Header Ads

Breaking News

With Huawei in hot water, a divided Congress finds common ground on China

With help from John Hendel and Leah Nylen

PROGRAMMING NOTE: Morning Tech will not be published on Monday, Feb. 17. We’ll be back on our normal schedule on Tuesday, Feb. 18. Please continue to follow Pro Technology.


Editor’s Note: Morning Tech is a free version of POLITICO Pro Technology’s morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.

— Congress comes together on Huawei, China: The Justice Department’s charges against Huawei on Thursday intensified lawmakers’ criticism of China, despite the telecom giant’s insistence that it bears no ties to the government in Beijing.

— Zuck in Germany: Mark Zuckerberg is speaking Saturday at the Munich Security Conference, where he is expected to acknowledge that Facebook’s tax bills in Europe may have to rise.

— Qualcomm’s day in court: The San Diego chipmaker told an appeals court that its patent licensing doesn’t injure competition, despite what the FTC’s antitrust enforcers contend.

FRIDAY! FINALLY. WELCOME TO MORNING TECH. I’m your host, Alexandra Levine, wishing you all a happy Valentine’s Day.

Got a news tip? Write Alex at alevine@politico.com or @Ali_Lev. An event for our calendar? Send details to techcalendar@politicopro.com. Anything else? Full team info below. And don’t forget: add @MorningTech and @PoliticoPro on Twitter.

CONGRESS FINDS COMMON GROUND IN SOUNDING THE ALARM ON HUAWEI — The Justice Department’s racketeering and intellectual property theft charges against Huawei on Thursday drew wide support from an otherwise polarized Congress, where lawmakers of both parties pointed to the company as a symbol of the greater threat from China.

— “Glad @TheJusticeDept finally sees #Huawei for what it really is: a human rights violating product of communist #China’s surveillance state,” Rep. Michael Waltz (R-Fla.) tweeted Thursday afternoon, including a link to POLITICO’s story on the charges.

Likewise, Sen. Ben Sasse (R-Neb.) explicitly called Huawei an extension of the Chinese Communist Party and its leader, Xi Jinping. Senate Intelligence Committee leaders Richard Burr (R-N.C.) and Mark Warner (D-Va.) called the charges “an important step in combating Huawei’s state-directed and criminal enterprise.” (Some tech experts, however, told Protocol the indictment is just a rehash of old charges and fails to “provide the long-awaited smoking gun showing collusion between Huawei and the Chinese state.”)

— The news landed amid new momentum for the Senate’s anti-Huawei “rip and replace” effort: After two months of blocking it, Sen. Mike Lee (R-Utah) has lifted his hold on Senate passage of House-approved legislation, H.R. 4998 (116), that would slate $1 billion for small rural U.S. carriers to remove and supplant existing gear from China’s Huawei and ZTE, Lee’s office told John on Thursday. Senate Commerce Chairman Roger Wicker (R-Miss.) now expects unanimous-consent passage once Congress returns the week of Feb. 24, as John reported Thursday.

— Republican Sen. Rick Scott of Florida separately introduced legislation Thursday to further crack down on U.S. sales to Huawei.

— Huawei says it’s being falsely maligned: Huawei executives say the company has no ties to the Chinese government and that Huawei’s founder, Ren Zhengfei, runs a “purely private enterprise,” as its global communications chief Glenn Schloss said in an exclusive sit-down at POLITICO’s headquarters in January. “Look, I’ve been there for five years,” Schloss said. “There is no sign of the Chinese government, and Mr. Ren’s independence and the board’s independence from the Chinese government is something they jealously guard.”

— Huawei’s chief security officer Andy Purdy, who has worked on cybersecurity at both DHS and the White House, suggested that the administration has conveniently connected the two because “the U.S. believes that China wants to take over the world, and anything … that they think directly or indirectly helps China, they’re against.”

ZUCKERBERG’S SATURDAY: CONCEDING GROUND ON THE GLOBAL DIGITAL TAX — The Facebook CEO is expected to call Saturday “for reforms of how Facebook and Google pay taxes for their digital empires” — while accepting that his company may have to pay higher taxes outside the U.S., POLITICO Europe chief tech correspondent Mark Scott reports based on excerpts of Zuckerberg’s prepared speech for the annual Munich Security Conference.

— The comments “are likely to win him plaudits during a series of meetings with European politicians in Munich and Brussels,” Mark writes, as talks continue at the Organization for Economic Cooperation and Development on creating a new global tax regime.

— The conversation continues next week in U.S. Tax Court, where Facebook will defend itself against “a decade-old claim from the IRS that it sidestepped up to $9 billion in taxes by moving much of its international profits to its operations in the Irish capital,” Mark writes. “The company denies any wrongdoing.” (More on that court battle here.)

