology.

The fallout is already starting to hit. Here's where:


Your pocket: Check your phone, because if you're one of the 200 million people worldwide who bought a Huawei handset last year, you may have stopped receiving software updates over the weekend from Google, whose Android mobile operating system powers Huawei's smartphones.

The US yesterday issued a temporary license that will allow software updates to "existing" handsets for 90 days – but that's not long. As other US tech companies distance themselves from Huawei, and the company is forced to find new suppliers, the cost of cellphones and other telecoms equipment will rise, both for consumers and companies.

US-China relations: This is potentially a huge blow to China. Huawei is a world leader in 5G technology, the next generation of mobile networks needed to run driverless cars and smart cities. But the company still relies on US-built chips and software, so losing access to American suppliers is a big deal.

If Huawei can't negotiate its way out of Trump's new measures, Beijing could retaliate by messing with US tech companies like Apple that do huge business in China, or by attempting to restrict US firms' access to China's massive supply of rare earths metals which are essential to powering many smartphones and other high-tech gadgets.

The structure of the global economy: Over the past 30 years, the globalization of supply chains – that is, firms sourcing parts and labor from the countries that can supply those things most efficiently – has generally been seen as a good thing. It reduced the cost of goods for Western consumers, gave developing countries a leg up, and created economic interdependencies thought to minimize the chance of war.

But forbidding the largest US tech firms from doing business with the largest Chinese ones is a direct rejection of that idea. As this astute Twitter thread points out, this is new and uncharted territory.

The upshot: The US and China still have time to find a solution, but the risk of a geopolitical break with major consequences for your wallet, for US-China relations, and even for the global economy is rising. Fast.

Is anti-trust action a good way to deal with tech companies?

It is certainly a way to get the attention of tech companies. They fear it massively. But breaking up these companies into different components - way harder than most people think.

Is Apple changing the iPad?

Why yes they're totally changing the operating system of the iPad. They've given it a new name. They are making it more like a computer and less like a big phone or a tweener more like a laptop

Are Facebook ads discriminatory?

Some are discriminatory. But it's hard to see whether the problems are with the data the advertisers have the data Facebook has, the interactions between the two. And in fact to make ads not discriminatory. Facebook would have to figure out the race, gender, of all of its users which could involve privacy violations So very complicated, hard to get right, but something to work on.

Last, The Rant: there are way too many robocalls. They're coming in nonstop. If my phone wasn't on airplane mode one would probably come in right now. The FCC has started some action, but they should do way more.

I'm in Athens for a bit of a different Media in 60 this week. I'm at a media conference where everyone has been reading the same piece of research. The digital news report out of the Reuters Institute in Oxford. Really the biggest piece of media research to come out every year. I recommend you read all 150 pages. However, for now, I'll give you the Cliff Notes in 60 seconds.

First pivot to pay more and more newsrooms are moving to subscription or membership model but the number of people willing to pay for news is actually plateauing and when they do pay it's only for one subscription. So it is a winner takes all model and in a battle between the New York Times subscription and your Netflix, Netflix almost always wins.

Second is pivot to private. So we're seeing declining use of Facebook though people are not giving it up altogether. Increased use of WhatsApp and Instagram which is good for them because it's the exact same company. Those were a couple of really smart acquisitions. We're also seeing more and more sharing and commenting of news in private or semi-private groups rather than in public feeds because probably people just feel safer there.

Third is pivot to audio. Podcast is in. 1 in 3 people have listened to one in the past month 1 in 2 for the under 35 audience and finally trust always a big issue. Trust is down two points to 42% of people saying they generally trust the media less than half of people even trust outlets that they themselves go to for their news. People feel that journalists are better at breaking news than explaining it so hopefully I'm explaining here. And also we're seeing massive news avoidance one in three people just avoiding the news. It's up 11 points in the UK because people are so so fed up with Brexit understandably.

Fair courts. Independent prosecutors. Clean police. Leaders who are held to account… These things are essential for a society to function under what we call rule of law. In a busy news week, three of the biggest stories in the world shared a common thread: the rule of law is in trouble.

