Huawei's retail partnership with AT&T that was supposed to provide the Chinese tech giant with a major entry point into the U.S. smartphone market fell through in a high-profile fashion a day before its scheduled CES 2018 announcement, following numerous reports about Washington pressuring the mobile service provider into cutting its commercial ties with the Shenzhen-based company. While most industry watchers agree the development isn't related to handsets themselves and is instead a consequence of Huawei's ambitions to become more deeply involved with the networking infrastructure in the country, the issue comes down to the fact that various intelligence committees are concerned about the possibility of the company spying on the American people and the government, whether in order to share its findings with Beijing or for another purpose, but without being opposed to providing the data it mines to China if requested to do so.
The failure of Huawei's deal with AT&T is far from the first occasion on which the firm was accused of espionage and also not the first time on which its accusers provided no evidence to support their claims. The company's troubles with the United States government began during the Obama Administration in the spring of 2011 when the White House ordered an in-depth review of its possibly surreptitious practices. Following 18 months of assessment, the investigators found no conclusive evidence proving that Huawei poses a security risk by spying on U.S. actors on behalf of China, Reuters reported in October of 2012. Earlier that month, The Washington Post reported Cisco frequently lobbied in favor of added federal scrutiny of Huawei and did so as a tactic to avoid having to face tougher competition in the U.S. Cisco previously distributed materials talking about Huawei being unable to deny its ties to China's People's Liberation Army to which its founder Ren Zhengfei once belonged, as well as its links to Beijing itself.
On the other hand, what that report fails to mention is that Cisco and Huawei have a history of patent litigation, with the former first suing the latter over patent infringement related to a router lineup fifteen years ago. While the lawsuit was eventually dropped in mid-2004, its settlement required Huawei to modify its series of devices so as to avoid misappropriating "core parts of the routing code" powering its products that are owned by Cisco, as its Chief Compliance Officer Mark Chandler claimed in late 2012. The takeaway from that episode is that while the possibility of Cisco lobbying against Huawei may not (solely) stem from its desire to avoid added competition in the U.S. networking market, no evidence of the Chinese company actively spying on any U.S. actor has been discovered despite extremely high levels of scrutiny.
Today, Washington is said to be pushing for AT&T to effectively disavow Huawei, most notably in regards to their still active 5G partnership. The intelligence community in the country is understood to be worried about the economical and national security implications of the next wireless revolution and hence doesn't want Huawei to participate in the efforts to define and deploy 5G networks in the U.S., insiders repeatedly claimed in recent weeks. While smartphones are essentially described as collateral damage by those reports, political structures in the country are seemingly adamant to inhibit Huawei's attempts to do any kind of business in the U.S. going forward. Given AT&T's current legal clash with the Department of Justice over its proposed Time Warner merger which strained its relations with Washington and the number of lucrative government contracts it's enjoying, as well as its own role in the federal data collection efforts, the telecom giant is unlikely to do anything but completely sever its ties with Huawei in the coming days.
Some critics of the U.S. opposition to Huawei's business ambitions in the country are claiming the politicians are playing into the general "hysteria" surrounding Washington's strained relations with Beijing over trade, which is how Motherboard's Karl Bode is describing the situation, specifically pointing to the Defending U.S. Government Communications Act recently introduced by Texas Representative Mike Conaway with the sole purpose of preventing Huawei and ZTE from selling their equipment to federal agencies. The same actors are quick to point out the stateside government's own spying endeavors, many of which were detailed by former NSA contractor Edward Snowden in 2013.
At the end of the day, even though no spying accusations made against Huawei in the U.S. ever stuck, none of the current arguments propagated by its defenders are likely to help it establish a stateside presence. While its newest setback may be a result of the Trump administration's protectionist policy, an even more aggressive take on the same approach to domestic economics which discourages foreign competition allowed it to thrive in China. Coupled with the political context of the current trade clash between Washington and Beijing, the company will hardly win over many sympathizers or advance its U.S. ambitions by calling for a level playing field or claiming it isn't allowed to partake in one. Whether anything changes on that front anytime soon remains to be seen but as things stand right now, Huawei won't be entering the U.S. in a significant manner anytime soon.