FTC starts turning the screw on Big Tech

The Federal Trade Commission (FTC) has issued Special Orders to five of the technology industry’s biggest hitters as it takes a more forensic look at acquisition regulation.

Under the Hart-Scott-Rodino Act, certain acquisitions or mergers are required to be greenlit by the regulatory authorities in the US before completion. This is supposed to be a measure to ensure an appropriate marketplace is maintained, though there are certain exceptions to the rule. It appears the FTC is making moves to combat the free-wheeling acquisition activities of Big Tech.

Under the Special Orders, Google, Amazon, Apple, Facebook and Microsoft now have to disclose all acquisitions which took place over the last decade. It appears the FTC believes the current rules on acquisition need to be reconsidered.

“Digital technology companies are a big part of the economy and our daily lives,” said FTC Chairman Joe Simons. “This initiative will enable the Commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition. This will help us continue to keep tech markets open and competitive, for the benefit of consumers.”

While authorities have already questioned whether some acquisitions are in the best interest of a sustainable industry, in fairness, Big Tech has done nothing wrong. Where relevant, the authorities have been notified regarding acquisitions, and they have generally been approved. If the FTC and its cousins in other regulatory authorities believe the current status quo is unappealing, they only have themselves to blame.

In general, an acquisition will always have to be reported if the following three criteria are met:

  1. The transaction would have an impact on US commerce
  2. One of the parties has annual sales or total assets of $151.7 million, and the other party has sales or assets of $15.2 million or more
  3. The value of the securities or assets of the other party held by the acquirer after the transaction is $68.2 million or more

All three of these criteria have to be met before the potential acquisition has to be approved by the regulators.

Interestingly enough, the Android acquisition by Google is rumoured to be for roughly $50 million, therefore the third criteria was not met, and the team did not need to gain regulatory approval for the deal. This is perhaps what the FTC is attempting to avoid in the future, as while we suspect there was no-one in the office at the time with enough foresight to understand the implications, the regulator might suggest it would not have approved the deal in hindsight.

One of the issues being faced currently, and this is true around the world not just in the US, is that authorities feel they have lost control of the technology industry. Companies like Google and Facebook arguably wield more influence than politicians and regulatory authorities, a position few will be comfortable with outside of Silicon Valley.

Aside from this investigation, the FTC is also exploring Amazon in an antitrust probe, while Google and Facebook are facing their own scrutiny on the grounds of competition. There have also been calls to break-up the power of the technology companies, while European nations are looking into ways to force these companies to pay fair and reasonable tax. Across the world, authorities are looking for ways to hold Big Tech more accountable and to dilute influence.

Interestingly enough, we don’t actually know what the outcome of the latest FTC foray will be. It will of course have one eye on updating acquisition rules, though as Section 6(b) of the FTC Act allows the regulator to conduct investigations that do not have a specific law enforcement purpose; it’s a blank cheque and the potential outcome could head down numerous routes.

Cloud becomes the golden child as Google reports yet more profit

When looking at the financial results of companies like Google, the question is not whether it has made money, but how much are the bank vaults overflowing.

Financial for the full year demonstrated slightly slowing growth, but few should worry about having to search the sofa for the pennies right now. Over the course of 2019, Google brought in $161.8 million, up 18.3% year-on-year, though it was YouTube and the Google Cloud business units as opposed to the core business which collected the plaudits from the management team.

“Revenues were 2.6 billion for the fourth quarter, up 53% year-over-year, driven by significant growth at GCP and ongoing strong growth and G Suite,” said Alphabet CFO Ruth Porat. “The growth rate of GCP was meaningfully higher than that of cloud overall. GCP growth was led by our infrastructure offerings and our data and analytics platform.”