After violent clashes in Hong Kong between police and activists, local legislators have postponed debate over a controversial new law that would permit the extradition of Hong Kong residents to mainland China. More protests are expected this weekend, but Hong Kong chief executive Carrie Lam, who enjoys the strong backing of China's leadership in Beijing, still intends to see the law through.

Spoiler: it's only a matter of time before she does. That will leave Hong Kongers subject to a mainland judicial system that is far more politicized and opaque than their local courts. What's more, Ms. Lam wants to dust off long-shelved proposals that would give Chinese authorities more leeway to crack down on dissent in the former British territory.

Meanwhile, earlier this week, the Kremlin responded to an unusually strong outcry over the bogus jailing of Moscow-based investigative journalist Ivan Golunov, by intervening to scrap the charges and fire two senior officers responsible for the arrest. That sounds like good news – and for Mr Golunov it most certainly is. But selective intervention by a Tsar-like president isn't at all the same thing as true rule of law. Both the arrest and subsequent intervention by President Vladimir Putin reinforce the pattern of arbitrary power that is one of Russia's biggest and most stubborn problems.

And sometimes the rule of law can suffer if prosecutors abuse that power. Over to Brazil, where the judge who heard trials in the massive "Lavo Jato" corruption investigation that's jailed hundreds of once-untouchable business leaders and politicians -- including the popular leftist former president Luiz Inacio "Lula" da Silva -- appears to have been improperly coordinating with prosecutors. That's according to leaked conversations published by The Intercept earlier this week. The revelations raise questions not only about Lula's conviction, but about the fairness and transparency of the whole probe. And it doesn't help that judge in question -- Sergio Moro -- is now Justice Minister under President Jair Bolsonaro, who cruised to victory in last year's presidential election after Lula was disqualified due to his conviction. Talk about an own-goal for the rule of law.

More trouble brewing in the Strait of Hormuz Two oil tankers were attacked in the Gulf of Oman yesterday, and their crews had to be rescued by Iranian and US naval vessels. This follows attacks on four tankers off the coast of the United Arab Emirates last month. Washington blames Iran, but Tehran — which earlier this week issued vague threats against the US — says the timing is "suspicious." After all, one of the tankers attacked Thursday was Japanese-owned — would Iran hit the vessel right as Japan's prime minister was in Iran on a mission to ease US-Iran tensions? We're watching to see if the temperature rises further between Washington (and its Gulf Arab allies) and Tehran, but we're also watching the gas pump: 20% of the world's traded oil passes through the Strait of Hormuz every day.

Boris Johnson — Former UK foreign secretary Boris Johnson on Thursday topped the first official ballot of Tory MPs in the race to succeed outgoing Prime Minister Theresa May. Boris received 114 votes and more than twice as many as the next-closest contender in a crowded field. The results make him a virtual shoe-in to become the next PM in a final vote by 124,000 rank-and-file Conservative party members later this month. Less certain is whether the former London mayor and media personality, whose late-breaking support for Brexit may have played a role in the UK's vote to leave the EU in 2016, can do any better than May in securing a Brexit deal that's acceptable to Parliament.

Protests in Haiti — The Caribbean Island nation has been paralyzed for days by fresh protests demanding the resignation of President Jovenel Moise, whom a government audit has implicated in the misappropriation of millions dollars earmarked for poverty alleviation. But wait… the plot thickens: the money was part of a Venezuelan regional development program in which Caracas allowed Caribbean nations to defer payments on Venezuelan oil imports so they could free up more cash for economic development. Haiti is one of the Western hemisphere's poorest countries. Moise says he has done nothing wrong and that he will be vindicated by a further investigation: we are watching to see if the streets believe him.

What We Are Ignoring

AMLO, Used Plane Salesman — Mexico's President Andres Manuel Lopez Obrador announced this week he will sell the luxurious presidential plane he inherited from his predecessor, and direct the cash towards plans to reduce the flow of US-bound migrants that pass through his country. We certainly can't deny that it's a cool plane: a sumptuously appointed Boeing 787 Dreamliner that AMLO says he can get $150 million for. But it'll take a lot more than that to address the problem of desperate Central Americans trying to reach the US border. What's more, AMLO had already promised to sell this plane to help poor people in Mexico. As "man of the people" gestures go, this one sends some oddly mixed messages.