Under surveillance
Covert communications at Huawei
Good morning, network navigators. This is your Stock Market Rundown for April 12th, 2024. Thank you so much for reading. Let’s get things started:
TODAY’S TOP STORY: TELECOM UNDER SUSPICION
Employees working gruelling hours, and passing out on office mattresses from exhaustion. It sounds like a sweatshop, but it’s actually the workplace scene at one of the world’s top tech companies.
Huawei is the world’s largest provider of 5G networks, with nearly $100 billion in annual revenue. It’s a “national champion” in China—and the source of much consternation in US national security circles.
The business was founded by former Chinese army officer Ren Zhengfei in 1987, who launched by reverse-engineering existing telecom technology and selling it for cheaper than Western incumbents. Huawei eventually did deals with most of the major global telecom operators.
But the company’s ties with the Chinese government have raised suspicion. Experts found evidence that Huawei telecom equipment has “backdoors” allowing Huawei to covertly access other countries’ telecom networks. Could using Huawei equipment be like giving James Bond your iPhone password?
Whether the espionage danger is real or not (Huawei denies it), US regulators are treating Huawei like an uninvited guest at the telecom party. The FCC banned imports of Huawei equipment, and a Department of Justice lawsuit against the company on charges of bank fraud and trade secret theft will go to trial in 2026.
Despite the ongoing spy saga, Huawei’s financial results are doing swell: the company’s profit doubled in 2023, boosted by the release of a new smartphone in China. Sounds like all those those sleepless nights at the factory paid off.
SO WHAT ELSE IS GOING ON?
Microsoft just announced a breakthrough in computing speed that slashes the time required for calculations. Maybe it can help me figure out how to split a restaurant bill when I’m out for dim sum with five friends and somebody brought a Groupon.
Telsa’s quarterly deliveries dropped for the first time in four years. Elon famously sent a Tesla into space in 2018; with this sales slowdown, there’ll be so many left on the lot he can send a whole fleet up there.
Layoffs watch: Amazon cut several hundred employees in its cloud-based Web Services division. So much for “learn to code” leading to a stable career.
Google may put its AI-powered search engine behind a paywall. Google turned the entire internet into a searchable library—now they’re suddenly making it pay to play? C’mon, fellas, what happened to “information wants to be free”?
Signing out for the week, superstars. Looking forward to circling back with you first thing Monday morning. Yours in capitalism, The Axe
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