QUALCOMM GETS ITS DAY IN COURT The San Diego chipmaker told an appeals court Thursday that its patent licensing doesn’t injure competition as the FTC contends. (Check out this piece for a primer on the antitrust fight between Qualcomm and the FTC).

— “The law encourages us to charge as high as we can to innovate,” Qualcomm lawyer Tom Goldstein told a three-judge panel at the 9th U.S. Circuit Court of Appeals, while disputing the FTC’s characterization of the company’s patent license fees as a “tax” on phone manufacturers like Apple and Samsung. FTC lawyer Brian Fletcher disagreed, accusing Qualcomm of imposing “a naked surcharge on rivals’ chips.”

— David vs. Goliath? Not all the judges seemed to follow the FTC’s thinking. “Who’s the Goliath here? Apple is more of a Goliath than Qualcomm,” Circuit Judge Consuelo Callahan told Fletcher at one point.

— Judge Johnnie Rawlinson questioned Fletcher’s focus on how Qualcomm’s behavior hurt Apple and Intel. “The Supreme Court has told us not to focus on competitors, but on competition,” she said. Fletcher responded that “often you harm competition by excluding competitors,” citing the landmark Microsoft case focusing on the software giant’s efforts to exclude the rival Netscape browser.

— Family feud: The Qualcomm case has also sparked deep divisions between the FTC and the Justice Department, which took the unprecedented step of arguing in support of Qualcomm and against the commission on national security grounds. (The judges appeared skeptical, Leah reports.) The split between the United States’ two antitrust agencies didn’t escape the judges’ notice: “We have two parts of the government here today. That’s really interesting,” Rawlinson said.

TECH QUOTE DU JOUR — “The bulk of the run-up in American party polarization predates social media, which means social media isn’t core to the story,” Vox editor Ezra Klein, author of the new book “Why We’re Polarized,” says in WIRED. “I’m not convinced social media is the key driver here.”

Andy Smetana, Craig Tyler and Jose Villarreal have joined Perkins Coie as partners based in the firm’s newly opened, tech-focused office in Austin; Wendy Wang has also joined the firm as a tech partner based in Palo Alto. … Karen Evans, the head of the Energy Department’s cybersecurity office, is leaving her post, POLITICO reports; National Security Agency official Alexander Gates will replace Evans.

Would you rather: 5G speeds or privacy?: John Hendel unpacks a new POLITICO/Qualcomm survey that found “a global divide exists on how willing people are to accept a lessening of privacy in return for a new era of super-fast networks and interconnected devices.”

In profile: “Oracle’s Man in Washington,” Kenneth Glueck — the Google foe’s top lobbyist “and a major force behind the increased government scrutiny of leading technology companies,” via WSJ.

Amazon win: A court ruled Thursday that the Pentagon must stop work on the major JEDI cloud computing contract it awarded to Microsoft (over Amazon) last year, POLITICO reports.

AB 5 latest: Lyft is pouring millions into fighting AB 5, “launching an independent expenditure committee to combat [the] California worker classification law that imperils the ride-hailing company’s business model,” Jeremy B. White reports.

States continue taking facial recognition fight into their own hands: “California is diving into the national debate over government surveillance with a far-reaching proposal for a five-year ban on the use of facial recognition tools by police and other public agencies,” Katy Murphy reports.

Q&A: Everything you need to know about Google’s expansion in Canada, via POLITICO.

DNC on the hook for Iowa: The Democratic National Committee has tried to distance itself from the app behind the Iowa chaos, but documents obtained by Yahoo News show “that national party officials had extensive oversight over the development of the technology.”

Voatz: Another voting app everyone’s talking about — and that researchers say is riddled with security and privacy flaws “that could let hackers change voters’ choices, expose their identities or prevent their digital ballots from reaching their destinations,” POLITICO reports. (Voatz, however, strongly begs to differ.)

Facebook fail: “Why Facebook’s data-sharing project ballooned into a 2-year debacle,” via Protocol.

Note for next week: FCC Commissioner Geoffrey Starks will hold a field hearing in Puerto Rico on Feb. 21 “to discuss steps taken to improve the resiliency of communications networks since Hurricanes Irma and Maria” and what further action is needed.

Tips, comments, suggestions? Send them along via email to our team: Bob King (bking@politico.com, @bkingdc), Mike Farrell (mfarrell@politico.com, @mikebfarrell), Nancy Scola (nscola@politico.com, @nancyscola), Steven Overly (soverly@politico.com, @stevenoverly), John Hendel (jhendel@politico.com, @JohnHendel), Cristiano Lima (clima@politico.com, @viaCristiano), Alexandra S. Levine (alevine@politico.com, @Ali_Lev), and Leah Nylen (lnylen@politico.com, @leah_nylen).


Source link

No comments