Huawei Investigation: the White House Gets Involved

0 Comment

The latest development with Huawei’s U.S. troubles is that in addition to the House Intelligence committee investigation, apparently the White House ordered a separate 18-month investigation of the Chinese telecom company. It’s not clear to me why they did that, but the results have raised the same issues that we were all talking about last week.

Because this investigation found no evidence of espionage/cybersecurity problems, the “no smoking gun” crowd is again saying that Huawei has been treated unfairly. To these folks, if there is no evidence of past wrongdoing, Huawei should be given a clean bill of health and allowed to do business in the U.S. just like any other telecom company.

Based on the House report, I disagree, and the White House-ordered investigation doesn’t change anything. As I wrote a few days ago, this was not about past misdeeds, but future risk.

It’s nice to know I’m not the only one with this opinion. Reporting on the White House investigation, Reuters notes the following:

Pressed about why the White House review and unclassified version of the House Intelligence Committee report had not turned up a “smoking gun,” two officials familiar with intelligence assessments said U.S. agencies were most concerned about the capability for future spying or sabotage.

Similarly, Chris Johnson, a former CIA analyst on China, said he had been told that the White House review had come up empty on past malicious acts. Nonetheless, officials emerged from the review with “a general sense of foreboding” about what would happen if China asked Huawei for assistance in gathering intelligence from U.S. customers, he said.

“If the Chinese government approached them, why would they say no, given their system?” Johnson said.

This is in total agreement with the approach and analysis of the House report.

There is, however, one part of this new development that bothers me. Just what prompted this investigation? We know that the House investigation began after Huawei sent a letter to Congress; it wanted an opportunity to tell its side of the story after running into problems with several deals. I was not aware of any White House involvement, though, at least until today.

Additionally, the Reuters article contains this odd quote:

“We knew certain parts of government really wanted” evidence of active spying, said one of the people, who requested anonymity.

This person is simply described as someone familiar with the probe. So not only did the White House launch this investigation for mysterious reasons, but it may have been looking for a particular result. That raises a lot of questions, if it’s true. With only one anonymous source who may/may not have actually been part of the investigation, we can’t exactly rely on that comment.

For all the Huawei boosters out there, this news about the White House will no doubt solidify opinions. If you think that the standard here should be evidence of wrongdoing, well, now you’ve got two separate investigations that have in effect cleared Huawei’s name.

For those of us on the other side of this, the White House investigation may also solidify our opinions. If the people involved in this second investigation also felt that there was an unacceptable future risk, then the conclusions of the two investigations are in agreement.

This raises lots of questions.

11 responses on “Huawei Investigation: the White House Gets Involved

  1. bystander

    You did not mention this from the Reuters report:

    “One computer scientist, who helped conduct classified U.S. government research on Huawei routers and switches four to six years ago, told Reuters that he had found “back doors” that his team believed were inserted with care.
    He said these back doors could enable attackers to install malicious software that would make critical government networks inoperable, allow hackers to gain entry into highly classified systems and enable them to spy on all traffic. He requested anonymity because he was not authorized to discuss the research.”

    I must sound like a broken record at this point (haha), being pretty much the only commenter on your site who’s actually talking about the nuts and bolts of the security / risk issue itself, but I really think it’s naive to dismiss the intelligence community’s concerns on this matter out of hand, simply because whatever they know isn’t unclassified and dumped into the public domain.

    Look, is it really credible to argue that the US gov’t is doing this stuff out of sheer anti-China sentiment or protectionism? These days the US doesn’t hesitate much to take action that is straightforward trade protectionism, whether via the WTO or other procedures. The solar panel story, the truck tires story, etc. There are lots of such cases. If the only concern is trade imbalance, why pick on telco? As I’ve mentioned earlier, out of the top 5 telco manufacturers in the world, two are Chinese and the other three are not American. There is Cisco, but Cisco doesn’t offer the same range of gear that Huawei does and doesn’t compete in many of the markets that Huawei now leads in, notably cellular infrastructure. But if you think that Cisco is the intended beneficiary of all this, then the question is, why Cisco in particular? Why not flat panel displays or steel products or car parts or what have you?

