March 25, 2014

Hypocrisy Knows No Heights: Shotgiant

Over the last couple of days, I’ve had no shortage of folk wondering when I might post on Shotgiant.

Frankly, I’ve been flummoxed.  What to say?

According to the New York Times and Der Spiegel, relying on Snowden-released documents, the U.S. National Security Agency (NSA) has, since 2007, been rooting around in Huawei’s corporate networks, monitoring executive communications and stealing proprietary product info.

In terms of the former, the U.S. Government is supposedly meant to be seeking to determine once-and-for-all if Huawei is somehow in cahoots with the PRC Government.

In terms of the latter, they reportedly wanted to be able to exploit Huawei network gear deployed in markets where, it seems, there isn’t a critical mass of already-compromised American gear to gather signals intelligence.

Obviously they haven’t realized their fantasy in terms of objective number one.  If they had, they’d have spread the word and shut the company down.  There is no way they’d have stomached Huawei gear deployed across every other NATO market otherwise.

In terms of objective number two, well, the challenge is now Huawei’s to determine whether and to what extent there’s any truth to what’s detailed in the Snowden leak and how to remedy it.

I swear, I am growing terribly weary of this shit.

So far, the response from the U.S. Government has been limited and muted, something to the effect of “well, when we conduct industrial espionage, we don’t share the information with American companies to give them a commercial edge, like others do.”


You get your hand caught in the cookie jar and you say “Well yeah, but I didn’t give any cookies to the kids (although they may have stumbled upon some “inadvertently” dropped crumbs), I just re-baked them into concrete and used them to break the neighbor’s windows so I could ransack their house.”

That’s crap. 

If a non-U.S. Government penetrated an American company and monitored their private comms and stole their intellectual property to re-purpose it to exploit networks in the U.S. and other countries we would be up in arms.

And, no, it’s not okay ‘cause we’re ’mericans.  After all, as you sow…  Honestly, we should be setting the right examples, not just examples.

As for the monitoring of Huawei’s communications to “prove” the company is compromised by the Chi-coms, well, they’ve obviously found squat.

Indeed, a wiser man than I made an interesting observation on this element of Shotgiant today.  He had an idea that no-one could possibly have had in advance of the Shotgiant revelation.

Referring to the inexplicably shallow and vacant 2012 U.S. House “Intelligence” Committee Report on Huawei, this wise man wondered if perhaps the entire charade was an intelligence operation.  Think about it. The NSA was five years into mucking about in Huawei’s email servers and hadn't turned up a whit of evidence of any unusual relationship with the Chinese Government.  What to do, what to do?...

Well, why not harness HPSCI and play a game of “shake the tree” - stir up Huawei with an “investigation” and monitor the internal communications to see if that might expose the heretofore unfulfilled pre-ordained outcome of inappropriate government ties?

Judging from the vacuous Intelligence Committee report that emerged nine month’s after the “investigation’s” launch, this didn’t work out either.

Enough already.

I take back the title. 

Hypocrisy should indeed know heights.

March 11, 2014

Checking in: An excerpt from "the book"

I have made cryptic reference in past posts to the as-yet-not-and-perhaps-never-to-be-published book I all too rarely revisit.  It stands at about 45,000 words at present, halfway to a novel, non-fiction mind you.

For the first time in a few months, I found myself reviewing/editing the draft this evening, and, recognizing that I've not posted to the blog in a while, I thought, why not post a chapter?  A teaser of sorts...

So, below, excerpted from (again) a perhaps-never-to-be-published book tentatively titled Huidu - Inside Huawei, is Chapter 11.

(NOTE: This is a personal blog.  Huawei is my employer.  The views expressed in this blog are mine, and mine alone.  This blog is not overseen or sanctioned or otherwise approved by my employer or anyone else).

Chapter 11 - What’s a 3Leaf?

If there is one thing Huawei has (hopefully) learned over the last five years, it is that companies with numbers in their names ought perhaps to be avoided when it comes to potential "acquisitions."  First 3Com, then 2Wire, then 3Leaf…

Flash back yet again to mid-summer 2010: Just as Motorola was extending its Lemko suit to Huawei, and as the Senator from Arizona was sharpening his poison pen, Huawei’s outside legal counsel took a call from someone within the Committee on Foreign Investment in the United States (CFIUS). 

CFIUS, mentioned earlier, is an inter-agency committee of the U.S. Government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the Secretary of the Treasury, CFIUS includes representatives from 16 U.S. departments and agencies, including the Defense, State and Commerce and Homeland Security Departments.  

Foreign companies proposing to acquire U.S. firms or U.S. firms expecting to be acquired by foreign companies are required to inform CFIUS in advance so that the Committee can conduct a review, if deemed necessary.

In the late Spring of 2010, a bankrupt California-based start-up approached the Huawei research and development team in Santa Clara offering a fire sale on some ASIC-based virtualization patents. 

Huawei already had a number of virtualization solutions in the tank but the offer was intriguing so Huawei’s California folk consulted California outside counsel who advised that before doing anything Huawei should seek Commerce Department advice on whether the technology was sensitive and thus export controlled.  

This was done, and Commerce ultimately communicated that the technology was not export controlled.

