Reprinted from RealClearMarkets
In 2016 Chinese smartphone maker Huawei Technologies shipped 140 million smartphones. More specifically, in 2016 Huawei Technologies shipped 140 million supercomputers that will enable global connectivity for more and more people. They’re called smartphones for a reason. What we have in our pockets amounts to computing power that would have put all desktop models to shame not too long ago.
Huawei is rapidly expanding its share of an exploding market for smartphones. Will it eclipse Apple and Samsung? It’s hard to say. But at the very least it should be said that Huawei could beat Apple, and it could beat Samsung. For those who might dismiss either scenario, keep in mind that Apple and Steve Jobs were ridiculed ahead of the iPhone’s rollout. The assumption was that dominant brands like Blackberry would continue to dominate. Until they didn’t.
So while Apple could surely remain on top, we in the U.S. will not be hurt one iota if Huawei out-innovates Apple on the way to dominance in the smartphone space. To presume otherwise is to presume that China is presently being harmed because Apple gets 20% of its iPhone sales in China.
Which brings us to Google’s business relationship with Huawei. When we remember the quantity of supercomputers being shipped by Huawei, it’s only logical that Google would have a relationship with the Chinese company. To not have one would be self-defeating. At the same time, it doesn’t really matter why Google has dealings with Huawei. As a profit-seeking corporation it should be able to do as it wishes subject to shareholder approval. The problem is certain politicians. Republican or Democrat, some don’t care about shareholder rights when they see an opportunity to demagogue an issue. And so they’re harassing Google. In shameful fashion. “China” is now a “serious” issue for politicians who aren’t serious.
Sen. Mark Warner (D-Va.) recently asserted that Google’s relationship with Huawei raises “serious national security concerns.” The previous charge is, according to reporting in the Washington Post, based on Huawei’s “alleged ties to the government in Beijing” such that the China-based corporation “may have exposed smartphone users’ text messages and other data to privacy and security threats.” What a laugh.
For one, that Huawei may or may not have “ties to the government in Beijing” is a nothing story. Figure that some of the U.S.’s most established businesses have rather public ties to “Washington.” Sadly they do. But the fact that they do doesn’t necessarily render their actions nefarious, criminal, or imperil the national security of the countries whose companies have business ties to them. No doubt it’s unfortunate that businesses have found it necessary to cozy up to governments, no doubt it’s a barrier to the growth of many of those businesses, but it’s hardly something unique to China.
As for Google having allegedly exposed user data to Huawei and others, a spokesman for the Mountain View, CA-based company told the Post that its data-sharing agreements with companies like Huawei “include privacy and security protections for user data.” But even if there were no protections, so what? Internet users don’t pay Google to use its indispensable search engine, which means they should expect Google to profit from their accession of the search function so thatthey can access it for free. It should be added that they’re also not forced to use Google’s other products and services, free and unfree. It’s all voluntary.
Furthermore, all successful businesses, whether they be grocery stores, carmakers, or technology behemoths, regularly try to learn as much as they can about their customers. That’s how they succeed – sometimes – in meeting customer needs. Applied to Google and Huawei, is it any wonder that a maker of supercomputers would have ties to a company whose search engine is used by so many owners of those computers? Each business is prosperous for a reason. That they strive to understand their users and buyers looms large in their success. If not, they wouldn’t share or sell information to one another.
So while in a normal world the U.S. would be led by politicians who don’t concern themselves with the doings of for-profit companies that they can’t possibly understand, the world is sadly imperfect. So is the U.S. Its people and its companies thrive despite the comical (if it weren’t so sad) ineptitude of its political class. The members of the latter like to meddle, particularly with larger corporations. In thinking about the harassment of Google, one can only assume that far-fetched as it may sound in the near term, at least one factor is fear that Huawei could eventually overtake Apple. In that case, why not sully its name now? Why not create the illogical perception that the smartphone maker is an agent of evil Chinese officials as a way of keeping it from competing in the U.S.? How sad if so.
Assuming Huawei does win, as in if it does beat Apple, the American consumer once again gains. Figure that Apple has 123,000 full-time employees, but there are 330 million Americans. Traveling back in time, who among us would be losing sleep today if Finland-based Nokia had reinvented the smartphone, as opposed to Apple? At one time Nokia phones were as ubiquitous on U.S. streets as iPhones are today. The U.S. economy was booming then. It generally does in countries eager to divide up work with the whole world.
None of this matters to politicians looking to grandstand. And so they do just that. Sen. Tom Cotton (R – Ar.) described Google’s dealings with Huawei as it “doing business with a virtual arm of the Chinese Communist Party,” which borders on ridiculous. Lest we forget, Huawei ships hundreds of millions of smartphones. Has Cotton, or any other reasonably sane politician ever heard of a business attached to government that has so many voluntary customers? Cotton and Warner should hang their politicized heads in shame.
As for Google, it should stride confidently. And tell the political class to watch it. While it insults Google to compare it to the ankle-biters in Congress, Google is exponentially more popular than they are. This should be remembered by politicians eager for a fight. Up against Google they’ll lose, and lose big. Few of us could happily live without Google, which is something that can’t be said for Congress.