Company Quarter Revenue (most recent) Year-on-year Growth
Google Cloud $2.6 billion 53%
Microsoft Intelligent Cloud $11.9 billion 27%
Amazon Web Services $9.9 billion 23%

Despite being a business unit which brings in an impressive $10 billion annually, it is impossible not to compare the performance of Google Cloud to AWS and Microsoft Azure. Google is realistically the only rival which can keep pace with the leading pair, though it does appear it is losing pace.

That said, the fortunes of the cloud are only beginning to be realised; this is a marathon not a sprint. Moving forward, the Google team believes strength in AI and software gives it an advantage to provide seamless experiences to users across multiple devices. There is also the blunt force approach to acquiring market share moving forward; Porat highlighted the objective is to triple the size of the cloud sales team.

Over at YouTube, the team is capitalising on the increasingly consumer appetite for video, though also what appears to be a more experimental attitude to subscription. YouTube TV is growing healthily at 2 million, while the core YouTube platform has more than 20 million music and premium paid subscribers.

This is positive momentum, though it will be interesting to see what impact partnerships have on these figures. Google is partnered with Verizon, forming a content option in its bundled products, though rivals are placing a much greater emphasis on these relationships, leaning on an already established link with the consumer, albeit sacrificing some profit in the process.

Perhaps these two business units demonstrate why Google is such an attractive company to investors and potential employees. The core business can do what it does, but Google is always searching for the next big idea. Google Cloud is arguably the most successful graduate of its ‘Moonshot Labs’ initiative, while YouTube is one of the biggest acquisition bargains at $1.65 billion in 2006. It now brings in more than $15 billion annually in ads sales.

During the earnings call, CEO Sundar Pichai pointed to some of the other investments which are absorbing the $26 billion annual R&D budget. Verily and Calico are linking together AI and cloud technologies to improve clinical trials, research, and drug development. Waymo is attempting to scale driverless vehicles in the US. Loon is another Moonshot graduate, endeavouring to stand on its own currently.

Google is one of the most interesting companies around, not only because it is a money-making machine, but the R&D business could produce some gems over the next few years.

The US election will test social media censorship to breaking point

Electoral losers are increasingly blaming social media for their failure, but this year will demonstrate that censorship is not the answer.

Democracy only works if the losers of elections accept defeat, but sadly few are inclined to do so these days. Now we have five stages of electoral grief that are directly analogous to the original Kübler-Ross model. We still have denial, anger and depression, but instead of bargaining we have litigation and acceptance seems to have been replaced with conspiracy theories in which social media plays a central role.

The central concern is that when the electorate votes for the other team it must be because they were mislead in some way, because no rational, fully informed person could fail to recognise the superiority of my team. In the past some blame could be attached to the mainstream media, something the UK Labour party still persists with. In the US, however, Donald Trump’s victory in 2016 despite having the support of no major media, would appear to render that theory obsolete.

Trump was able to prevail because politicians are no longer dependent on the old media to communicate directly with the electorate, thanks to social media. But this significantly lowered barrier to entry into the public sphere also provides fertile ground for electoral losers searching for mitigation and another bite at the cherry.

A favourite on both sides of the pond is to blame ‘the Russians’. While cold war fervour largely shifted its focus to China, Russia remains a strong source of bogeymen. Now it should be noted that there is plenty of evidence of social media bot farms originating from a number of countries, including Russia, that apparently seek to meddle in elections. What is much harder to prove is whether they had any effect on the outcome of elections whatsoever.

The small matter of evidence is never going to stand in the way of those refusing to concede defeat, however, and it has now become conventional wisdom that social media censorship is vital if we are to ever have untainted elections again. Since the US is in the middle of another of its interminable general election campaigns this year, the heat is being turned up on social media and they are being forced to respond.

Last week Twitter announced it was ‘turning on a tool for key moments of the 2020 US election that enables people to report misleading information about how to participate in an election or other civic event.’ The tweet implies the tool has a broader purpose than that, though, as it also includes intimidation and misrepresenting of political affiliation. Already you can see how a simple censorship objective becomes immediately and massively complicated under the weight of interpretation, semantics and generally chasing its tail.

