Google's Huawei problem

The Trump administration's recent move to limit Huawei's access to US technology may be an immediate problem for Huawei but it's a double edged sword that also cuts deep into US companies' bottom line including Google.  

Right after the announcement of putting Huawai on the "entity list", the initial response is Huawei's hardware, mostly advanced chips, suppliers would be affected.  Most of their stock prices tumbled last week.  This week's news is on the software side when Google followed by not allowing Huawei use the GMP suites.  In fact, the key item here is not GMail or Google maps but the Google Playstore, which essentially put Huawei out of the Android ecosystem.  Although Huawei's Chinese users won't be affected as they don't have access to Google services for almost over a decade, Huawei's international markets outside China (e.g. EU and beyond) is the main victim.  Currently, the international markets contribute to roughly 40% of Huawei's cell phone revenue. 

It may be death by a thousands cuts. For Huawei, this is a bit too late.  Since 60% of its cell phone sales are in China and not affected by this Android ban, Huawei will survive this, unlike Blackberry or Microsoft. Once again, it will approve that compartmentalized markets are resilient to globalization issues.  If anything, Trump just handed the Chinese government the best defense of it's ban on Google's services.  

Moreover, this Android problem is actually Google's.  The recent development just reminded every Android phone makers (Samsung and alike) that their survival is in a pair of hands controlled by a head with an orange hairdo.  First, all the Chinese phone manufactures will have no doubt joining Huawei continue to develop a complete Google-less mobile app ecosystem.  Now the soon to be release P30 Mate would be equipped with the ecosystem in the EU market.  Since Samsung and other cell phone makers have already joined this ecosystem in their Chinese market offerings, it won't be a surprise they expand the option to other markets.  

This is why it's a problem for Google, which is already in a tough position in Europe.  Comparing to hardware makers, it may be feasible to move its Android licensing location (maybe some support, but that's hard to avoid the US ban) to Europe.  However, the damage is done and it would just slowing down the new ecosystem's progress.  Mobile app revenue is small for Google, but the mobile user market is the largest user base for its bottom line: e.g. search, map, etc.  It will be interesting to see what Google would do.  

Okay, my view on Google was wrong 20 years ago, let's see how it turns out this time.