Fri 24 May 2019
The Chinese smartphone maker might be forced to develop the Android rival the EU is hoping for.
By imposing restrictions on Huawei Technologies Co., the administration of U.S. President Donald Trump may force the Chinese company to do something that no one in tech has dared to do for a long time: Challenge Google’s control of the Android universe, which earned the U.S. company a huge European fine last year.
Huawei faces two big threats from U.S. technology export restrictions. One is the loss of American components for its products, a blow it cannot parry immediately if it wants to keep making top-flight smartphones. The other is the potential withdrawal of its Android license, which would stop Huawei from preinstalling the latest Google-approved version of the operating system and some key services Western users see as necessary — above all Google’s Play Store, the biggest repository of Android apps. This particular obstacle could, under the right conditions, turn into a Huawei strength in Europe, a market that accounts for almost a third of the company’s smartphone unit sales, according to market analytics company IDC.
Last July, the European Commission fined Google 4.34 billion euros ($4.85 billion) for imposing illegal restrictions on smartphone manufacturers. In exchange for the right to preinstall the Play Store, they had to agree, among other things, not to sell devices running versions of Android not approved by Google: so-called Android forks. These operating systems are developed from the open source version of Android, which anyone can use, including Huawei if the U.S. bans it from using American technology. Amazon.com Inc.’s Fire OS is the best-known Android fork today, though there are others around.
The commission wrote that by obstructing the development of Android forks, Google and its parent company Alphabet Inc. “closed off an important channel for competitors to introduce apps and services, in particular general search services, which could be pre-installed on Android forks.” In its ruling, it made a strong case for forks as platforms for Google-independent innovation that, if they were allowed to spread widely, could have curbed Google’s market dominance in various areas.
Google has appealed the ruling, but it has also removed restrictions on handset makers to avoid further fines. This, however, hasn’t led to the proliferation of alternative platforms based on open-source Android: Big phone makers are locked into comfortable relationships with Google and see no need to experiment. Days after the European Union fined Google, Huawei, at the time the biggest phone manufacturer that provided an easy opportunity to install alternative Android-based operating systems on its devices, ended the program without explanation.
France for Huawei
Percentage* of consumers who say they’ll consider buying a Huawei device when they’re next in the market for a smartphone
The company has said it developed its own operating system (likely an Android fork), and it’s been trying to luredevelopers to its app store. If the U.S. stops Huawei from preinstalling the Play Store, the Chinese manufacturer probably won’t spend much time educating consumers on how to install it on their own (the way people do now with phones bought in China). That’s not what most users expect on a new, expensive device. Instead, Huawei will want to offer developers an easy way to sell apps not just in the Google store but also in one preinstalled on Huawei devices — to “multi-home” them.
Huawei hasn’t been eager to get into an open confrontation with Google, which was a valued partner. But a breakup ordered by the U.S. government changes things. Huawei, with plenty of resources of its own (and most likely with support from the Chinese government, determined to fight back against the U.S.), could soon be investing heavily in the marketing and improvement of an Android fork. Given Huawei’s marketing potential, the effort isn’t necessarily doomed. And it could boost Asian and European developers deterred from competing in some areas — such as mapping, video services or even search — by Google’s enormous power.
This is something of a utopian scenario, I know. Huawei may never need to go on the warpath against Google: The U.S. and China could strike a trade deal that would make the specter of restrictions go away. Or, if Huawei is banned from buying U.S. technology, it could find itself unable to produce marketable phones for a while. And, of course, it is a company from Communist China, making it difficult for European regulators, and even for private developers, to embrace it as a savior from the overly dominant U.S. tech companies. Monopolies in tech don’t last forever, however. Sometimes they just need a push to start showing cracks. If the U.S. moves against Huawei, it might be unknowingly giving such a push to Google in the smartphone market.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of Media Revive Network.
To contact the editor responsible for this story:
Stacey Shick at sshick@bloomberg.net
Source: bloomberg