Then you have Google and its subsidiary YouTube blogging about how much they ‘support’ elections, whatever that’s supposed to mean. Again a lot of this focuses on content that is intended to mislead voters, but since electioneering is biased by definition, surely all of it is intended to mislead to some extent. YouTube also reiterates its aim to promote ‘authoritative’ voices, which is code for establishment media and commentariat.

In contrast, Facebook Founder and CEO Mark Zuckerberg is increasingly pushing back on censorship, having tried and failed to walk that tightrope since the Cambridge Analytica scandal. Perhaps motivated by the prospect of an extra four years of Trump, who has made his feelings known on censorship, Zuckerberg is now turning all free speech absolutist on us. Whether that position will survive even the first engagement of the US electoral process remains highly debatable, however.

Early signs of the immense pressure these platform owners will come under are already appearing, with the Democrats mobilising supposed experts to ‘protect’ the electoral process. “Iowa’s first-in-the-nation caucus will mark the DNC’s greatest challenge so far in efforts to guard its presidential contenders from the same fate that befell Hillary Clinton in 2016 when her campaign was upended by a Russian-backed hacking and disinformation effort,” reports the Washington Post in depressingly partisan fashion.

If that WaPo piece is anything to go by everyone is going to be trying to manipulate not only the US Presidential election, but the Democratic primaries too, where non-establishment candidate Bernie Sanders is currently the front-runner. Presumably YouTube doesn’t intend to punish the country’s mainstream media for misleading the electorate, so it seems it will support democracy by censoring everyone else.

As ever, censoring free societies is a game of whack-a-mole, in which policy-making can never hope to keep up with the desire of its people to say what they want. Even if the social media companies are successful in their stated censorship objectives, which they won’t be, the team that loses will still blame them. So they might as well not bother and trust their users to sort the wheat from the chaff. Afterall, they’ve been doing that with mainstream media for years.

Amazon and Microsoft are proving to be a different class in the cloud game

Amazon and Microsoft have unveiled bumper financial results and now it is over to Google to prove it can keep pace with the two clear leaders in the cloud segment.

For years, it was Amazon’s cloud business unit, AWS, which was incomparable to the rest of the cloud segment. No-one could get anywhere near this trailblazer, though Microsoft has closed that gap recently. The question is whether anyone else has? The likes of Google, IBM and Oracle claim to be in the same league, but there is little evidence to support this, but Google has a chance to set the record straight next week.

Amazon and Microsoft have now revealed their numbers for the final three-month period of 2019. The story is not quite complete without Google’s numbers, realistically the only competitor who has a credible claim to be in the same league, but the numbers are eye-watering.

At group level, Amazon increased revenues by 21% during the last quarter, with the cloud business bringing in $9.9 billion, an increase of 23% year-on-year. While net income only increased 19% to $2.6 billion, this was actually 79% of the total net income across the group. The cloud business unit at AWS is a profit machine.

Over at Microsoft, group revenues increased by 14% to $36.9 billion, while net income was up 38% to $11.6 billion. Revenue in the ‘Intelligent Cloud’ unit increased 27% to $11.9 billion with Azure’s revenue up 62% for the quarter. Cloud products and services of course factor into the other Microsoft business units, but the ‘Intelligent Cloud’ group is showing the most aggressive growth.

Business unit Total revenue Growth
Intelligent Cloud $11.9 billion 27%
Productivity and Business Processes $11.8 billion 17%
More Personal Computing $13.2 billion 2%

Although revenues are only one part of the picture, market share estimates also tell another story.

Looking at the most recent estimates from Synergy Research Group, Amazon is leading the cloud segment with 39%, Microsoft sits in second with 19%, Google is on 9% and 5% for Alibaba. Salesforce now has 4% and IBM is on 3%, while no-one else has more than a 2% share. These figures are for the Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) segments.