    You ask “Just what prompted this investigation?” To me it seems that you are straining to dismiss the security and risk as something fabricated, a cover for the real reason which apparently is going unstated. Presumably, I guess, it’s trade protection, but again, I just don’t find that credible. If there were a real concern about protectionism and a will to pump the US in Telco, this is a strange way to go about it, because the result of this action will be more sales to Ericsson and Alcatel and Siemens, above all. Why would one not conclude that what prompted the investigation is the US intel community telling the President: hey, watch out, it looks to US like the Chinese are hellbent on infiltrating the US communications infrastructure. They are bombarding our networks with attacks night and day; their companies have a bad record when it comes to security; and the companies appear to be controlled or influenced by the Chinese gov’t itself, which is no surprise in a country where gov’t owned companies account for 70% of economic output. Seems obvious, no?

    1. Stan Post author

      My question about how this investigation started was a procedural one. I was not trying to minimize the problem, or potential problem. I was curious about how the process began. This was not a court case or a Section 337 complaint or something. I don’t think it’s common for the White House to initiate investigations of specific companies like this.

  2. Jack Fensterstock

    Maybe the White House launched the investigation to distance itself from a Congressional Committee investigation that might be politicized. The White House needs to look at the China relationship in a broader context than the Committee and hence they need independent apolitical assessments.

    1. Stan Post author

      Not sure of the exact details, but it sounds like the WH investigation might have pre-dated the House one. Former took 18 months, and the latter 11. I’d also be interested to know how the WH investigation story broke to the press (Reuters, I guess).

  3. Jeff

    You bring up some interesting points but I disagree with thought process here. If the point of all of these investigations is to come up with some “what-if” scenarios, One could make any case they wanted. “What if” the government collapsed or “what-if” they didn’t pay their bills, etc.? As executives, we perform these kinds of analysis all the time. I am over simplifying but I hope you idea. Hypothetically, if I sere in Australia (or almost any other foreign country), I might make a similar case against Cisco or Juniper. “What if” they do the same things that Huawei/ZTE “might” do? OK, they can’t do business here.

    Frankly, I don’t care if Huawei/ZTE does business in the U.S. or not. What I am concerned about is the effect this will have on U.S. technology companies doing business here in China. I can almost guarantee a backlash in one form or another.

    1. Stan Post author

      I expect a backlash, and that’s a problem. But the folks in government who are in charge of this don’t care about that, and frankly they probably shouldn’t factor that into their analysis anyway.

      I don’t think it’s fair to say that since one can play an endless series of “What If?” games, we should therefore dismiss all risk analyses that do so. Look, some scenarios are more likely/reasonable than others, and I assume that the nice people (!) over at the NSA know what they’re doing.

      Of course, it doesn’t matter what I think. Put yourself in the shoes of a politician. You look at a risk analysis. The bottom line calculation is: possible harm + likelihood of occurrence. If the possible harm is really high, and of course the possible POLITICAL harm is sky-high, then even a very small likelihood will stay result in a negative conclusion for Huawei/ZTE. Would you want to be one of the Congressmen that gave Huawei a pass and then something bad happened? You’d never hold an elected job again in your life.

      I think that’s reality for Washington.

  4. H.Z.

    I think it is totally fine that US Government does not want to use Huawei or ZTE gear. Any IT product could pose a security risk. Backdoors are probably red herrings, as anyone who worked on equipment would know that you leave access ports (outside of its normal function) so engineers can remotely diagnose and service problems that will inevitably emerge during operations. It is all about the access to such backdoors Chinese government no doubt has the same concern for Microsoft or Cisco. In the end it is a cost/benefit analysis. If USG and US military only use specialized hardware/software produced in the US, how much more would it cost them for the added security (or perceived security)? Will the added cost undermine their effectiveness? If the risk outweighs the benefit from the lowered cost then don’t do business with Chinese IT firms. I am sure Chinese governments will do the same, no matter what US policy is. Interfering with civilian use, however, could constitute a violation of fair trade.

  5. H.Z.

    Also it is interesting that Congress advocate banning the two companies from buying any US companies. Do they intend to pass a bill of attainder? Under what law would any government agency have such authority, based on suspicion alone?

  6. Dominic

    Hello, Neat post. There is an issue along
    with your web site in internet explorer, could test this?
    IE nonetheless is the market leader and a large element of folks will omit your great writing due
    to this problem.