A longtime industry expert explains why Trump's attack on Huawei could end up hurting Google and other US tech giants (GOOGL, FB, UBER)

GBA managing partner Gregor Berkowitz

  • The Trump
    administration’s assault on Huawei could
    end up harming Google and
    other US tech giants, said Gregor Berkowitz, a tech industry
    consultant with extensive experience in China and Asia.
  • The US government’s move to bar the Chinese device maker from
    using US tech products and services could encourage it to promote
    Chinese apps and services outside of China, Berkowitz said.
  • That could give companies such as Baidu a leg up over Google
    and Didi one over Uber in areas of the world where Huawei is
    strong, he said.
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    Insider’s homepage for more stories

Investors have already started to worry that
Apple may get caught in the crossfire
of the Trump
administration’s attacks on Huawei and the broader US-China trade

But the iPhone maker may not be the only tech giant that suffers
collateral damage in the conflict, warns Gregor Berkowitz, a
longtime tech-industry consultant. The administration’s moves
against Huawei could end up giving a leg up to the Chinese
competitors to US behemoths such as Google and harm those tech
giants’ ability to compete, particularly in the developing world,
he said. 

“There are many secondary effects” of the attack on Huawei “that
are maybe more significant than the primary effect,” Berkowitz

US officials
have charged that units of Huawei have conspired to steal trade
from T-Mobile, and have cautioned that the company’s
could be used to spy on people and companies
on behalf of the
Chinese government.

Last week,
as part of its targeting on Huawei
, the administration issued
an order barring US companies from supplying Huawei with their
products and services. That move not only barred smaller component
makers from dealing selling their products to the Chinese company,
but it also will
prohibit Google
and other tech companies from offering their
software to Huawei. On Monday, the US government
gave Huawei a temporary repreive
from the restrictions,
allowing it to continue to work with US companies to serve current

Read this:
President Trump’s national emergency likely won’t stop you from
buying a Huawei phone, much less an iPhone. Here’s what it means
for you.

As part of the restrictions, Huawei will no longer be able to
use the Google-supplied version of the Android operating system,
nor will it be able to offer its phone users access to the Google
Play app store. The company has said that it is
working on its own homegrown alternatives
to both.

Chinese alternatives to Google and Facebook could get a boost

Huawei is the
second largest smartphone maker
. Although its phones haven’t
gotten much traction in the US, they’re popular in China and in
many other countries around the world.

Ren Zhengfei huaweiInside China, Huawei already offers
local alternatives to US tech services, because Google’s Play store
and many US apps and services — such as Facebook and Uber — are
unavailable there. But now that it’s unable to work with US
companies, Huawei will likely start promoting those Chinese
alternatives outside of China, Berkowitz said.

“People like Google begin to lose out, because Huawei will point
its search [box] at Baidu, not at Google,” Berkowitz said. He
continued: “As the conflict or trade war between the US and China
[heats up] … we’re going see that set of Chinese suppliers begin
to spread throughout the world.”

Many US tech companies have struggled to gain traction in China
or, finding themselves in untenable positions due to the country’s
censorship and domestic surveillance policies,
have abandoned the market
. Now, they may find themselves in
losing out to Chinese firms in developing countries also, Berkowitz
said. Huawei could promote Didi’s ride hailing services instead of
Uber’s, or Chinese messaging service WeChat instead of Facebook’s
WhatsApp, he said.

US tech companies may find themselves not just facing trouble in
China, but also “that Baidu becomes the default search engine for
India and for consumers in Africa and the email provider and online
transaction provider,” Berkovitz said. 

In the developing world, price trumps all

At least right now, the US tech services in general tend to be
better known and more popular outside of China than their Chinese
rivals. But that brand strength may not matter all that much in
developing countries.

Much of Huawei’s success in the smartphone market has come from
offering devices with top-end features at prices that are
significantly lower than their rivals. If a Huawei phone is selling
in a developing country at a steep discount to the price of an
iPhone or Samsung phone there — but is perceived to offer similar
features — it’s going to be attractive to consumers in those
countries, regardless of whether it has the Google Play store or
Google’s search app, Berkowitz said.

What’s going to matter to such customers is “more pure economics
and the cost of the phone,” he said.

2 stark charts show why Huawei’s attempt to build a replacement for
Android will fail

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A longtime industry expert explains why Trump's attack on Huawei could end up hurting Google and other US tech giants (GOOGL, FB, UBER)