As mentioned before, the landscape is not complete until Google releases its numbers next week, though IBM and Salesforce have released theirs. At IBM, total cloud revenues stood at $6.8 billion, up 21% year-on-year, while Salesforce reported group revenues of $4.5 billion for the last quarter, an increase of 33%. These numbers are attractive, investors might well be pleased, but Microsoft and Amazon look like they are sitting alone in the top tier of the cloud industry.

Another factor to consider are the deal wins.

While Amazon has been hoovering up deals with SMEs and the emerging digital businesses, Microsoft has extensive existing relationships with almost every major corporation in the Western world. The firm claims to currently be working with 95 of the Fortune 100 companies on cloud infrastructure. These companies like the look of Microsoft, thanks to a stronger focus on hybrid-cloud, whereas Amazon has a better reputation for the speed and scale of cloud-only strategies.

During the last period, Microsoft secured the US Department of Defense $10 billion JEDI cloud contract, which will cover 1,700 data centres and the transition of millions of devices from on-premise servers to the cloud. AWS lost out on this deal, but it has got plenty of significant customer wins to boast of; Western Union, media firm Fox, the NFL, pharmaceutical giant Novartis and Best Western Hotels & Resorts.

Interestingly enough, the rapid expansion of these internet giants might well start to encroach potential revenues which have been earmarked for the telcos.

The last few months have not only seen CAPEX investment from the likes of AWS and Microsoft, but also picking up industry executives. An excellent example of this is Alex Clauberg, a former Deutsche Telekom executive.

As the connected world starts to spread to more corners of society and the ‘edge’ develops, there are plenty of opportunities for telcos to make more money from what is quickly becoming a commoditised service. However, there is no guarantee the newly created ‘service’ revenues will be reserved for the telcos themselves. Clauberg’s move is evidence the internet players are attempting to muscle in on telco revenues.

Clauberg is a well-known name in the SDN and NFV sector and is the current Chairman of the Telecom Infra Project (TIP). He was previously VP and CTO at T-Systems International, the global services and consulting arm of DT, but now works as Solutions Architects Leader, at AWS. There is not a huge amount of information as to what this new job actually is, but it is demonstrative of the ambitions of the likes of AWS in the telco world.

These are companies which are growing rapidly in their traditional playing grounds and pushing aggressively to steal profits in places they should be considered secondary. Google still has an opportunity to place itself at the top table of the profitable cloud segment, but it does look like AWS and Microsoft are in a league of their own.

BT seeks stickiness and diversification through Google Stadia partnership

UK ISP BT says it’s the first European network to partner with Google over its Stadia cloud gaming service, which it will bundle with some broadband offers.

The press release features a needless amount of banging on about ‘moving the cloud gaming industry forward’, and ‘initiatives designed to build awareness, access and availability of it in the UK,’ as if cloud gaming is some kind of philanthropic initiative. But the long and short of it is that BT is offering Stadia for free with some bundles for a couple of weeks and then from 7 February will bundle Stadia Premier Edition with special cloud gaming add-ons to some of its fibre packages.

“We continually look to provide our customers with the most exciting products and experiences, and by partnering with Google on Stadia, we’re able to help them push the limits of gaming,” said Marc Allera, CEO of BT’s Consumer Division. “We’re also investing in the UK’s fastest 4G, 5G and fibre networks, so our superfast home broadband service is the perfect accompaniment for those wanting to make the most from this innovative streaming gaming platform.”

“We’re excited to continue our cross-product partnership with BT in the UK to further drive the cloud gaming industry forward,” said Michiel van Eldik, General Manager of Devices & Services at Google EMEA. “BT has an established track record of leading the industry in delivering next-generation services and products to their customers. Through today’s announcement, we are able to make the best gaming content even more accessible, and to continue to change the way people access, play and enjoy their favourite games.”

