Front Burner - What Canadian universities gain, and lose, by accepting Huawei funding

Episode Date: December 4, 2019

The Chinese tech giant Huawei is in the news again. This week is the one-year anniversary since the company's CFO, Meng Wanzhou, was arrested at a Vancouver airport, which triggered a massive diplomatic crisis between Canada and China. Also this week, Meng Wanzhou's father, the founder and CEO of Huawei, said the company's centre for research and development will be relocated from the United States to Canada. But that move isn't such a surprise. Huawei currently funds $56 million of academic research at Canadian institutions, a fact that worries tech and national security experts. Today on Front Burner, guest host Elamin Abdelmahmoud is joined by Peter Armstrong, CBC's senior business reporter, to talk about the risks and rewards of accepting Huawei's money.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hello, I'm Elamin Abdelmahmoud sitting in for Jamie Poisson. Huawei. It seems not a week goes by when the name of this Chinese tech giant isn't in the news. This week marks one year since the company's CFO Meng Wanzhou was arrested at a Vancouver airport.

That triggered a massive diplomatic crisis between Canada and China. The Canadian government is calling China to the World Trade Organization. It wants the two sides to formally meet there to try to resolve a dispute over canola. In China, two Canadians, Michael Kovrig and Michael Spavor, have been held there for nearly a year now. So it's kind of funny that also this week, Meng Wanzhou's father, the founder and CEO of Huawei, said the company's Center for Research and Development will be moved out of the United States and into Canada.

See, despite that blow-up, there are still some strong ties between Huawei and Canadian tech innovation. So strong that Huawei funds $56 million worth of academic research right here in the country. But that generosity has security experts worried about the hidden costs of accepting that money. To explain all that, today I'm joined by CBC senior business reporter and friend of the pod, Peter Armstrong. This is FrontBurner. Hi, Peter.

It's nice to have you here. Hey, you're not Jamie. No, I'm not. Nice to see you. This is going to be fun. We've never done one of these before. I'm glad to get in. We normally just talk about country music in the hall.

There's truth to that. Well, thank you for being here. Glad to be here. Okay, let's dive right in. You've reported that Huawei funds academic research in Canada to the tune of $56 million. That is not a small chunk of cash. Who's getting the money? So we reached out to like 33 universities across the country. We heard back from 17 that are receiving funds in some kind, whether that's direct funding of like a specific academic

research project or a bursary or a scholarship or an award, but all of it sort of around the academic research and specifically around kind of, you know, information communication technology, wireless infrastructure, how all this works. And it's an interesting sort of look across the country. You go from on the West Coast, UBC is pulling in like 7.3 million. University of Alberta, this one really surprised me at like 7.2 million. Waterloo is one of the best universities in the world that's looking at these issues. So it's not surprising they're bringing in the most,

around 15.3 million. McGill at seven. The lowest sum I think we were able to find was at Western, which was 60,000. Your alma mater, Queen's, at I think 360 or so thousand dollars. So it's an interesting variety of both research and the amount of funds we're getting. And then an interesting response from each of them about how much they can disclose, what they will tell us, what they won't. What people have and have not said has almost been

as interesting as what we found in the data. So let's talk about that research. Let's talk about these projects. These are supposed to be the cutting edge of technology, 5G projects. What can you tell me about them? Well, they are fascinatingly varied. And Huawei, it gives you a really interesting glimpse into what they're interested in, right? Because I sort of thought this would be just antennas talking to radio devices, right? How do you make your cell phone talk faster to the network? And yeah, there is some of that.

In fact, there's a lot of it. But there's also all kinds of neat stuff around AI, around blockchain. I mean, one of the programs at UVic, the University of Victoria, is around how automobiles might be able to communicate with each other. Again, it's on a network that would be sort of facilitated by Huawei infrastructure, but it sort of gets away from what I had initially thought. But it is fascinatingly varied. And it is like it stretches right across the country.

Huawei is spending $600 million on research and development for 5G. And a quarter of that money is being spent right here in this country. Why Canada? Well, look, Canada is incredibly good at this. Canada has always been incredibly good at this. Canada's always been incredibly good at this. You go back to Nortel and BlackBerry and BNR before Nortel. Nortel was a Canadian giant, representing a third of the value of the Toronto Stock Exchange. RIM is a Canadian high-tech Cinderella story.

