Angry Planet - The Fight Over 5G and Chinese Spies

Episode Date: February 3, 2020

There’s a battle raging for the future of the internet. No, it has nothing to do with net neutrality or broadband access. This is about 5G, the shadowy world of global intelligence agencies, and a telecom giant with $108 billion in revenue that most Americans haven’t heard of.The company is Huawei, a Chinese manufacturer known the world over for its cell phones. It also makes radio arrays and is building 5G infrastructure all across the planet. Recently, the UK announced it would allow Huawei limited access to some British 5G mobile networks. The Trump White House doesn't like that and claimed Huawei’s tech is an elaborate trojan horse for a Chinese spying network.Here to help us understand the world of 5G networks and spies is Amanda Macias. Macias is CNBC’s National Security Reporter. She specializes in the business of war. Amanda, thank you so much for joining us.You can listen to War College on iTunes, Stitcher, Google Play or follow our RSS directly. Our website is warcollegepodcast.com. You can reach us on our Facebook page: https://www.facebook.com/warcollegepodcast/; and on Twitter: @War_College.Support this show http://supporter.acast.com/warcollege. Hosted on Acast. See acast.com/privacy for more information.

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Hello, and welcome to War College. I am your host, Matthew Galt. There's a battle raging for the future of the Internet. No, it's nothing to do with net neutrality or broadband access. This is about 5G, the shadowy world of global intelligence agencies and a telecom giant with 108 billion dollars in revenue that most Americans haven't heard of. That company is Huawei. The Chinese manufacturer known the world over for its cell phones. It also makes radio arrays and is building 5G infrastructure all across the planet.

Recently, the UK announced it would allow Huawei limited access to some British 5G mobile networks. The Trump White House doesn't like that and claimed Huawei's tech is an elaborate Trojan horse for a Chinese spying network. Here to help us understand the world of 5G networks and spies is Amanda Macias. Macias is CNBC's National Security Rew. reporter. She specializes in the business of war. Amanda, thank you so much for joining us. Hey, guys. Thanks for having me. Let's get some basic background out of the way. Let's talk about this company and ZTE. What are they? What do they do? And why is the U.S. government so afraid of them?

Right. So this saga has been going on for very long time. So the U.S. has long had concerns about Huawei and ZTE, basically two Chinese tech companies. So back in 2012, the U.S. government warned about Huawei's equipment and their components. And same thing goes for ZTE. And their main issue with these two companies is that the Chinese use both of these platforms as a way to spy on American citizens as well as U.S. allies. So the government's put together a couple of different reports. There's a big one in 2012 that basically interviewed a lot of intelligence committee chiefs. And they put forward all of these risks.

All of that was cited throughout the Department of Defense. And in a way to sort of mitigate any risk, the DOD two years ago ended up putting an effective ban on any of these products, citing these security concerns. And another wrinkle I want to add to this, just so we kind of have our definition. up top is what is five eyes? Yeah, so the five eyes are considered the highest of intelligence sharing, and the five-eye partners are Australia, Canada, New Zealand, the UK, and the United States. And so these five governments have decided that they will share military intelligence, human intelligence at the highest level.

So this is the elite when it comes to national security intelligence. sharing. Okay. Now, how is this going to, how is this decision going to affect that intelligence sharing? And can you speak, I'm sorry, and can you talk a little bit about, like, what the UK did specifically and why? Right. So this is going to be a major wrinkle moving forward with the five eyes and this level of

intelligence sharing that they do because basically what happened earlier this week is the UK's prime minister, Boris Johnson's government just decided that, you know, by Trump calling Johnson a friend and a key member, Boris Johnson decided that they were going to allow Chinese tech firm Huawei to have somewhat of a footprint within the United Kingdom. So people that I've spoken to at the British Embassy here in Washington have sort of downplaying U.S. concerns that this is now going to jeopardize the Five-Eye Intelligence Sharing Alliance, as well as complicate how the U.S. and the U.K. work together in the future. What exactly is the concern that the U.S. has, and is there any evidence for it that's been put forward?