Exciting times then. BT seems to think gaming is where the smart ISP diversification money is at these days, having recently announced its sponsorship of the Excel Esports team. How excited BT customers will be with all this, however, remains to be seen as initial reviews of Stadia concluded it’s a bit rubbish.

Verizon attempts to muscle in on Google’s search quasi-monopoly

Verizon has announced the launch of OneSearch, a privacy-focused search engine which promises not to share user data with third-parties.

Google’s dominance of the search engine segment was arguably cemented when the verb ‘google’ was entered into the Oxford English Dictionary on June 15, 2006. The vast majority of people would not even consider using an alternative, such is the effectiveness of the algorithm and the savviness of Google in distributing the platform across all access points.

However, Verizon is now attempting to lure customers away from the market-dominant search engine with OneSearch.

“We deeply believe in consumer trust and choice, both for our user community and our partners,” said Michael Albers, Head of Consumer Product at Verizon Media.

“In support of our commitment to trust and transparency, we are excited to launch OneSearch, an innovative new online search experience built for privacy-minded searchers. With it, you can search the internet with increased confidence, knowing your personal and search data isn’t being tracked, stored, or shared with advertisers.”

It is an interesting approach, one which would severely dent the overall revenues in the search engine segment should it be successful. Ads would be served to customers based on the context of the search as opposed to any profiles built on the user, making them less accurate. With less-accuracy being offered to advertisers, Verizon will not be able to charge as much.

This is not to say ads would not be accurate, but it is a downgrade on the hyper-targeted advertising model which has brought Google so much success over the years.

For example, if you were to search for ‘flights to Paris’, OneSearch would serve ads for booking agents who can help. Google might go one step further however, knowing that the user has a preference for premium airlines, travelling in limousines or staying in Boutique hotels with a gym and mini-bar. Immediately, the number of potential customers is expanded to airlines who fly to France, car services around the airport and hotels in the city.

The more forensic the targeting is, the more likely there is to be success and the more advertisers are likely to pay.

What is worth noting is that Verizon faces an uphill battle to secure market share. Not only does it have to counter consumer behaviour, it has to combat the fact Google is the default search engine on desktops, Android-powered mobile devices and various IOT devices which have been launched. It will also have to prove it is better than Google.

This is something which is often forgotten about the Google search engine. The management team might have made some very good acquisitions and deals to ensure Google is presented to users as default, but it originally found success because it was a better service than anything else on the market. That arguably remains a true statement today.

Privacy International leads revolt over Android ‘bloatware’

Privacy International is leading a coalition of more than 50 organisations demanding Android owner Google offers users the opportunity to delete any and every app from their device.

On almost every device, there are several apps which are relatively redundant and useless. Unfortunately for the user, these applications are known as ‘bloatware’ and there is no-way to get rid of the squatting app. The open-letter spearheaded by Privacy International is calling for Google to end the practice, allowing users complete control over what applications are kept on the device.

“We, the undersigned, agree with you [Google CEO Sundar Pichai]: privacy cannot be a luxury offered only to those people who can afford it,” the letter states.

“And yet, Android Partners – who use the Android trademark and branding – are manufacturing devices that contain pre-installed apps that cannot be deleted (often known as ‘bloatware’), which can leave users vulnerable to their data being collected, shared and exposed without their knowledge or consent.”

‘Bloatware’ applications are largely harmless on the surface. Generally, they sit there not doing much, but the issue being raised by Privacy International and its followers is what is going on in the background.

Quoting a paper written by several academics, the coalition claim these applications collect data in the background, largely without the knowledge of the user, and also have ‘privileged custom’ permissions which would not usually be granted by the Android security framework. These permissions include access to the devices microphone and camera.

Interestingly enough, the paper also claims the devices carry the ‘Google Play Protect’ badge but 91% of these applications do not appear in the Google Play Store. This could be a way to get around the strict privacy protections which are implemented by Google and therefore undermines the integrity of the ‘Google Play Protect’ credentials.

