domingo, 30 de junio de 2019

Adding confusion to Huawei´s affair

After the meeting between Xi Ping and Trump there's a feeling of relief in the tech sector. The general conclusion after the press conference given by the US President is that the tech war against Huawei has finished. I really don´t know if there are reasons to be so optimistic. My impression is that everybody was so eager of listening good news that they think they have listened good news without further analysis. Perhaps it would be good to analyse what we know so far of the supposed end of the Huawei affair.

To begin with, Trump´s declarations are contradictory up to some point. On one hand, he announced that "we´re allowing them (American companies) to sell (to Huawei)", but he refused to confirm that the Chinese tech company would be dropped from the entity list. Therefore, the meaning of this "allowance to sell" is not clear. It may mean a new postponment of the effective entrance of Huawei in the entity list beyond the already given extension of 90 days or it may means that the bunch of tech companies that have been lobbying against the ban are going to receive a partial license for selling chips to Huawei. The answer will be published (or not) by the US Commerce Department in the following days.

It's also interesting to appreciate that no mention has been made by Trump to the Executive Order on the tech supply chain published at the same time that Huawei was introduced in the entity list. It is relevant to highlight that there are signs that the order implementation has its own problems (e,g, The initial assessment of threats of the US Director of National Intelligence was not published this week as was foreseen in the order), but Trump has not give any sign that the implementation of the order was going to be stopped or paralized. This absence may mean that the crusade against the deployment of telco networks based on Huawei equipment on US soil will continue. And therefore, the pressure on US allies to ban Huawei equipment may not be relaxed.

The answer to the above doubts and many others will be given in the following days (or not), but there´s a serious chance that we may have attended only to the first scene of a new episode of confusion of the Huawei´s affair instead to its final act.

miércoles, 26 de junio de 2019

Finishing the building of the European Data Space

Data is recognized as a critical resource for the development and grow of the economy in the forthcoming years. On one hand, there will be an infinite number of data sources, which grow is driving by the dissemination of the IoT. According to IDC, 41.6 billion IoT devices will generate 79.4 zettabytes of data in 2025. On the other hand, there will be a growing demand for data from AI applications across all the economic sectors. Only the market of AI in IoT Devices will reach $9.5B in North America by 2024 with 28.% CAGR. Therefore, we are getting closer to a perfect storm with a perfect match between supply and demand.

Europe has been building a shared data space for years based on legal certainty. Firstly, with the personal data and privacy framework which is now in its second generation with the GDPR.  Now, the free flow of non personal data regulation establishes a new legal innovation without possible comparison in other geographical areas. These two elements set up the the base for trust that allows to say that the free movement of data may be called already the fifth freedom of the European Union and underpins Europe position as worthy partner in the digital economy.

However, an unlimited space for the free movement of data has no sense without unleashing the sharing of data among private and public actors.  Regarding the public sector,  with the continuous exploration of new frontiers for the re-use of public sector data that has achieved a new milestone with the third version of the PSI Directive, it may be said that there is an unrestricted access to public data. By the contrary, B2B or B2G sharing of data its yet in its infancy. 

Regarding B2G sharing of data, there's a strong case for forcing the access from governments to certain data. Data held by companies can be very relevant to guide policy decisions or improve public services. The more the data the better the planning of public services based on evidence. Starting with the data generated by utility companies and ending with data from online platforms for mobility or housing services, the definition of an harmonized European legal framework for B2G sharing of data will unleash without doubt a new wave of sustainable growth in Europe and helps to achieve the SDGs.

More complex in the issue of B2B data sharing. On one hand, any hard or soft regulation measure should be based on voluntary schemes and linked with the different business model for sharing (such as monetisation/selling data, marketplaces/exchanging data, industrial platforms/joint ventures or opendata). On the other hand, as part of this data may be personal data any sharing of it should be based on consent from the sources. The respect for business models and the user privacy rights should be also combine with awareness-raising campaigns among companies on the benefIts of sharing data.

No Single Market would be possible without a Digital dimension and non Digital Single Market would be possible without a European Data Space. Therefore, the survival of Europe as a commercial power depends of deepening and strenghtening the efforts on data regulations beyond ensuring the flow of data  it´s needed promote flooding the channels of exchange with the data itself

miércoles, 19 de junio de 2019

Collateral damage of trade wars

There's a certain probability that in five years the inclusion of Huawei in the US Commerce Department entity list will be study as the black swan event for the OS market for smart devices. Until May 16th 2019, Android was the dominant player in the OS market for Smart Phones and other consumer devices (such as TVs). The maket share of Android on smartphone OS was more than 80% and there was not pesrspective of a viable alternative to it. This position was achieved not without a fierce battle, because we should remember than less than 10 years ago Android was a minor player in the same market.

But then, the unexpected happened. The second player in the smartphone market, Huawei, was banned to use Android and forced to look for an alternative. Based on its immense R&D force (the Chinese company spends more than 15 $ billion per year), Huawei announce that it would began to distribute its own OS less than month after, just in time to avoid (or at least, to make difficult) a massive abandonement of the Huawei Smartphone by users.

There are some people who predicts a Huawei´s failure in this challenge. The main error is the comparison with the fruitless trials of Amazon or Microsoft to compete with Google in the Smartphone OS market. On both cases, the companies made the same errors. They tried to build up at the same time a market share on devices and a market share on OS. Huawei already has a market share on devices. Furthermore, while Amazon/Microsoft were not playing for surviving, Huawei has not alternative but to battle until the end. In this circumstances, even the obstacle of not having Gmail, maps and other Google apps in Huawei´s smartphone will not be a a definite hurdle, because the alternative in not having anything at all.

The first hint that Google is worried about the unexpected competitor in the OS market is already on the table. The Google lobbyist machine are beginning to fight the ban with all its forces. Even the first sign of impact of these efforts has appeared with the doubts about Huawei´s blacklisting in some high US official.

Interesting months ahead in the Smartphone OS market for once in many years. The Google dominance of this sector maybe the collateral damage of the trade wars.

miércoles, 5 de junio de 2019

Disrupting supply chains

On May 16th, US Government introduced Huawei in the Entity List, a black list of companies that no American companies could supply specific items under EAR (Export Administration Regulation). This means, basically, the ban to supply the Chinese company any software or hardware product developed in the USA. However, this ban is not only for US-Persons but also for non US-persons. In the case of foreing products that contains US-products, the supply to Huawei is also forbidden in case they contain more than a de minimis amount of controlled US content are subject to the EAR (25% of the value). The best explanation I have found of these restrictions is in this post.

Look around yourself and pick up any device that gives you access to digital services. Or think about any of the applications that you use on a daily base. Few of these products have been developed completely in just one country, usually all of them are made of different hardware or software components, each of them build up in geographical areas on different sides of the international borders.  So now imagine how difficult is to be safe  of not being breaking the restrictions if you are supplying a technological product. You would have to begin to made complex calculations in case you are using any US component. Therefore, the safe route is cutting relationships with Huawei if possible.

And this is what is happening. Important companies around the world are stopping to supply products to company for the fear of breaking the rule. Software and hardware products that are needed for Huawei products should be substituted by others. A complete redesigne and rebuild of the company flagship products will be needed. The lesson from this affair is how easy is to disrupt the supply chains even of the most powerful companies.

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