Huawei Technologies Co., already squeezed out of the vast European market for next-generation telecommunications equipment, is besieged by another fast-growing company: cloud computing.
U.S. officials have pressured European lawmakers and industry leaders to use Western companies – while avoiding Huawei – to build data centers and provide infrastructure to handle the growing tide of information .
As part of a European tour last week, US Under Secretary Keith Krach met with leaders including Timotheus Hoettges, CEO of Deutsche Telekom AG, and Meinrad Spenger, director of Spanish telecom operator MasMovil, are urging them to ditch Chinese cloud infrastructure providers over data security concerns.
“Look at this as an extension of this 5G,” Krach said. “Clouds are really important, whether in the service cloud or in the data centers themselves. This is a big deal. “
Pressure from Washington is affecting one of Huawei’s fastest growing companies. China’s largest tech company by sales has amassed an impressive list of customers in recent years, including Deutsche Telekom, the French company Orange SA and Spain Telefonica SA. It is now looking to expand its reach to customers such as oil companies, power grid operators and logistics providers.
While Alibaba Group Holding Ltd. operates a larger cloud company and WeChat operator Tencent Holdings Ltd. is not far behind, Huawei is more vulnerable as the Trump administration has managed to convince some governments in the region to exclude its 5G network equipment. Europe’s cloud infrastructure is a A $ 12.4 billion company that has grown 33% this year from 2019, according to IDC market research. American players dominate, led by AWS from Amazon.com Inc. and tracking Microsoft Corp., IBM, Google and Oracle Corp.
“Chinese players like Alibaba and Tencent are not making huge inroads into the European market,” according to Carla Arend of IDC.
A Huawei spokesperson declined to comment on its European cloud business.
Like European telecom companies slowing down to turn away from Huawei for their 5G infrastructure, the American pressure is already working in the cloud. In July, Orange CEO Stephane Richard told analysts that the company’s cloud-based Huawei infrastructure was “probably no longer relevant.”
“It is clear that today the Huawei Cloud infrastructure is not necessarily the one that we are going to promote in Europe,” he said. The Orange cloud built by Huawei is currently used by the European Space Agency and PSA. Just days before Richard’s call with analysts, Orange signed a cloud deal with Google.
Deutsche Telekom declined to comment on its CEO’s meeting with Crash and its cloud business plans. The company, whose largest sales come from its T-Mobile unit in the United States, has cloud partnerships with Cisco, Microsoft, OVH, and Amazon’s AWS. It also offers an offer based on Huawei infrastructure called “Open Telekom Cloud” for small and medium-sized businesses.
While Huawei is struggling, American businesses are thriving. Nokia Oyj on Wednesday signed a five-year deal to move its IT infrastructure Google Cloud from Alphabet Inc. The US provider also recently won a multi-year contract to store Manufacturing data from Renault SA, marking the US tech company’s first major industrial cloud deal in France.
“Huawei is losing market share in Europe,” said Jim Lewis, director of the technology policy program at the Center for Strategic and International Studies in Washington, DC. “I think his mark has been damaged. Their handset sales continue to do well, but in terms of infrastructure, they are being squeezed out of developed countries. “
US sanctions have already put Huawei’s supply chain at risk. US ban on chip sales to Huawei went into effect September 15, disrupting his wireless, handset and cloud offerings. In 5G, the United Kingdom has imposed a total ban, while France has drawn up rules making it riskier for operators to use Huawei equipment, without categorically banning it.
Read more: Trump still tries to pressure Merkel to ban Huawei
Telefonica, which has retracted its intention to use mainly Huawei for its 5G, is selling a cloud offer with the company Shenzen in Spain, Brazil, Argentina and Chile. It also has partnerships with Google, SAP and Microsoft. Krach cited Telefonica as one of 50 telecommunications operators committed to the US “clean network” plan.
Huawei is far from being defeated in Europe. One rainy day last week, he opened an 8,000 square foot (743 square meters) research center in an upscale neighborhood of Paris. Local telecommunications champion Orange has said it will selectively retain parts of Huawei’s infrastructure in its offerings.
But for now, the United States is keeping the pressure on its European counterparts.
“All these companies that have cloud computing companies and data centers that use Huawei, they understand that in terms of 5G, fancy smartphones and their servers, they are going to run out of chips,” Krach said after his tour. European Union in eight countries.
– With the help of Sarah Syed, Maria Tadeo, Natalia Drozdiak, Rodrigo Orihuela, Yuan Gao and Coco Liu