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Huawei CEO lashes out against US decision to kill distribution deal

Expected to be announced at CES, the smartphone maker's deal with AT&T was reportedly nixed over concerns about espionage

Las Vegas: Chinese mobile phone maker Huawei has hit back against the decision to kill its deal with United States carrier AT&T, that would’ve seen its smartphones bundled with services deals throughout the country.

The major deal, which was expected to be announced at CES, the consumer electronics show taking place in Las Vegas this week, reportedly fell through following political pressure from the US authorities over concerns about Huawei’s relationship with the Chinese government.

Standing against the backdrop of a simple slide reading “Something I Want to Share,” chief executive Richard Yu said that Huawei's absence from the US was “a big loss for us and for the carrier but more for the consumer. Consumers don't have a choice.”

Made during his keynote on the second day of CES, Yu’s remarks were met with applause from the audience, as he hinted at his disappointment over the lost opportunity.

Despite being the third largest smartphone vendor in the world behind Apple and Samsung, Huawei remains relatively unknown in the US, hampered by political suspicion.

In 2012, a report by the US House Intelligence Committee cited both Huawei and fellow Chinese smartphone maker ZTE as potential security risks.

“Private-sector entities in the United States are strongly encouraged to consider the long-term security risks associated with doing business with either ZTE or Huawei for equipment or services,” the report said.

Huawei was hoping that its deal with AT&T to sell the Mate 10 smartphone would be a turning point, offering the company a way to penetrate the hugely valuable US market.

Speaking to the Associated Press a month ago, Yu said that Huawei would sell its “flagship phone, our product, in the U.S. market through carriers next year. I think that we can bring value to the carriers and to consumers. Better product, better innovation, better user experience.”

Bundle deals are especially important in the US, as customers increasingly purchase their smartphones as part of a service deal with a network provider.

“Everybody knows that in the US market that over 90 per cent of smartphones are sold by carrier channels,” Yu said, before going on to address the failure of the deal directly.

Just before the agreement was set to be unveiled, AT&T walked away from it, according to a number of US media outlets.

While it wasn’t immediately clear why, both the Wall Street Journal and the New York Times reported that a letter was sent by a group of lawmakers to the Federal Communications Commission, expressing concern over a potential deal between Huawei and an unnamed American telecommunications company, citing “Chinese espionage in general, and Huawei’s role in that espionage in particular.”

The incident is the latest in a string of failed Chinese overtures to US companies, the most recent of which took place last week, when Ant Financial, an affiliate of internet giant Alibaba Group, dropped a $1.2 billion proposal to acquire MoneyGram.

According to Reuters, the Committee on Foreign Investment in the United States (CFIUS), which reviews acquisitions by foreign entities for potential national security risks, objected to at least nine acquisitions of U.S. companies by foreign buyers in the first half of 2017, a historically high number.

Earlier on in his speech, Yu announced that Huawei had enlisted Gal Gadot, best known for playing Wonder Woman in the 2017 hit film of the same name, as its chief experience officer, in an apparent attempt to woo American customers.  

Yu also officially launched Huawei’s flagship Mate 10 smartphone for the US market, albeit only as an unlocked option, retailing for $799.