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New US proposal to combat HUAWEI's dominance: Invest in the competition.
As the HUAWEI trade ban rages on, US Attorney General William Barr suggested another tactic to combat the Chinese tech giant — investing in its competitors. According to The Wall Street Journal, Barr thinks US firms investing in companies such as Nokia and Ericsson is one of the best ways to challenge HUAWEI’s dominance in the telecommunications equipment market.
It may not sound like it at first, but this suggestion may be one of the most aggressive proposals coming from the Trump administration so far. This means the government doesn’t just want to keep the US and its allies from doing business with HUAWEI, but it wants to directly support and endorse the competition.
This is really about taking power away from China.
“We have to make a decision on the ‘horse’ we are going to ride in this race,” said Barr during a speech at the Center for Strategic and International Studies in Washington.
This may sound like a direct attack against HUAWEI, but it’s bigger than that. This is really about taking power away from China and mitigating what US officials see as a threat to US economic and national security.
Nokia is based in Finland, and Ericsson is based in Sweden. Taking the telecommunications business away from HUAWEI effectively takes it away from China.
Barr warns that allowing Chinese companies to lead the telecom industry and future 5G networks posse a “monumental danger” to US national security and the future of its economy.
“Some propose that these concerns could be met by the United States aligning itself with Nokia and/or Ericsson through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies,” said Barr. “Putting our large market and financial muscle behind one or both of these firms would make it a more formidable competitor and eliminate concerns over its staying power.”
Nokia and Ericsson already supply cell tower equipment to network operators around the world, but both struggle to gain market share and deliver consistent profits as HUAWEI’s dominance grows. Barr and the Trump administration think putting momentum behind these companies could finally tip the scales in the US government’s favor.