Google has announced the suspension of all commercial activities with Huawei. The Chinese company will not have a license for the Android operating system nor for Google services.
Google’s decision to block the authorization of its Android mobile operating system in Huawei could give a huge blow to the ambitions of the Chinese technology giant to become the leading player in smartphones globally.
The U.S. technology giant has suspended business with Huawei, which means that the transfer of hardware, software and key technical services is blocked. Google has taken this step to comply with Washington’s decision to put Huawei on the so-called “Entity List”, which means that American companies need a special license to sell products to the Chinese company.
Huawei can therefore no longer license Google’s Android operating system and other services that the company offers. The Chinese company is now able to use a public version of the Google operating system through the Open Source Android project. It means that future Huawei phones will not have any of the Google services that users expect from Android devices.
“We’re sticking to the order and reviewing the implications,” said a Google spokesman today. “For users of our services, Google Play and Google Play Protect security protections will continue to work on existing Huawei devices.
A Huawei spokesman told CNBC that the company is “evaluating the possible impact of this U.S. government action on consumers.
“Huawei has made a substantial contribution to the development and growth of Android worldwide. As one of Android’s leading global partners, we have worked closely with their open source platform to develop an ecosystem that has benefited both users and the industry,” the spokesman said. “Huawei will continue to provide security updates and after-sales services to all existing Huawei and Honor smartphones and tablets to cover those that have been sold or are still available globally. We will continue to build a secure and sustainable software ecosystem in order to provide the best experience to all users globally.
This is a blow to the Chinese company, which relies heavily on Android for the smartphones it sells outside of China. Within China, the company uses a modified version of Android that does not include Google’s pre-installed apps because search engine services are blocked in the country. But in markets outside China, Huawei smartphones use Android with Google apps.
Just over 49% of Huawei’s smartphone shipments in the first quarter of 2019 were in international markets outside mainland China, according to Canalys. Huawei was the second largest smartphone manufacturer by global market share in the first quarter. The company has already outlined its ambitions to become the first player in the smartphone market by 2020. But this latest move by Google could put a brake on the company’s projects.
“It’s a kind of “instant switch” for Huawei’s ambitions to outperform Samsung in the global market,” said Nicole Peng, vice president of mobility for Canalys, this morning at CNBC.
Huawei relies on key components from many other U.S. suppliers for everything from smartphones to network equipment. It has more than 30 U.S. companies among its “core suppliers. Some of these vendors, including Qualcomm and Intel, have told employees that they will not sell to Huawei until further notice. This according to a Bloomberg report.
Huawei, for its part, says it is preparing for the kind of situation that it will now face. In March, the company said it had developed its own operating system for its consumer products, in anticipation of when it would no longer be able to use Google or Microsoft. And just last week, the Nikkei Asian Review reported that Huawei would inform some suppliers that it would prepare itself for any problems related to the US-China trade war by developing its own technology.
Although Huawei has been able to reduce dependence on U.S. suppliers for some components, experts said it might not be enough because it still needs other parts from U.S. companies. And analysts also questioned the profitability of Huawei’s operating system.
Neil Shah, director of research at Counterpoint Research, said Huawei will have to rely on third-party Android app stores outside China because Google Play will not be installed by default. And this could be a problem.
“This is a clear disadvantage for your operating system (Huawei) compared to Android provided on Samsung or other phones, primarily in terms of the lack of apps available on the Play Store, as apps (some may be dated), and in terms of security, as they will not be screened by Google,” said Shah.
“As a result, all apps from U.S. companies will not be available and users will be forced to crack them or Huawei will have to make them available through third parties, which will be a huge task for the Chinese company,” he added.