So I think in your introduction, you put this really clearly in that calling Huawei and ZTE a Trojan horse. So both of these companies are giants when it comes to Chinese telecom, and they just so happen to be the front runners when it comes to 5G. And so the entire world is after a 5G network. Unfortunately, the West can't provide that, so they have to turn to these two Chinese companies to do that. Everyone from the Director of National Intelligence to the FBI, CIA, NSA, DIA, as well as the National Geospatial Intelligence Agency,

all of these directors have testified before lawmakers. this was back in 2018 about the potential security risk now because they were testifying in an open hearing, they weren't able to get into some of the more classified intelligence that they had that linked Huawei and ZTE to malicious activity in terms of spying on Americans or spying on U.S. allies. So the United States hasn't exactly put forward very clearly what intel that they do have, but they have stressed their deep concerns for these types of risks. and they believe that both of these companies are beholden to the Chinese and will do whatever they can to promote Chinese intellectual property theft in terms of spying, that type of thing.

And, you know, all of those issues are key to the U.S.-China trade war that the Trump administration is waging right now. But America's allies don't seem super concerned over this, right? Like even MI5 head, Andrew Parker recently said that he doesn't think that this tech is going to interfere with UK's intelligence sharing relationship with the U.S. Is there any, like basically what we're going on is faith from the American intelligence apparatus, right? We're kind of taking them at their word. Especially when you have, you know, Huawei and ZTE CEOs both coming out and saying that they don't have any alleged tariff. to the Beijing government. And they strongly deny all of these accusations.

So, yeah, I mean, you do have to take America's top intelligence chiefs, you know, at their word when they cite these types of security concerns. And the British diplomats that I spoke to in the wake of all of this really sort of downplayed these concerns and said, you know, we've made a decision. The Chinese are already in our telecom systems anyway. and we're going to make sure that when Huawei does have a little bit larger of a footprint within the UK, that it is going to be contained and it won't hit the core of their networks, which would have top secret, classified, intelligent sharing levels.

So the Brits have done their assessment. They've decided that they do want to move forward with Huawei, and I don't know if you recall, but the last, Secretary of Defense. The last defense minister for the U.K. was asked to leave his post by then Theresa May over these Huawei concerns. So there was some leaked information about how the UK was considering Huawei, and the UK linked those leaks to then Gavin Williamson. So this has been something that has sort of lumbered over the U.S. and the U.K. for a long time. It saw the ousting of Gavin Williamson, their defense minister.

And now under Boris Johnson, the UK has decided to move forward with Huawei. So this will definitely create a wrinkle. We're still waiting for the U.S.'s response and how the U.S. is going to move forward. But this is something to watch because Germany hasn't actually ruled out not using Huawei. You know, France hasn't ruled it out yet completely. So, you know, you're watching all of these European countries fill the pressure of wanting to have 5G, and yet the West can't support that yet. There's a lot of really fascinating stuff here. I want to dig into a couple different areas of it.

First, it seems to me, just based on the public statements that have been made, that the U.K. is kind of tacitly acknowledging that there may be a problem here, but they're going to be able to handle it. I think Johnson said that the UK would be able to prevent Huawei from accessing quote unquote sensitive functions in their in their government computers. Do we have any sense that that's possible?

No. Or even true. Right. No, you don't. I mean, this is one of the reasons why the U.S. was so clear in saying that we're not going to work with WallA and we're not going to work with ZTE. citing all of these potential risks. And, you know, I mean, no, this is just key to the Trump administration with their fight with China and the trade war. So this really does hit at a matter that's very important to Washington right now. And it is unclear if the U.K. is going to be able to mitigate Chinese spying or seeping into other parts of the network.

The Brits seem to think that this is a double-edged sword. We need 5G. It's going to cost their economy billions if they have to develop it on their own. They're going to be way behind, and China is just the frontrunner for this type of technology. So either you wait this out and you develop on your own and you're way behind and, you know, 6G is the next 5G. or you try and take steps in which the British say that they have, where you do an assessment, you find a way to mitigate risk, and now they've made their decision.

So it doesn't appear to me from the diplomats that I've spoken to that represent the UK that they're going to walk this back in any way. All right, let's back up a little bit, because we're talking a lot about 5G, and I want to make sure that we all kind of, that the audience understands exactly what that is. Can you give us a primer? Just the biggest point that I would note about 5G is that it's a type of network that enhances the speed in which mobile broadband services operate on.