Its unique feature? A keyboard that allows you to send and receive email, essentially in real time. Bell Northern Research wondered what would happen if every desk had a computer on it connected to a vast internetwork. This is a country that has been at the sharp end of the stick in wireless communication and information communication technology, the research. And then you have that thing that happens in the academic world, where you're good at something and that draws one big name researcher and that brings more money and more people that

want to work under that researcher and they become big name researchers and that draws more money and it snowballs. And that's something to be really proud of. And it's important to note that you need private sector funding to make sure this research happens. This isn't always just going to be funded by either the university or the government. Private sector has always played an important role in this. Now, the climate in the United States, for example, where they're making it harder for universities to back this kind of research, to do this kind of research funded by a company like Huawei, the intelligence community and the politics have actually made it more and more difficult for Huawei to be a big player in the academic research.

Today it laid criminal charges against the company for allegedly committing fraud and stealing trade secrets. The prosperity that drives our economic security is inherently linked to our national security. The U.S. has banned Huawei products from use in federal agencies and 5G networks. And we've seen an immediate result where a lot of that research funding has migrated north into Canada. In fact, this is weak. Now Huawei is saying they're going to move their major research center from the United States to Canada. Because of the sanctions, we are not allowed to communicate with our employees in America. No phone calls, no emails, no contacts. Huawei's development has been blocked in America,

and therefore we are moving our business to Canada. So, I mean, you know, we talk about these frosty relations with China, with Huawei in particular, the rest of Meng Wanzhou, and yet if you follow the money, it looks like a pretty cozy relationship. So let's talk a little bit about the idea that in the U.S. it's a little bit harder to get that money in there. So the University of Oxford said that it's not going to accept any Huawei money. So did MIT. So did Stanford.

So these are our closest allies, Britain and the U.S. They're a little skeptical about it. What does this say about us that we're willing to take that money? Well, it says that we're living in a gray area and that that's really uncomfortable and really difficult for the universities. And that that's really uncomfortable and really difficult for the universities that without guidance, without the government saying, listen, here's how we feel about this company and the money it's spending. And here's the role it's going to play in building out our next generation of telecom infrastructure. where they have to, the dean of a university has to play the role of CSIS, of CSE, of Export Development Canada, of patent applications, of the PMO in a lot of cases, and sort of assess risk and assess contract language and assess all these things that a dean of a guidance governments should be giving to the universities, but frankly, also to the companies, right? Like you've got Bell, Telus and Rogers have all at one point or another partnered with Huawei. They all still have using Huawei equipment without any real sense from either the government or to a certain degree, the intelligence and security agencies to tell them what specifically they should do. Other than, I don't know, we're kind of worried. When a university accepts a funding agreement with Huawei, what exactly are they giving away in terms of patents funded in seen by the

Canadian public, by Canadian companies that would like to use it, or by competitors to Huawei. And we just don't know what actually will happen with this because nobody's under any obligation to disclose the contract language or the specific agreements with any company, let alone Huawei. Are some universities disclosing this or not? So some universities are disclosing more than others. And as I say, it was really interesting to see who would disclose what. I'll give you an example of UBC. That's come under a fair amount of fire for taking too much funding

and being too liberal with its relationship with Huawei. They gave us a complete breakdown of program by program, of research project by research project, specific funding, and then even included some, not the contract, but an indication that the contract would allow for them to continue to publish after the agreement has been finished and the research is done. So yes, it stays in the public domain. The commercialization of it is up in question. But then you get to my old alma mater, Université Laval in Quebec City, and they wouldn't tell

us anything. They would say, listen, the contract with Huawei means that we can't tell you. We do have, I think, three projects with the company. We won't tell you how much they're worth or what they're into. So there's a very large variance in how they're not only accepting, but disseminating the information around the money they're accepting. Now, what would happen to these universities if all of a sudden they stopped being so generously funded by a company like Huawei? It's an interesting question. And we put that to

Christopher Parsons, who's, I mean, one of the best in this country on this subject, who understands the ins and outs of this and understands the position the universities are put in as well. Some of that research just wouldn't be done or wouldn't be done at the speed that it may be being done now or with the technical sophistication with some of the labs can be purchased. And he says, listen, if this money dried up, some of this funding would go somewhere else, right? The company will find a place to get this research done. And if that research moves somewhere else, you may also see some university professors or graduate students that go wherever that money flows to. So if they move over to Spain or Sweden, you also see some university professors or graduate students that go wherever that money flows to.