The letter is calling for several changes to the dynamic, most notably:

  • Users should be able to permanently delete any application
  • Pre-installed apps should face the same scrutiny as other apps
  • Pre-installed apps should have some sort of update mechanism
  • Google should refuse to certify devices unless manufacturers make changes to reinforce privacy credentials and protections

What is worth noting is that Privacy International and other such organisations are lobby groups which often paints an apocalyptic view of the digital economy. Google can never do anything right in the eyes of this community.

That said, Google is often in hot water over privacy concerns.

Numerous executives have penned blog posts and opinion articles to push the importance of privacy both as a concept and an internal company value of Google. However, the odd scandal often emerges to undermine these PR efforts.

In November, Amnesty International suggested Google was implementing strategies to abuse privacy rights of individuals. Its virtual assistant is under investigation after it emerged humans were reviewing transcripts of conversations recorded by its smart speaker without the consent of the user. In July, International Computer Science Institute (ICSI) researchers said numerous apps could easily circumnavigate Android’s privacy protections. The Google smart city initiative, Sidewalk, has also come under some intense privacy criticism.

What is clear is that Google’s actions and the relationships which it has in place are always of benefit to it as an organisation. The presence of ‘bloatware’ is by design not an oversight, therefore Google will begrudgingly back-pedal on this current dynamic. It may well be forced to under the weight of public criticism, but there will be plenty rolls of the dice before it.

Sonos says Google has been stealing its patented tech for years

Wireless audio specialist Sonos is suing internet giant Google, claiming it has knowingly used its patented technology without paying for it since 2016.

The grievance relates to Google’s portfolio of smart, wireless, networked speakers, now going under the collective brand of Google Home. Sonos says it gave Google access to its patents in 2013 in order to allow Google Play Music to work on the Sonos platform. At the time Google had no competing hardware.

A couple of years later, however, the Chromecast Audio dongle was launched, which promised to connect regular speaker to the internet. Initially, as the Guardian reported, each connected speaker required its own audio source. But within a couple of months Google added a bunch of additional functionality, including multi-room support, which seems to be the first of the patent infringements.

Here are the main patents Sonos claims are being infringed, although there are another 23 not detailed in the suit:

  • US. Patent No. 8,588,949 – Method and Apparatus for Adjusting Volume Levels in a Multi-Zone System
  • US. Patent No. 9,195,258 – System and Method for Synchronizing Operations Among a Plurality of Independently Clocked Digital Data Processing Devices
  • US. Patent No. 9,219,959 – Multi Channel Pairing in a Media System
  • US. Patent No. 10,209,953 – Playback Device
  • US. Patent No. 10,439,896 – Playback Device Connection

“Google is an important partner with whom we have collaborated successfully for years, including bringing the Google Assistant to the Sonos platform last year,” said Sonos CEO, Patrick Spence. “However, Google has been blatantly and knowingly copying our patented technology in creating its audio products.

“Despite our repeated & extensive efforts over the last few years, Google has not shown any willingness to work with us on a mutually beneficial solution. We’re left with no choice but to litigate in the interest of protecting our inventions, our customers, and the spirit of innovation that’s defined Sonos from the beginning.”

We’re not aware of any public Google response, but even if they have it will just be templated legalese claiming innocence, so let’s just take that as read. Sonos has filed suit in the Central California district court and also asked the International Trade Commission to block the importing of any of the products claimed to infringe the patents into the US. If Google is guilty of any of this it would be well advised to settle quickly as the PR from exploiting such a well-loved tech brand is unlikely to be good.

App economy hauls in $277mn on Christmas Day

Some are preoccupied by presents, others by the mountains of food, and a few are even napping in the comfy sofa, but more of us are spending money on in-app purchases on Christmas Day.