It expands a lot of mobile networks. When you talk about self-driving cars, that's going to need 5G. So I think as nations rush to have this available for consumers, the pressure will mount in working with a 5G leader. And right now, that's right now. Right. It feels as if 5G has been pitched as the base speed, the base wireless speed that we need to get to the future that we're planning. Right. And, you know, there's top, you know, so it was 4G and then it was LTE and 5G and, you know, paving the way to 6G. And so I guess the big question that governments have to look at and economies have to look at is, do we want to do this the super, super, super safe way that the U.S. acknowledges, which means cut out China entirely.

But how can you cut out a market leader? And that's the pressure that was mounting in the UK. And obviously, based off of Boris Johnson's decision, the UK is going to pivot and actually work with Huawei and their 5G platforms. You almost make it sound as if this has more to do with like the trade war between U.S. and China than it does intelligence concerns. Do you think that's a fair assessment? So I think what's key of the Trump administration is, and it's been, a party line. This has been when he was campaigning and president-elect, but Trump has always cited as China taking an unfair advantage, whether it's business decisions, trade, national security,

and he's linked a lot of that to intellectual property theft. And so the bread and butter of the U.S. China trade war, which is the top two economies of the world hitting each other with tip for tat tariffs, the key point, the key takeaway to that is the fact that Trump has used tariffs. citing national security concerns, and that has prolonged a lot of this back-and-force retaliation. So there is no greater example of Chinese intellectual property theft that also has linked to national security concerns than Lockheed Martin's F-35, because China is said to have gone in, been able to look and pull designs than the inception of the F-35, and has made their sort of play off of that. It's unclear if China's version, knockoff version of the F-35 is as good as the F-35,

but they saved so much money in research and design because they didn't have to go through the trials and tribulations that is America's most expensive weapon system, which is Lockheed Martin's F-35 Joint Strike Fighter. So I think that that when we talk about Huawei and we talk about 5G and intellectual property theft and the U.S. suffering, jobs, and the economy taking a blow because of its relationship with China, I mean, that's just a baseline for the Trump administration. So I do think that all of these issues are aligned. I don't think that the 5G-Wawei fight is any different than the trade war fight. And then we see this ripple through, you know, diplomacy.

the Pentagon's have to have to you know the trade issue the market trade issue is not separated from what I've seen happen in the Pentagon. Okay, but Huawei seems pretty unstoppable, right? It's penetrating markets worldwide and people seem to like them. You know, there's a recent wired article that claimed that 40% of the planet's population are using Huawei products. Is there anything really meaningful that the U.S. can do here in the face of, market dominance or what appears to be market dominance? Right. No, I really don't think that the U.S. has, I don't think that there is a way for the United States to stop what China has created in Huawei. We're seeing Huawei take up a larger market share. Samsung's still a leader in terms of mobile devices. Huawei takes the number two spot over Apple. And so with the UK deciding to use Huawei equipment within their telecom networks.

I mean, that just makes, you know, these are the, when we talk about the five eyes, these are the top governments that the United States has entrusted with their highest level of intelligence sharing. If you have one of those, take a step back and turn to what has become, you know, the epicenter of the Trump administration's fight with China, then, no, I think that the UK sent a very, very clear sign. Again, like I mentioned, they've downplayed their decision, but it's going to be an interesting road for the U.S. to navigate in the wake of all of this. Right, because you've got an economic partner that you're also in competition with, but that you're also ostensibly

sharing intelligence with, right? And all these things all come into conflict with each other. Right. And the main issue here is that you really just, you really don't know, you can't verify. When you talk about trying to find, to get something transparent out of the Chinese, you know, who's, you know, so when you ask like, oh, is there really a way in which the Chinese can operate so closely to an intelligence partner without taking advantage of? And we've seen time and time again that that, that especially isn't the case. So this is really uncharted territory that the U.S. and the U.K. are taking this relationship in. And I don't really see a way, you know, aside from, we're already in the middle of a trade war with China. You know, you could do sanctions or something like that. But I really just don't see a way for the U.S. to stop the rest of the world from eyeing something that China has to offer, which is 5G.

Except for competing in that market, but you say it's already a little bit too late. I mean, at the end of the day, I always want to count on American innovation. But as it stands right now, China is the leader in this. Well, that begs the question to me, at least. Are we seeing the beginning of the end of global Internet? You know, if we begin to fear our global partners, if we don't think we can trust their tech, can we keep connected? You know, China and Russia are both already taking existence. existing steps to limit connection and regulate what goes on on the internet inside their own borders.

