By Aaron Pressman and Clay Chandler
December 12, 2018

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Huawei Technologies chief financial officer Meng Wanzhou is undoubtedly resting a little easier this morning. On Tuesday, a Canadian justice ruled that she can be released on bail of $10 million Canadian dollars while awaiting extradition to the United States. Meng, the daughter of Huawei founder Ren Zhengfei, will be subject to 24-hour physical and electronic surveillance by two security guards, which she’ll have to pay for herself. She’ll also have to abide by a curfew between 11 p.m. and 6 a.m., and wear an ankle bracelet so her movements can be monitored. But at least she’ll be able to serve her detention in the comfort of her multi-million dollar Vancouver mansion.

The U.S. Justice Department has sought Meng’s arrest on the narrow charges of hiding Huawei’s ties to a Hong Kong company that did business with Iran, thereby violating U.S. sanctions law. But in China, her detention is seen as symbolic of a broader U.S. effort to restrain Huawei and China itself. As the Washington Post puts it, the fraud allegations against Meng “fit neatly into the Chinese narrative about American efforts to undercut China’s rise as an innovator and rival, especially in the race for the next step in smartphone technology, known as 5G.”

But just because a narrative “fits neatly” that doesn’t make it wrong. Over the past several months, the U.S. has launched a global campaign to persuade security allies to ban Huawei products from their markets. Allies from the so-called “Five Eyes” countries (the other four are Australia, Canada, New Zealand, the United Kingdom), as well as Japan and the European Union have all raised security concerns about Huawei. Australia has blocked Huawei from rolling out its 5G technology. Japan has announced that it will stop buying Huawei technology for its government and military, and Japan’s top three telecom companies have reportedly decided to forego procuring Huawei equipment.

In the United Kingdom, an early and enthusiastic customer of Huawei technologies, telecommunications industry experts have been sharply critical of security flaws in Huawei products and software. The Financial Times reports that Huawei has “caved in” to demands from British security agencies to address the risks and has pledged $2 billion to overhaul its systems. That may suggest a way forward for Huawei in other Western markets as well.

As for Meng, her extradition will put pressure on Washington to put up or shut up in labeling Huawei a security risk. As CNBC’s Katie Fazzie points out, so far U.S. officials have aired their grievances about unfair Chinese business practices to friendly audiences like congressional committees and have “rarely had a chance to make any cyber-theft or money-laundering allegations in court against a Chinese executive.” In court, the scrutiny will be more rigorous. Losing the Meng case, Fazzie warns, “could mean losing credibility here and abroad on a far wider range of security issues involving China.”

Clay Chandler
@claychandler
clay.chandler@timeinc.com

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