So if they move over to Spain or Sweden, you may see some brain drain. Whether they leave Canada to go do it, whether they partner with somebody else, it puts the universities in a tough spot. The concern from sort of both tech experts and intelligence experts is really fundamentally what happens with that information at the end. Maybe the patents that result of any of this are going to be taken back to China and nobody here could possibly use them and could be used to the detriment of Canadian companies and Canadian consumers who want to see the benefit of this. Are they patents that are assignable exclusively, in this case, to Huawei, to the disadvantage of Ericsson, Nokia, and other competitors? Or is it open? And so they can also be licensed to the competitors

so that 5G generally, and not just for Huawei, is improved. Now, Huawei is addressing this, and Huawei is saying that, look, the most recent contracts that we've signed and funding agreements we've signed with these universities actually involves a co-sharing of patents. But we don't have the language around that. We don't have those contracts to really dig in and show to a contract lawyer and say, well, what does this actually mean? So even there, yes, that sounds like a really good and positive step, but you have to sort of ask yourself, what is that actually going to look like on the ground? And we're not in a position to answer that. Right. Then you have to say, well, wait a second. Huawei sort of stands out on its own and is a different kind of company.

The way it was built and the way it was founded with really deep, really intertwined relationship with the Chinese government, with the Chinese military, with all of these accusations of IP theft and of spying. I mean, you know, their role in the demise of Nortel is the stuff of legend and myth in a lot of cases in the tech world. Brian Shields was Nortel's top cybersecurity official. Well, he says cyber hackers literally stole the company bit by bit. Clearly it was on behalf of Huawei and ZTE, any Chinese company that could have used this information. For its part, Huawei has consistently denied any role in cyber espionage.

So you can't just look at it in a vacuum like you would any other company. Everybody's saying we need to look, we need to assess this risk differently than we would assess other risk. we need to assess this risk differently than we would assess other risks. Now, this is coming particularly at a time when a lot of countries like the UK, like Australia, like the US, they're kind of skeptical about Huawei. They're saying, we're not really sure if we want that company having anything to do with our telecommunications infrastructure. At the Halifax International Security Forum, Robert O'Brien, President Trump's National Security Advisor, is warning the Canadian government not to allow Huawei to participate in our 5G network. When Huawei becomes the backbone of the internet for any liberal democracy, it's not just that you're going to lose your sense of

security information to the Chinese. All of your citizens are going to have their most private, personal data exploited. Medical records, banking records, social media. So this kind of sounds like a risky moment for Canadian universities to be so deeply intertwined, at least financially, with a company like that. I mean, it's hard to assess the risk for the universities. The fundamental role of the university is to, you know, help make us all smarter, right? Use that research to, and if there's an agreement to at least publish that information, some would say that's enough.

Yeah, sure, let the patent go and the commercialization of this research is a different thing. But we're at this sort of critical juncture in the telecommunications field. And now it's about to make this really big jump out to 5G. And that's going to be a game changer in how we use information communication technology. It's no longer just about I can text Elamin faster or I can buy something off Amazon. We're looking at a world

under 5G where cars are going to be talking to streetlights, but critical infrastructure, dams, electricity grids, all of these things that are critical to a society are going to be embedded online and using those antennas and the telecom infrastructure by whichever company, whether it's Ericsson or Nokia or Huawei. That's why this is so deeply important. Ericsson or Nokia or Huawei, that's why this is so deeply important. Well, the story kind of almost becomes, you know, like a futuristic spy novel in the sense that let's say in the future there's an escalation between China and our allies. Is there a world where technology that is developed right here in Canada could then be used by the Chinese military intelligence services? For sure. That's the issue, right? I think when people think about the threat about Huawei, we hear the word spying.

