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A sign calling for the release of Huawei CFO Meng Wanzhou outside the British Columbia Superior Courts in Vancouver, on Dec. 10. Photo: Jason Redmond/AFP via Getty Images

The U.S.-directed arrest of Huawei CFO Meng Wanzhou in Canada sounds an alarm for the increasingly contentious dynamic between China and the U.S.

Why it matters: When it comes to 5G, Huawei is the fastest horse in a thinning race, with potential to gain a monopoly in the next decade. But the U.S. has now launched a global campaign against the company without a serious domestic alternative for 5G infrastructure.

Background: The largest supplier of telecommunications and internet equipment globally, Huawei sells more smartphones than Apple, employs twice as many people as Google, and leads the world in 5G technology development.

  • Of the top 4 telecoms equipment brands, 2 are Chinese and none are American.
  • Although Huawei is banned from U.S. 5G networks, rural American markets often depend on the company’s equipment.

The arrest comes on the heels of a broader U.S. effort to undermine Huawei's influence, in the form of a lobbying campaign to persuade other governments — including those of Germany, Italy and Japan — to drop the firm, offering potential payment as an incentive. As U.S.-China ties grow increasingly strained, the Trump administration may consider a stricter ban on the company.

  • AT&T execs have said Huawei was 70% cheaper than competing suppliers. Excluding the Chinese giant amounts to a tax on domestic telecoms that will cost the biggest players billions.
  • For a quarter of rural wireless carriers, dropping Huawei would incur tens of millions in switching costs. And it would take a decade to implement the change.

What's next: The U.S. now has to decide what it's willing to do to prevent a company with tight ties to China's NSA-equivalent from owning the network that delivers 5G to Americans. If Huawei is able to deliver 5G to other nations years before and for a cheaper price than U.S. alternatives, few, if any, countries will wait.

Graham Allison is the former director of Harvard Kennedy School’s Belfer Center for Science and International Affairs.

Go deeper

Felix Salmon, author of Capital
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Facebook's scandals have been great for shareholders

Expand chart
Data: YCharts; Chart: Axios

Facebook has been embroiled in scandal for the past five years, and while the specific allegations change over time, a central theme is constant. Given the choice between commercial and moral imperatives, Facebook always seems to choose the option that is best for the share price.

Why it matters: Facebook's stock chart supports that narrative. Since the 2016 scandals alleging that the social network was infiltrated by foreign actors trying to influence the outcome of democratic elections, Facebook's revenues — and its stock — have been soaring.

Biden to tap telecom trio for NTIA, FCC posts

Jessica Rosenworcel. Photo: Bill Clark/CQ Roll Call

President Joe Biden on Tuesday is expected to name Alan Davidson as head of the telecom arm of the Commerce Department, Jessica Rosenworcel as chairwoman of the Federal Communications Commission and Gigi Sohn as a commissioner at the FCC, according to a person familiar with the process.

Why it matters: Internet availability and affordability has been a key policy priority for the White House, but the administration lagged in tapping people for the agency posts that oversee the issues.

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Data: Piper Sandler Taking Stock With Teens Study; Chart: Axios Visuals

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Why it matters: A series of stories based on leaked whistleblower documents suggest the company sees the aging of its user base as an existential threat to its business.