This Will Hurt (More Than You Think)

The US-China trade war is becoming a fight over the future of the internet, and global consumers are feeling the brunt of the impact.

By Xische Editorial, May 27, 2019

Source: Abscent/Shutterstock

Trade wars are never fun. When the two largest economies in the world go to war over trade, the global marketplace suffers. As China and the United States exchange tariffs amid negotiations over the future of the global economy, smaller countries and many consumers are starting to experience the blowback. Without swift resolution, the immediate effects could transform into long-term challenges over the future of the internet, data governance, and smart legislation for the digital age.  

The case against Huawei highlights the dangerously thin line China and the US are currently walking. This month, the US banned American companies from supplying Huawei, one of the world’s largest smartphone manufacturers, with physical products and software. That means Huawei is not able to use ARM processors, Intel microchips, and Google software. The physical hardware ban will matter most for devices made for China, while the software ban is going to hit the company’s worldwide users very hard (since Google services are not used inside China).

At a time when the international community is attempting to come together on matters concerning the internet, technology, and regulation, the US ban on Huawei demonstrates just how much work we have to do. Consider this: Huawei is likely the world’s largest supplier of smartphones by volume. More than 30% of the smartphones sold in Q1 2019 in Europe were made by Huawei. Under the new trade considerations, none of those smartphones would be able to access Google services such as Gmail, YouTube, and Maps.

Regardless of America’s concerns over Huawei technology containing backdoors for the Chinese government, Washington’s recent actions have global ramifications. Consumers in Europe that have nothing to do with the trade war between Beijing and Washington are now pawns in a battle far from their countries. Huawei has said it has plans for its own services and suppliers, but without Google their products are going to be a very hard sell.

The trade war and its manifestations expose a deeper challenge facing the global internet. As we explored in a recent issue of Backstory, Xische’s weekly newsletter, attitudes towards data and the internet are cultural phenomena, shaped by social, corporate, and government narratives. As a result, the internet is fracturing before our eyes. There is one version led by the United States and Silicon Valley companies such as Google and Facebook. There is another led by China and its massive companies like Alibaba and Tencent.

As the trade war between the US and China heats up, the depth of differences between the world’s leading internets are coming into sharp focus. The dramatic Huawei ban will force other Chinese companies to pursue technological independence. The fracturing is going to accelerate. When it comes to data regulation, the fractured internet is hindering global efforts to protect consumers, enable smart regulations, and drive innovation. As tensions continue to flare, consumers everywhere stand to lose the most. Blending aspects of the Chinese and American internet could radically transform data regulation, smart governance, and user options for the better.

At a time when we need innovative ideas about how to balance forward technology progress and the needs of society, the trade war is an example of how we continue to retreat to old norms and solutions to new problems. At the same time, the trade war underlines just how connected we are. After all, European consumers have nothing to do with the US and Chinese economic relationship but they are bearing the brunt of its effects.

The fracturing of the internet is a reality that won’t change anytime soon but we can attempt to move closer together to solve challenges that users worldwide face. As the two largest economies in the world appear to be currently drifting apart, it is critical that we focus on the links that bind us such as the prevalence of Chinese smartphones operating American technology in Europe. By focusing on those links, we can begin to construct a better future.