ZTE's license to pre-install Google's Android operating system on its mobile devices is in danger after the United States Department of Commerce moved to cut the supply of all hardware and software products to the company from U.S. firms for seven years. The decision comes amid escalating tensions between the U.S. and China over trade relations and is likely to prevent ZTE from releasing new Android smartphones stateside for the time being.
More to the point, the Department of Commerce's decision to sanction the Chinese smartphone and telecom equipment manufacturer stemmed from the company's recent imports to Iran, which broke Washington's trade sanctions imposed on the Asian country. ZTE was fined $890 million last year as part of a settlement it reached with the United States Department of Justice and the Office of Foreign Assets Control over the Iran sanctions. Following that penalty, U.S. companies are now being prohibited from selling their products to ZTE as part of a new sanction against Chinese firm which hasn't complied with the terms and conditions stipulated in its 2017 settlement. Previously, ZTE agreed to remove four senior officials from their positions and impose disciplinary actions against 35 others, though the Department of Commerce discovered last month that the company did not carry out the latter.
U.S. regulators are now also seeking to prevent ZTE's products from being purchased by any government agency with two bills currently making their way through both chambers of the Congress. Ajit Pai, chairman of the United States Federal Communications Commission, recently proposed new legislative measures against equipment with the potential to endanger U.S. national security interests which are set to be finalized in 2018. In essence, the government official is seeking to prevent the FCC's $8.5 billion Universal Service Fund from being used for the purchase of products and services from companies or states that the U.S. government considers to be a threat to the country's national security in any shape or form, including telecom suppliers such as ZTE and Huawei.