Trump’s Huawei ban ‘wins’ one trade battle, but the US may lose the networking war

While U.S. government officials celebrate what they must consider to be a win in their battle against the low-cost, high-performance networking vendor Huawei and other Chinese hardware manufacturers, the country is at risk of falling seriously behind in the broader, global competition for telecom tech and customers.

It may be a race that the U.S. is willing to concede, but it should be noted that Huawei’s sphere of influence on other shores continues to expand, even as the company’s ability to operate in the U.S. is completely proscribed.

Indeed, Huawei’s executive director and chairman of its investment review board, David Wang, told Bloomberg that, “Our U.S. business is not that big. We have global operations. We still will have stable operations.”

Wang is right… to a point. Huawei derives most of its sales from international markets, according to a 2018 financial report released earlier this year, but it depends heavily on technology from U.S. chip manufacturers for its equipment. Without those supplies, Huawei could find itself in a very difficult spot, indeed.

Huawei’s end of year financials showed its consumer devices business is now its main money-maker, while the majority of its revenue is not derived from the U.S. market

And the U.S. has its reasons for working to stymie Huawei’s efforts to expand the reach of its networking technologies as this excellent Twitter thread from Adam Townsend persuasively argues.

Essentially, China has invested its basically limitless capital into subsidizing next-gen wireless technology and buying up next-generation startups and innovators, all while the U.S. has borne early stage risk. Meanwhile, it is also using unlimited money to poach regulators and industry experts who might advocate against it.

Huawei continues to make inroads in nations across the emerging markets of Latin America, Eastern Europe, Southeast Asia and Africa where demand for connectivity is on the rise. Those are regions where the U.S. has plenty of strategic interests, but America’s ability to sway public opinion or entice governments to act against Chinese networking companies could be severely limited by its inability to offer meaningful incentives or alternatives to them.

Even with the passage of the BUILD Act in October 2018, which was meant to revitalize U.S. foreign aid and investment with a $60 billion package, it’s worth noting that China spent nearly $47 billion in foreign investment in Europe alone in 2018. Chinese direct investments totaled another $49.45 billion into Africa and the Middle East and $18 billion into South America, according to data from the American Enterprise Institute, compiled by Foreign Policy.

Map courtesy of the American Enterprise Institute.

Those investments have turned nations that should be staunch political allies into reluctant or simply rhetorical backers of the U.S. position. Take the relationship between the U.S. and Brazil, for example — a historically strong partnership going back years and one that seemingly only strengthened given the similarities between the two ultraconservative leaders in power in both nations.

However, as Foreign Affairs reports, Brazil is unlikely to accede to President Trump’s demands that Brazil aids in steps to block China’s economic expansion.

“Brazilian business groups have already begun to defend the country’s deep trade ties to China, rightly pointing out that any hope of containing China and once more turning the United States into Brazil’s most important trading partner is little more than unrealistic nostalgia,” writes Foreign Affairs correspondent, Oliver Stuenkel. “Working alongside powerful military generals, these business associations are mobilizing to avoid any delays that sidelining Huawei in the region could cause in getting 5G up and running.”

The whole article is worth reading, but its refrain is that the attempts by U.S. government officials to paint Huawei and Chinese economic inroads as a national security threat in developing economies are largely falling on deaf ears.

It’s not just networking technologies either. As one venture capitalist who invests in Latin America and the U.S. told TechCrunch anonymously: “It’s interesting how the U.S.-China relationships are going to affect what is happening in Latin America. The Chinese are already being more aggressive on the banking side.”

China’s big technology companies are also taking an interest in South America, both as vendors and as investors on the continent.

In an article in Crunchbase, the South American and Chinese-focused venture capitalist, Nathan Lustig underscored the trend. Lustig wrote:

In both the private and the public sectors, China is swiftly increasing its support for Latin America. Chinese expertise in financial technology, as well as its influence in developing markets around the world, is turning China into a strategic partner for startups and entrepreneurs in Latin America. Most of the Chinese investment in Latin America so far is going to Brazil, although this is likely to spread across the region as Chinese investors become better-acquainted with the local tech ecosystems, most likely to Mexico.

Beyond the Didi Chuxing acquisition of Brazil’s 99 in January, Chinese companies began investing heavily in Brazilian fintech startups, specifically Nubank and StoneCo, this year.

Indeed, China has an entire catalog of low-cost technologies and economic packages from state-owned and privately held investors to support their adoption, backing up its position as the leader for tech across a range of applications in emerging markets.

For the U.S. to compete, it will have to look beyond protectionism at its shores to actual commitments to greater economic development abroad. With lower tax revenues coming in and the prospect of giant deficits building up as far as the eye can see, there’s not much room to promote an alternative to Huawei internationally. That could leave the country increasingly isolated and create far more problems as it gets left behind.

Facebook finds and kills another 512 Kremlin-linked fake accounts

Two years on from the U.S. presidential election, Facebook continues to have a major problem with Russian disinformation being megaphoned via its social tools.