And I think people think that means they're going to listen to you and I talk about country music or something. It's not that. I just want to address that spying bit because I think people really do think that it's listening in on conversations. Intelligence services and militaries around the world can listen in on conversations no matter whose equipment's out there. Thank you for reassuring me. They're pretty good at that. That's why anybody who's in the intelligence community and governments and whatever use a lot of encrypted communication because they know everybody's spying. The concern

here is if there were holes in the infrastructure, security holes or flaws, maybe built in, maybe not. Maybe just they understand it in ways that the people trying to control it haven't yet. They could turn something off. They could turn something on. They could reroute power or water. And that's any adversary. And so the closer the tie of the provider of that telecom infrastructure

to any particular government, in this case China's, becomes just inherently more and more problematic. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. What has Huawei said about all of this? Well, a lot. You know, we sat down with the VP of Corporate Affairs for Huawei here in Canada, Ali Kan-Velshi,

who's like, listen, my main response to that is everybody here is required to abide by Canadian laws. It doesn't matter if you're our President Eric, our Chief Cyber Security Officer Oliveira, our CTO Rob, or me, or the engineer beavering away in a cubicle, we follow Canadian laws and Canadian laws alone. The other thing he says is, man, we've been here for 10 years, 11 years now almost, been here since 2008. And not once in those 10 years has Huawei been, at least publicly, accused of breaking a law or doing something that either the government or the security agencies or the intelligence community has had a problem with. But the third reason is it's really just a

financial reason. It's a dollars and cents reason. The moment that, you know, if Huawei were to be caught doing something inappropriate, it would stop being a global company operating in 170 countries and it would just be a Chinese company operating in China alone. Okay, so they're in the country, they're operating here, they say legally. And by all indications, I mean, there is no sign that they haven't been playing by all of the rules. And they're giving all this money. So these pretty close relationships with Huawei and Canadian institutions, do they have an effect at all on our relationship with our allies? Canadian institutions, do they have an effect at all on our relationship with our allies? It was interesting in watching Trump and Trudeau sit down on the sidelines of the meetings this week, where in London, where they're talking, he was asked, are you guys going to talk about Huawei?

We'll discuss that. Yes, we'll discuss that. We'll be discussing that. But no, we find a tremendous security problem with respect to Huawei. The intelligence community in the United States has taken a much stronger position than Canada. I mean, the Five Eyes is the big international Western intelligence community. We stand alone in our lack of specific response. And there are models. The UK, you can build just not in the core, and they have access to all of their equipment. They do all of these regular checks on it.

The United States is increasingly headed towards a zero Huawei policy. Australia has taken a really tough stance. And I think they're all sort of waiting on Canada to take some kind of action. Well, because the whole point of the Five Eyes is that we all kind of have similar standards when it comes to what we think about security. What we think about security and how we build the critical infrastructure on which our security apparatuses will be built. So in light of all these potential dangers, what can the government tell the universities to do?

So I think that's an important sort of distinction of there's the sort of future of building out the infrastructure question that needs to be solved. And then there's this other sort of subset to it of what do we do about the universities? And I think from what we heard from the experts is guidance and specific policies around disclosure, around contract language, and specifically what happens to this information that comes as a result of the research. And I think if you can address some of those, the universities are in less of a bind. Everybody's clear on what it can be, what it should be. And if you don't want to be involved in that as either a university or a company,

then so be it. But at least it's clear. I feel like this conversation has been happening every single week for the past year or so. So I'm sure we'll be chatting about this some more in the future. Lots more to come. Peter Armstrong, senior business correspondent for CBC News, senior country music correspondent. Thanks so much for chatting, man. You bet. In other news, a big update from the Trump-Ukraine impeachment inquiry. Yesterday, the House Intelligence Committee released a massive 300-page report

that outlines the allegations against the U.S. president. That report argues that evidence of Donald Trump's misuse of power and obstruction of Congress is, quote, overwhelming. And he was willing to sacrifice the national security of the United States by withholding military aid and diplomatic recognition in the form of that White House meeting in order to get what he wanted. So what happens now? Well, the impeachment process now moved to the House Judiciary Committee.

And those hearings are set to kick off today. That's it for now. I'm El-Amin Abdelmahmoud, in for Jamie Poisson. Thank you so much for listening to Frontburner.