Huawei has decided to go on the legal offensive against the United States government after defending itself against alleged espionage and bank frauds linked to American sanctions on Iran. During a press conference late Wednesday, Huawei announced that it has filed a lawsuit against the U.S. government, arguing that a ban on the use of its products by federal agencies and contractors violated due process and is unconstitutional.
The company is the world’s largest maker of telecommunications equipment and a growing threat to Apple in the global smartphone race. At the center of the suit, which was filed with a federal court in Huawei’s U.S. home base of Texas, is the company’s claim that Section 889 in the National Defense Authorization Act, passed in August 2018, is unconstitutional.
Section 889 contains restrictions that prevent federal agencies from procuring Huawei equipment or services, working with contractors that use Huawei equipment or services or awarding grants and loans that would be used to procure Huawei products.
During today’s press conference, Huawei‘s rotating chairman Guo Ping said Congress has failed to provide evidence to support the restrictions or allowed Huawei due process of law. The company is seeking a permanent injunction against the restrictions.
“For three decades, we have maintained a solid track record in security,” said Guo. “Huawei has not and never installed backdoors and we will never allow others to install backdoors in our equipment. The U.S. government branded our services a threat. The U.S. government has never provided any evidence supporting their accusations that Huawei poses a serious security threat. The U.S. government is sparing no effort to smear the company. Even worse, it is trying to block us in other countries.”
U.S. officials have long warned domestic companies and other governments against using Huawei equipment over threats that China could be using its tech for spying. A law passed in 2017 requires all organizations and citizens to “support, assist, and cooperate with national intelligence efforts in accordance with law, and shall protect national intelligence work secrets they are aware of.”
Huawei’s legal action compares with a reconciliation reached between its rival ZTE and the U.S. government last year. The U.S. announced in July that it would lift a ban preventing ZTE from selling to American suppliers after ZTE agreed to pay a $1 billion fine. The penalty followed an investigation showing that the Chinese maker of telecommunications devices had violated U.S. sanctions by doing business with Iran and North Korea.
Concerns around Huawei have escalated as the Chinese company grows to play a key role in 5G, the network solution crucial to driverless cars, remote surgeries and other futuristic technologies. In the backdrop is China’s ambition to lead the global 5G evolution, which has seen Beijing fast-track the issuance of 5G commercial licenses to spur consumer interests.
Earlier this year, the U.S. Justice Department filed criminal charges against Huawei and its financial executive Meng Wanzhou over business practices that allegedly circumvent U.S. sanctions over Iran. Meng announced this week she is suing the Canadian government and police for violating her rights when they detained her on behalf of the U.S. government in December.
Huawei executives, including founder Ren Zhengfei, who rarely speaks out publicly, have firmly denied the presence of any backdoors in its equipment. Ren recently declared that the U.S. won’t hamper his company’s trajectory and that the arrest of Meng — his daughter — is a “politically motivated act [that] is not acceptable.”
The Huawei controversy comes as the U.S. and China are engaged in a prolonged trade dispute. Critics have warned that escalating tensions between the world’s largest economies could strangle innovation breakthroughs, as countries around the world become increasingly reliant on China for investment, supply chain resources and skilled labor, while many of them depend on the U.S. for security alliance.
Update (March 7, 2019, 11:30 am): Added context on ZTE and trade war.