In the ensuing weeks, Huawei purchased the patents, hired some former 3Leaf employees and separately purchased some former 3Leaf servers and equipment that were being sold off by creditors. 

And then, in July - spurred (it is rumored)  by a DoD employee who was trawling LinkedIn for all things Huawei-related and in so doing stumbled on an individual’s updated profile referencing a change in employment - our DC outside counsel was contacted by CFIUS asking why Huawei had not filed for the Committee’s approval of the deal. 

From there, things quickly spiraled utterly out-of-control and in all sorts of irrational directions.

It is not CFIUS’s business to understand that large global companies might have eager, young, inexperienced folk in Silicon Valley who might engage in transactions without considering political or national security implications.  

But one might expect the Committee to have some basic understanding of how multinational ICT companies function.

Nevertheless, CFIUS seemed to be telegraphing the perception – which I heard from multiple folk in D.C. – that Huawei’s quiet "acquisition" (hardly) of 3Leaf was a blatant attempt to circumvent the review process, which was ludicrous. 

And then there was the matter of the technology itself and the highly debatable question of whether or not or how it could present a threat to U.S. national security in Huawei’s hands. 

No matter.  CFIUS claimed jurisdiction and Huawei had, indeed, screwed up, however inadvertently.

Parallel to the ongoing Sprint RFP, Huawei prepared for a formal CFIUS submission, which ultimately took place roughly at the same time that the Secretary of Commerce was calling Sprint’s CEO to torpedo any semblance of open and fair competition in the U.S. telecom infrastructure equipment market.  

The initial CFIUS 30 day review graduated into an additional 45 day investigation, during which time Huawei provided reams of data about the company, its operations, and countless other topics utterly unrelated to 3Leaf, responding to dozens and dozens of CFIUS interrogatories. 

As the investigation wound down in February, it was made clear to Huawei that CFIUS would recommend to the President that he endorse a formal finding that Huawei’s “acquisition” (sigh) of 3Leaf constituted some sort of a threat to U.S. national security. 

The normal course of action in such instances is for the “acquiring” (I refuse to dignify this mis-labeling, hence the perpetual quotation marks) company to back down from the deal.  In Huawei’s case, since the deal had already closed, this would mean unwinding the transaction. 

Huawei’s lawyers and other advisors all counseled and began preparing for the obvious. 

Meanwhile, within Huawei, there was an agonizing process of soul-searching underway. 

Rightfully, Huawei felt cheated by the process. 

Yes, the company had screwed up, but the reality was that there had never been any intent to circumvent any process nor was there any reason to believe that the 3Leaf technology presented some sort of threat to national security and, well, Huawei itself didn’t present any such threat, notwithstanding free-wheeling D.C.-based slandering to the contrary. 

Bottom line: From our perspective, Huawei was effectively being held hostage to the process, a process that was perceived, within the company (and by scarce few externally), to be driven by anti-China, anti-Huawei politics, and little else.

So, at the last minute, Huawei decided to, um, thumb its nose at CFIUS.

A comprehensive communications plan was put into place.  The company would proclaim its innocence, re-assert its commitment to openness and transparency, and call for a “real” investigation of the facts. 

This was another watershed moment for Huawei.  

Throughout the process Huawei had had limited interaction with media and other external stakeholders, sticking to very simple, deferential statements, being nothing other than cooperative with and respectful to CFIUS.  Now, Huawei was going to test its muscle and engage in the type of PR expected of a world-leading multinational.

Huawei’s lawyers and consultants – PR and GR – were utterly appalled.

The media ate it up.

Yet, for the most part, the resulting public dialogue didn’t favor Huawei. 

While there were some media reports that commented on the novelty of Huawei’s response, as perhaps an indication of innocence, for the most part, the conversation – in the media and in Washington – focused on what was depicted as Huawei’s utter naïveté.  By refusing to divest of 3Leaf, Huawei was effectively forcing the White House – within a 10-day window – to announce an almost-certain finding of threat to national security, a death knell for Huawei in the U.S.

The internal soul-searching continued.  The reaction was not what was intended.  The media had focused on the tactic rather than the substance.

So, we reversed ourselves.  

We announced that our intent in declining to divest had been to invite a more impartial investigation, and that we had not meant to stir up a media storm focused on our tactic instead of our message.  

We began the process of unraveling 3Leaf, as directed by CFIUS.  Ironically, our offer to donate the 3Leaf technology to the U.S. Government was not entertained – a seeming lack of interest in this terribly sensitive technology - and it found its way into the hands of a Southern U.S. university.

So, what was the 3Leaf review really all about? 

Some have said that Huawei inadvertently put the Committee in an impossible procedural situation.  When CFIUS reviews an acquisition, to the extent that it determines a potential threat to national security, often as not, it negotiates with the parties involved to craft mitigation agreements to address those concerns so that the transaction can go forward.  But Huawei had already sealed the deal, so how was CFIUS to mitigate after-the-fact? 

(There’s some truth to that, but it’s perhaps overly-gracious).

Others have said that CFIUS used Huawei’s screw-up to send a strong message to the company and others that ignoring the CFIUS process is done at great peril. 

(Again, there's some truth there, but was that really the motivation?)

Yet others have observed that the 3Leaf review was nothing more than the ongoing demonization of Huawei and all things Chinese.

(Sigh... Winner).