Hi folks, it's Shelly in Hong Kong. I saw a message yesterday from a friend in India asking if Google's search bar was no longer going to work on her Huawei phone. She heard the recent news that China's largest tech company was cut off by the U.S. government for security reasons. If Huawei won't be allowed to buy software and parts from American companies, including Google's Android operating system, does she need to buy a new phone?
Meanwhile, in China, millions of Game of Thrones fans fumed on social media about another casualty of the broiling U.S.-China trade war: Hours before they were set to tune into the season finale of the popular fantasy drama, they found out that its Chinese carrier, Tencent, would no longer show the long-awaited finale on its video service. The missing episode conveniently dominated the attention of social media users, drowning out the news that Huawei was getting the rug publicly pulled out from under it by U.S. President Donald Trump. While Tencent cited technical difficulties, HBO said the indefinite postponement was a casualty of the trade war between the world's two largest economies.
Both cases show how the ramifications of this new Cold War will stretch beyond any short-term trade deal, rewriting the rules of global businesses. It's not just about creating dual digital worlds separated by a tech-enabled iron curtain, where China and the U.S. have long operated in parallel realities. In this new world order for corporations, politics trumps economics. Being a private company beholden to shareholders no longer gives you a pass on having to choose between Team China or Team America. And that's going to mean the products companies make for consumers will be worse, not better.
For instance, as China and the U.S. battle for supremacy, rapidly-shifting political alliances are upending global supply chains that have been built over decades to assemble everything from smartphones and internet networks to sneakers and television shows. The upheaval is prompting big U.S. companies like Cisco, Apple and Google to re-asses their sprawling stable of offshore contract manufacturers and figure out contingency plans if access to China's factories are severed (Hint: Stuff is going to get more expensive). It's also hampering the roll out of 5G technology, the next generation mobile network that will govern future technologies like self-driving cars and internet-connected roadways and kitchen appliances. And it could threaten Chinese-made products now popular in America, including drones and social media apps.
The Trump Administration's assault on China's tech giant has also hastened Beijing's resolve to control more of its own destiny. That means reducing its dependence on American technology and media, spending to develop sectors like semiconductors, artificial intelligence and entertainment, and pushing companies to create and manufacture more of their own components and content instead of relying on U.S. firms.
Of course, these are big shifts that are going to take time to unfold. In the meantime, there's no doubt consumers who have grown accustomed to the benefits of global access are going to suffer. That includes the Indian in Mumbai struggling to figure out if she can still operate her phone, the Dallas teenager looking to play with a DJI drone, and the Shanghai fan of HBO dramas. Does anyone win when millions of Chinese turn to pirated versions of Game of Thrones?
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