Service Provider Cloud

Next Huawei battle with the US will be fought over the cloud

A Chinese radio might include malware for spying or even crippling national infrastructure, US policymakers have said in justifying their campaign against Huawei. If that's so, then a Chinese cloud storing all kinds of information about countries, companies and people seems far more troubling. The US has done a good job of bashing Huawei's device and network businesses. But as those crawl along, Huawei Cloud looks rampant.

Rampant enough for Senator Tom Cotton and Member of Congress Mike Gallagher, two vociferous critics of Huawei, to write to Anthony Blinken, the US Secretary of State, and ask him what the Biden administration is doing to stop it. Huawei Cloud, the Chinese firm's newish cloud business, already has more than 70 agreements with foreign governments or state-backed enterprises, they say. Unchecked, it could expose Huawei's clients to the "prying eyes" of the Chinese Communist Party.

Their deepest fear seems to be that China obtains information about Americans who visit or work in the countries where Huawei Cloud is active. According to the US policymakers, those include countries "of immense geopolitical importance to the US." Egypt, Indonesia, Malaysia, Mexico, Saudi Arabia, Turkey and the United Arab Emirates are all on the list.

Huawei already boasts one of the largest public clouds in China, and it is rolling quickly into other territory. "Huawei Cloud is the fastest-growing cloud service provider in the Asia Pacific," said Eric Xu, one of Huawei's rotating bosses, during a press conference earlier today. "Our Huawei Cloud team hopes to become one of the top three cloud service providers in the Asia Pacific in a short period of time."

To achieve its target, Huawei plans to invest about $100 million over the next three years in a program called Spark. Its purpose is to help small and medium-sized enterprises migrate their systems to its cloud platform. The public sector is evidently seen as another opportunity. "We hope and believe that Huawei Cloud will become the cloud service provider of choice for governments and enterprises in particular," said Xu.

Huawei clean-up

Stopping it may be like trying to halt the drift of a cumulonimbus. US legislators were able to sabotage Huawei's hardware activities by cutting it off from suppliers that used American technology. They cannot prevent Huawei from writing code or hiring the Chinese software experts it needs. As Huawei Cloud seeps into new markets, their only real option is to lean heavily on other governments, pressuring them not to buy Chinese software.

This tactic formed part of the campaign against Huawei's 5G business and seems partly responsible for the clampdown that happened in the UK last year. Cotton and Gallagher reckon 60 countries and 200 telecom companies joined an initiative called Clean Network, launched by Mike Pompeo, the US Secretary of State under Donald Trump. The signatories pledged not to buy Chinese network products. Under a sub-initiative dubbed Clean Cloud, that included products from Chinese cloud providers such as Alibaba, Baidu, China Mobile, China Telecom and Tencent.

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What's unclear is whether Joe Biden shares the same commitment to this Clean Network initiative. If he does not, Cotton and Gallagher want to know what – if anything – will succeed it. Their letter to Blinken includes a list of other questions, most of which seem to be about dissuading countries from signing cloud contracts with Huawei.

While Xu declined to comment on the latest American rumblings, Huawei is clearly working from the opposite side to win allies and overcome doubts. "This is something that the team at Huawei Cloud have been have working toward – using technology infrastructure to deliver a secure and trustworthy cloud so that customers can sleep soundly at night," he said.

A lot now rides on the success of that business while others crumble under US sanctions pressure. Huawei made about $50 billion in smartphone revenues last year but expects sales to fall by $30 billion to $40 billion this year.

"It will take rather a long time to compensate for the $30 billion to $40 billion lost by applying 5G and other technologies to different industry sectors," Xu told reporters. Denied the hardware it needs in 5G, Huawei must see the cloud as one of its most promising growth opportunities. It is also shaping up to be the next front in its battle with the US.

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— Iain Morris, International Editor, Light Reading

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