U.S.-China Tech Cold War Puts Europe in the Middle
A decade ago, a European scholar asked a Chinese scholar, “What does China-European strategic partnership look like?” The Chinese scholar responded: “We hope that when China goes to war with the United States, Europe will at least remain neutral.”
The looming “tech cold war” between the United States and China may now provide an initial test of that proposition. In May, Google became the first of many U.S. tech firms to announce its split from Chinese telecom giant Huawei in compliance with a new U.S. Commerce Department regulation. If implemented stringently, the regulation—which prohibits U.S. firms from doing business with Huawei without a government license—would shake the tech and telecom industries worldwide, potentially delay Europe’s 5G rollout plans, and begin to decouple the U.S. and Chinese tech sectors in the name of national security. Stuck in the middle will be Europe.
Europe is emerging as the telecom battleground in the new U.S.-China technology Cold War. For Google, the Commerce rule means that Huawei phones – which constitute roughly one-quarter of the European market – will no longer carry the licensed Android operating system or Google’s suite of apps including Gmail, YouTube, and Chrome. For U.S. microchip firms that supply Huawei, it means cutting ties. Even if Huawei finds alternatives to U.S. hardware, ultimately European consumers could face a stark choice: cheap Huawei phones or YouTube.