The US-China trade war has taken a new turn. China is preparing to launch an antitrust probe into Google, based on complaints made by Huawei, reported Rueters. Huawei had complained to China’s regulator that Google has leveraged its dominance in the mobile operating system to stifle competition.
A formal investigation may be initiated as soon as October, two unnamed sources told the publication.
The issue between Huawei and Google
Huawei is currently the largest smartphone maker in the world. However, this is largely because of Chinese domestic sales. Its international business has suffered greatly after Google stopped selling Huawei licensed versions of its Android operating system. While Huawei can still use public versions of Android, it wouldn’t have Google’s proprietary services like Google Play Store, Gmail or YouTube.
- Why did Google cut ties to Huawei: The Alphabet-owned company was forced to do so in May 2019, after the US government added Huawei and 70 of its affiliates to its “Entity List”. Huawei was essentially prohibited from importing, exporting or using American technology. This meant Google could no longer have business transactions with Huawei. Soon enough, Google cut off Huawei’s Android license.
- But what did Huawei do? The government was acting on suspicions that Huawei and ZTE were allowing the Chinese government to access data of their American users. The US government’s actions were part of a larger trade war being waged by the country on China. It was also an attempt to arrest Huawei and fellow Chinese company ZTE’s participation in the country’s 5G market. Huawei’s pariah status was cemented when the US government declared the company as a “national security threat” in July 2020.
Huawei has said that the US blacklist led to a shortfall in Huawei’s revenue by as much as $12 billion. Interestingly, Google’s services are not available on any device, including Huawei’s, in China because of the country internet firewall. An ability to use Android would most likely only help its international prospects, not domestic.
Huawei’s case against Google
Huawei seems have told China’s market regulator, the State Administration for Market Regulation, that Google’s market dominance was causing “extreme damage” to Chinese companies like itself. An unnamed source told Reuters that losing the Android license woud lead to loss of confidence and revenue of Huawei. The case has reportedly been submitted to the State Council’s antirust committee for review.
The Chinese regulator will reportedly look at how its peers in other countries like India and those in Europe have dealt with Google in antitrust cases. In India, Google is currently facing an investigation by the Competition Commission of India (CCI), wherein it has been accused of using its dominant market position to unfairly promote its GooglePay app.
China might reportedly consider fining Google based on its global revenues, rather than its local revenues. The country has a ready example from the European Commission which had fined Google 1.29% of its turnover ( €1.49 billion) in 2018 for violating EU’s antitrust rules. The commission had held that Google abused it market dominance by placing restrictions on third-party websites, preventing rivals from placing ads on their websites.
Related: Huawei to release its homegrown OS
Meanwhile, with no option left, Huawei has decided to switch from using Android on its devices to its own Harmony OS. Last month, the company unveiled the latest version of the Harmony OS, which would be released on Huawei phones as soon as 2021.
- Google pulls Huawei’s Android licence days after US govt put it on trade blacklist
- US Commerce Department adds Huawei and 70 affiliates to trade blacklist
- US considering stopping export of American tech to China’s largest semiconductor manufacturer: Report
- FCC designates Huawei, ZTE as threats to US national security
- 2001-2019: Huawei’s long history of being considered a national security threat