Skip to Content

Data Sheet—How a Huawei Arrest Fits Into the Big Picture of China-U.S. Relations

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.

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

NEWSWORTHY

Tomb of his virtue. Speaking of the odd arrest of Huawei CFO Meng Wanzhou, President Donald Trump did nothing to dispel talk that the move was related to his ongoing trade battle with China when he mentioned possibly using Meng as a pawn to close a deal. “If I think it’s good for what will be certainly the largest trade deal ever made, which is a very important thing—what’s good for national security—I would certainly intervene if I thought it was necessary,” Trump said on Tuesday. If the trade war does not wind down, Apple could move production of the iPhone out of China to other, unspecified countries, Bloomberg reports. Apple would consider abandoning China if U.S. tariffs were applied to phones at a level of 25%, the anonymously sourced story, which did not include a comment from Apple, stated.

A walking shadow. And further speaking of China, some U.S. authorities are blaming the Chinese government for the massive hacking attack that stole data on 500 million guests of Marriott’s Starwood hotels, the New York Times reports. China denied the allegation.

Struts and frets his hour upon the stage. After declining earlier entreaties, Google CEO Sundar Pichai appeared on Capitol Hill on Tuesday to answer lawmakers’ questions about every subject they could think of to make themselves look better. Not much new information was gleaned, as Pichai largely ducked questions about Google’s plans for re-entering the Chinese search market and other hot topics. Also, Mr. Monopoly showed up in the audience.

A poor player. Remember Bloomberg’s controversial, hotly disputed, widely denied blockbuster story in October that Chinese spies had secretly embedded a spying microchip on motherboards of servers made by Super Micro? In yet another blow to the story’s credibility, Super Micro announced on Tuesday that an outside audit had found “absolutely no evidence of malicious hardware on our motherboards.”

Full of sound and fury. On Wall Street, Michael Dell announced he had obtained shareholder approval to complete a complex transformation of his namesake tech company and return to the public markets at year’s end. Dell Technologies will trade under the symbol DELL. Also, Chinese music-streaming service Tencent Music priced its IPO late Tuesday at $13 per American depository share, at the low end of its projected range. The shares will begin trading on the New York Stock Exchange under the symbol TME on Wednesday. And Verizon said it was writing off about half the value it paid for acquiring Yahoo and AOL. The $4.6 billion pre-tax write off leaves just $200 million in goodwill and $5 billion in assets on the carrier’s books for the struggling digital media unit known as Oath.

Of his virtue and of his honor. Aldo Amenta was completely paralyzed in a diving accident three years ago. But he walked across the graduation stage on Sunday to receive his diploma from Florida International University thanks to a powered exoskelton. The video is pretty inspiring. Cobots, or collaborative robots that work in conjunction with humans, are definitely going to be big.

FOOD FOR THOUGHT

We are using a few thousand words in today’s Data Sheet to convey information about the state of the tech world. But, as they say, a picture is worth a thousand words—and sometimes many more. Brand research firm Kantar in collaboration with author and infographics guru David McCandless are out with their annual “Information is Beautiful” awards and the list is filled with stunningly gorgeous and brilliant depictions of data. The complete list of winners is online, but be sure to check out Pedro Cruz’s visual tree ring metaphor for U.S. immigration patterns and Professor Marian Dork’s history of the world through coins.

IN CASE YOU MISSED IT

U.K. National Health Service Signs Fax Machines’ Death Certificate By Erik Sherman

Nvidia’s 50% Plunge From Its Peak May Be Causing a Headache for Softbank’s Vision Fund By Kevin Kelleher

Hertz and Clear Bring Facial Recognition to the Rental Car Industry By Jeff John Roberts

How Police Use Fake Amazon Boxes and GPS to Catch Thieves By Don Reisinger

Fatal Uber Self-Driving Car Accident Could Have Been Prevented, Says Former Manager By Erin Corbett

The NIH Is MRI-ing Kid’s Brains While They Instagram to Study the Effects of Screen Time By Brittany Shoot

Popular YouTube Streamer Promotes Channel That Publishes Anti-Semitic Content By Chris Morris

BEFORE YOU GO

While Amtrak trains trundle slowly across the country’s neglected infrastructure, other nations are pressing their advantage. East Japan Railway unveiled a prototype high-speed train on Wednesday designed to operate at speeds of 224 miles per hour, rivaling the fastest locomotives in the world, such as the engines on China’s Fuxing line that hit a maximum speed of 248 mph. But don’t fret–we have an incredible talent for making cool toy train displays.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.