After Scrutinizing Facebook, Congress Turns To Google Deal With Huawei

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By Stu Woo and Douglas MacMillan

Members of Congress have begun scrutinizing Google's relationship with China's Huawei Technologies Co., according to people familiar with the matter--roping another Silicon Valley giant into Washington's escalating digital cold war with Beijing.

The review--of a facet of Google's Android operating system partnership with Huawei--comes after lawmakers questioned Facebook Inc. about its data partnerships with Huawei and three other Chinese electronics makers. Facebook said it would wind down the Huawei deal by the week's end.

Some members of Congress also plan to voice displeasure over Google's continued partnership with Huawei in light of its more recent decision not to renew a Department of Defense contract, according to these people.

Spokespeople for Google and Huawei weren't immediately available to comment.

Lawmakers on Capitol Hill have been at the forefront of a push by Washington to curb telecommunications equipment and smartphone maker Huawei, and its Chinese peer ZTE Corp. U.S. officials and lawmakers have deemed both companies national security threats.

They worry the two could be vulnerable to requests by Beijing to use their equipment to spy on or sabotage Americans--an allegation both companies deny. Huawei has said repeatedly it is an employee-owned company, and that no government has ever asked it to spy on or sabotage another country.

The new scrutiny aimed at Facebook and Google highlights Washington's increasing offensive against Huawei and ZTE. In a series of moves by the Trump administration and Congress, officials and lawmakers have largely limited their action to trying to reduce the two Chinese companies' American footprint. Now, members of Congress appear more willing to examine partnerships between U.S. firms and the two companies that have nothing to do with U.S. sales.

Google, a unit of Alphabet Inc., joined with Huawei earlier this year in a deal that allows devices made by Huawei, the world's No. 3 smartphone brand, to use Google's Android Messages service to send texts, photos and other media. Huawei phones run on Android's operating system. When Huawei announced the partnership in January, it said it would collaborate with Google to offer wireless carriers computer infrastructure, which would integrate technology from both Huawei and Google, to run the service.

Google has announced similar partnerships with more than a dozen carriers and phone makers over the past two years.

In the wake of the Facebook disclosure, the Google-Huawei deal has alarmed several Congress members, who want to know more about the partnership and whether it might allow any level of data sharing, according to people familiar with the effort. The group is considering formal options, including asking Google to answer questions about the deal, these people said, and the effort could expand into a broader examination of Google's overall relationship with Huawei.

The objective of the Google deal with Huawei, as with its deals with other phone makers, was to upgrade Android phones from an older messaging technology, called SMS, to a newer technology, RCS. The new technology is better for processing images and video, said another person familiar with the matter. The upgrade to RCS doesn't give mobile phone makers like Huawei any greater access to user data than they had before, the person said.

Congress has been at the epicenter of the pressure by Washington directed at Huawei and ZTE. Members pushed AT&T Inc. to drop an agreement to sell Huawei phones, which the company did earlier this year.

Lawmakers also successfully urged the Federal Communications Commission to restrict sales of Huawei and ZTE gear in the U.S.

Bills that would further restrict sales of Huawei and ZTE electronics are working their way through both the House and Senate.

Congress has also been a critic of White House efforts to reverse a Commerce Department ban against ZTE buying U.S. components. The move came after the department said ZTE violated terms of a sanctions-busting settlement. Early Thursday, the Commerce Department said it had reached a deal with ZTE to lift the ban.

The Justice Department is investigating Huawei over similar alleged sanctions violations, The Wall Street Journal previously reported.

Earlier this year, President Donald Trump blocked Broadcom Ltd.'s $117 billion hostile bid for rival chip maker Qualcomm Inc. partly over concerns the merger could strengthen Huawei.

Write to Stu Woo at Stu.Woo@wsj.com and Douglas MacMillan at douglas.macmillan@wsj.com

Source : http://www.4-traders.com/FACEBOOK-10547141/news/Facebook-After-Scrutinizing-Facebook-Congress-Turns-to-Google-Deal-With-Huawei-Update-26732107/

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