In a blog post today the company reveals another tranche of Kremlin-linked fake activity — saying it’s removed a total of 471 Facebook pages and accounts, as well as 41 Instagram accounts, which were being used to spread propaganda in regions where Putin’s regime has sharp geopolitical interests.

In its latest reveal of “coordinated inauthentic behavior” — aka the euphemism Facebook uses for disinformation campaigns that rely on its tools to generate a veneer of authenticity and plausibility in order to pump out masses of sharable political propaganda — the company says it identified two operations, both originating in Russia, and both using similar tactics without any apparent direct links between the two networks.

One operation was targeting Ukraine specifically, while the other was active in a number of countries in the Baltics, Central Asia, the Caucasus, and Central and Eastern Europe.

“We’re taking down these Pages and accounts based on their behavior, not the content they post,” writes Facebook’s Nathaniel Gleicher, head of cybersecurity policy. “In these cases, the people behind this activity coordinated with one another and used fake accounts to misrepresent themselves, and that was the basis for our action.”

Sputnik link

Discussing the Russian disinformation op targeting multiple countries, Gleicher says Facebook found what looked like innocuous or general interest pages to be linked to employees of Kremlin propaganda outlet Sputnik, with some of the pages encouraging protest movements and pushing other Putin lines.

“The Page administrators and account owners primarily represented themselves as independent news Pages or general interest Pages on topics like weather, travel, sports, economics, or politicians in Romania, Latvia, Estonia, Lithuania, Armenia, Azerbaijan, Georgia, Tajikistan, Uzbekistan, Kazakhstan, Moldova, Russia, and Kyrgyzstan,” he writes. “Despite their misrepresentations of their identities, we found that these Pages and accounts were linked to employees of Sputnik, a news agency based in Moscow, and that some of the Pages frequently posted about topics like anti-NATO sentiment, protest movements, and anti-corruption.”

Facebook has included some sample posts from the removed accounts in the blog which show a mixture of imagery being deployed — from a photo of a rock concert, to shots of historic buildings and a snowy scene, to obviously militaristic and political protest imagery.

In all Facebook says it removed 289 Pages and 75 Facebook accounts associated with this Russian disop; adding that around 790,000 accounts followed one or more of the removed Pages.

It also reveals that it received around $135,000 for ads run by the Russian operators (specifying this was paid for in euros, rubles, and U.S. dollars).

“The first ad ran in October 2013, and the most recent ad ran in January 2019,” it notes, adding: “We have not completed a review of the organic content coming from these accounts.”

These Kremlin-linked Pages also hosted around 190 events — with the first scheduled for August 2015, according to Facebook, and the most recent scheduled for January 2019. “Up to 1,200 people expressed interest in at least one of these events. We cannot confirm whether any of these events actually occurred,” it further notes.

Facebook adds that open source reporting and work by partners which investigate disinformation helped identify the network.

It also says it has shared information about the investigation with U.S. law enforcement, the U.S. Congress, other technology companies, and policymakers in impacted countries.

Ukraine tip-off

In the case of the Ukraine-targeted Russian disop, Facebook says it removed a total of 107 Facebook Pages, Groups, and accounts, and 41 Instagram accounts, specifying that it was acting on an initial tip off from U.S. law enforcement.

In all it says around 180,000 Facebook accounts were following one or more of the removed pages. While the fake Instagram accounts were being followed by more than 55,000 accounts.  

Again Facebook received money from the disinformation purveyors, saying it took in around $25,000 in ad spending on Facebook and Instagram in this case — all paid for in rubles this time — with the first ad running in January 2018, and the most recent in December 2018. (Again it says it has not completed a review of content the accounts were generating.)

“The individuals behind these accounts primarily represented themselves as Ukrainian, and they operated a variety of fake accounts while sharing local Ukrainian news stories on a variety of topics, such as weather, protests, NATO, and health conditions at schools,” writes Gleicher. “We identified some technical overlap with Russia-based activity we saw prior to the US midterm elections, including behavior that shared characteristics with previous Internet Research Agency (IRA) activity.”

In the Ukraine case it says it found no Events being hosted by the pages.

“Our security efforts are ongoing to help us stay a step ahead and uncover this kind of abuse, particularly in light of important political moments and elections in Europe this year,” adds Gleicher. “We are committed to making improvements and building stronger partnerships around the world to more effectively detect and stop this activity.”

A month ago Facebook also revealed it had removed another batch of politically motivated fake accounts. In that case the network behind the pages had been working to spread misinformation in Bangladesh 10 days before the country’s general elections.

This week it also emerged the company is extending some of its nascent election security measures by bringing in requirements for political advertisers to more international markets ahead of major elections in the coming months, such as checks that a political advertiser is located in the country.

However in other countries which also have big votes looming this year Facebook has yet to announced any measures to combat politically charged fakes.