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The real fallout from Google's Huawei Android restriction

Lianna Brinded
Head of Yahoo Finance UK
A mobile phone is on sale at the Huawei Experience Center on May 16, 2019 in Hangzhou, Zhejiang Province of China. (Photo by Long Wei/VCG via Getty Images)

Google (GOOGL) dealt a major blow to Chinese telecoms giant Huawei by blocking it from some updates to the Android operating system.

This means new designs of Huawei smartphones will lose access to some Google apps. This paves a new direction for consumers who will end up choosing whether they want a mobile from the Chinese giant that won’t be updated with apps, like YouTube and Maps.

However, those who already have Huawei smartphones will be able to update apps and push through security fixes.

US president Donald Trump’s administration placed Huawei on a list that prevents American companies from trading with them, unless they have a specific licence to do so.

READ MORE: China's Huawei restricted from using U.S. suppliers

Google said it was "complying with the order and reviewing the implications.” While Huawei has not put out a formal statement in response to Google’s move, Huawei chief executive Ren Zhengfei told Japanese media on Saturday: "We have already been preparing for this."

Why Huawei is seen as a threat

Huawei has come under fire from many governments around the world.

The US have continually pointed out Huawei’s ties to the Chinese government as well as emphasising China’s National Intelligence Law that says organisations must “support, co-operate with and collaborate in national intelligence work.”

The US, as well as Australia and New Zealand, has since barred local firms from using Huawei to provide the technology for their 5G networks.

The UK is yet to place a formal ban on Huawei.

In March this year, the UK’s National Cyber Security Centre, which is part of the UK government’s intelligence and security organisation GCHQ, released a report that severely criticised the Chinese company, by saying there are “significant technical issues in Huawei’s engineering processes” and its approach to software development brings “significantly increased risk to UK operators.”

The Centre also said it can provide “only limited assurance that the long-term security risks can be managed in the Huawei equipment currently deployed in the UK” and that it “can only provide limited assurance that all risks to UK national security from Huawei’s involvement in the UK’s critical networks can be sufficiently mitigated long-term.”

At the time of the report, Huawei said it took the concerns “very seriously” and that it would continue to work with UK operators and the National Cyber Security Centre to meet their requirements.

In February, the head of Britain’s foreign intelligence service MI6, Alex Younger warned at the Munich Security Conference against the UK using a single provider of equipment in new 5G mobile networks.

What this could mean for the smartphone market

Android makes up a huge amount of the smartphone market and if new Huawei handsets are prevented from app updates, downloads, and security features, this could pose a tricky decision for a consumer.

For example, as a smartphone shopper, you would not want an Android phone that risks a lack access to Google's Play Store.

Android made up a massive 74.45% of the sector, according to Statcounter for the period January 2018 to January 2019. This is in comparison to Apple’s iOS of 22.85%.

Furthermore, the political fallout and bans over Huawei could also start to reshape the smartphone market and slow down growth of Chinese upstarts.

“Globally, there were 3.6 billion active smartphones in use in June 2018,” said a report by Newzoo. “The world’s most popular smartphone brand was Samsung, boasting 893 million active devices and a market share of 27%. Apple was a close second, with a market share of 24%. Samsung’s lead is mostly due to the company’s selection of budget devices, which fare well in developing markets such as India.

“Globally, Chinese manufacturers Oppo, Xiaomi, Huawei, and Vivo came in at #3, #4, #5, and #6, respectively. Together, the four Chinese companies make up a third of the world’s active smartphones.”