According to data from mobile analyst firm Sensor Tower, $277 million was spend on apps across Google Play and Apple’s App Store on December 25. This represents an 11.5% increase on the amount spend in 2018 while the entertainment category brought in the biggest gains across the app economy.

While the US accounted for the largest proportion of spend globally, it trailed the average grow. In the US, just over $80 million was spend across both the app markets, representing a comparatively sluggish year-on-year growth of 4.8%.

Christmas is usually a profitable time for those involved in the app economy due to the number of new devices, first-time mobile customers and vouchers being offered as last-minute gifts, though interestingly enough, the non-game segment also grew, indicating that perhaps there were some urgent Uber’s called once the realities of spending the evening with the in-laws kicked in.

Huawei promises to launch P40 with Google service replacement, reports say

Huawei has told the media that P40, the company’s next flagship smartphone will be launched with its own mobile service suite but will be built on Android 10 instead of its own HarmonyOS.

Richard Yu, CEO of Huawei Technologies Consumer Business Group, told a group of journalists from the French media that the company’s next flagship smartphone, the P40 (and likely P40 Pro), will be launched at the end of March 2020 at a special event in Paris. The exact date is yet to be announced. Yu promised the media representatives, who were on a press tour to the company’s headquarters in Shenzhen, that the phone will be in a design never seen before (“jamais vu”), with improved photography quality, better performance, and boosted automation.

Yu also confirmed that the phone will be built on Android 10 with Huawei’s customised user interface, EMUI. This is consistent with the company’s earlier announcement that its own operating system, HarmonyOS, will not be powering smartphones or tablets in 2020. Instead it will be used on other connected devices, including smart TVs and wearables.

Meanwhile, the Indian newspaper The Economic Times quoted Charles Peng, the CEO of the Huawei and Honor brands in India in Huawei’s Consumer Business Group, as saying that P40 will come equipped with Huawei Mobile Services (HMS), in place of Google Mobile Services (GMS). Both brands from Huawei as well as Oppo, another Chinese smartphone maker, were reported to have approached app developers to make the top apps in India available for HMS as well as for Oppo’s own Color OS.

“We have our own HMS and are trying to build a mobile ecosystem. Most of the key apps such as navigation, payments, gaming and messaging will be ready soon.” Peng told The Economic Times. Frandroid, a French media outlet, noted that HMS should be ready at the same time as the launch of P40.

The Economic Times reported that Huawei offers developers up to $17,000 for making their apps available for HMS, supported by Huawei’s $1 billion global fund the company announced earlier this year. Oppo’s coffer “to develop a “new intelligent service ecosystem” is reported to amount to $143 million.

It is worth highlighting that having the most popular third-party apps in a certain market (India, China, for example) available for HMS is different from bypassing GMS. The core Google services and APIs, including Chrome browser, YouTube and YouTube Music, Play Store, Google Drive, Duo, Gmail, Maps, as well as Movies and TV, are optimised to work with the Android operating system. Most importantly, there is Google’s fundamental “search” capability that powers everything else.

Developing its own operating system as well as an overall mobile ecosystem has long been on Huawei’s card. As Ren Zhengfei, Huawei’s founder, told media earlier, the work, as well as in-house chipset development capability, started long before Huawei ran afoul of the US government. However, the company has learned it the hard way that such tasks are more difficult than building a nice phone. Richard Yu had to renegade on his own promises more than once. Shortly after Huawei was put on the Identify List Yu said that the company’s own operating system would be able to power its new smartphones by the end of this year or the beginning of next. That has now been officially denied when HarmonyOS’s positioning was clarified. Yu also said, prior to the launch of P30 in September that there would be a workaround solution to load GMS on the new smartphone. That did not happen either.

Consumers may also find Huawei’s narrative less than convincing. As IDC’s Navkender Singh put it to The Economic Times, “There will be a breakdown of the conversation that Huawei or Honor devices will have OS and app store issue. It is going to be very tough for Huawei/Honor to sell the phone based on their own suite.”