If they start controlling the pipes, metaphorically speaking, is it, you know, completely paranoid to think that they will begin to export their idea of what the internet should look like? That's interesting. I think that also is reason why the defense department is courting a lot of. of companies out of Silicon Valley. There's a lot of big tech contrast coming out of DOD, including, you know,

AWS, for instance, Google has scooped up quite a few. So I think as the Pentagon Courts, Silicon Valley, and as the Trump administration pushes forward on space, I think that's going to be the way in which the U.S.

can mitigate some of these security concerns in terms of Russia and China. So I think that there's just multiple prongs of going after this matter. And like I said, at the end of the day, I do want to believe in American innovation, you know, over China or Russia. But, yeah, I think that that could be potentially, now that we're going back and forth on this,

I think that that could potentially be a way in which the U.S. does dampen, you know, China's efforts. Traditionally, the military has had kind of a hard time courting Silicon Valley. This is changing. You know, you've got companies, you know, obviously, like you said, Google, and there's companies like Palantir and Palmer Lucky's company that are kind of very interested in dealing with the military. The tech company workers are often at odds with this, but do you think it's important, like there's this, I think I'd have to say this, there's this transmission of culture.

that would happen between the two. And I think, you know, tech company workers at a base level are worried that the military culture would kind of infect them and they would be working on projects that they may feel are unethical. But isn't there also, isn't it also possible that there would be a transmission the other way and that tech company values and American values can help bolster the American military and the Pentagon and... No, no, no, I get what you're saying.

because I will say that when I was at the Reagan National Defense Forum in Simi Valley, oh, last month, what you're getting at is exactly what Amazon CEO and founder Jeff Bezos got at, is that if the U.S. tech companies decide that they're not going to support the Pentagon's war business, then that for the United States and for the globe is a very, he had a very dismal outlook on that. And basically what he, he very loosely referenced in his comments that, and what happened with Google and Project Maven. So very controversial contract. It was Dub Project Maven.

Hang on. Sorry. Very controversial contract, Dub, Project Maven caused thousands of employees to protest the initiative. But basically, what Google was doing with the United States. States military was analyzing drone videos by using artificial intelligence. And so that culture that you're getting at where there's people at Silicon Valley and at tech industries that don't want to use tech for war. So in the wake of all of that, Google decided to not renew the contract and expired March 2019. And so Bezos loosely referenced those, you know, those steps when he was

speaking at the Reagan National Defense Forum, and you know, he is in the middle of a lawsuit, you know, with the Pentagon over the cloud computing contract that was awarded in October to Microsoft over Amazon. So,

you know, Amazon is just another example of a company that is competing from Silicon Valley for massive DOD contracts. And so he said something to the fact that Reagan, you know, if Big Tech turns its back on the Department of Defense, you know, the country is in trouble.

And he took it on more as like a patriotic duty that we need to do everything that we can in order to support the Department of Defense. So that's one example of someone who shares that same outlook that you were mentioning. But, I mean, Google Project Maven is the opposite of that, of a company that decided, look, we don't want to do this anymore. And we don't want our AI to be used for war, essentially. So you get both sides of the spectrum with Silicon Valley. I mean, when you think about guys and hoodies and tech with the hierarchy and the bureaucracy that is the Department of Defense, I think there's naturally going to be a culture clash.

However, I will say that in the Pentagon, we're seeing, you know, for instance, Dr. Roper, who is acquisitions chief for Air Force, and he's really interested in tech. and he wants to leverage Silicon Valley, and he's spending a lot of time with tech companies trying to figure out how do you guys get an initiative and move it so quickly through your company, whereas the Department of Defense has all these boards and revisions that it has to go through. So you are seeing a little bit of a vibe within the Pentagon,

believe it or not, of people who do want to leverage what the private sector is doing. And I think in order to survive, in order to compete with China, for instance, You have to do that. You have to figure out a way to adjust your normal acquisition process. All right. I think that's a wonderful spot to end on.

Amanda, thank you so much for coming onto the show and walking us through this complicated topic. You're welcome. Thanks for having me. That's it for this week, War College listeners. War College is me, Matthew Galt, and Kevin Nodell. You can follow me on Twitter at M.J.Galt and Kevin at KJK. Nodell. It was created by myself. and Jason Fields. We will be back next week with more stories from behind the front lines.

Stay safe until then.