The Huawei Hullabaloo

Speaker 1: If you were driving through the English countryside, you'd probably cruise right by the main offices of HCSEC without batting an eye. It's this big red brick building off the highway on the outskirts of a town called Banbury, nestled in a scene one, scene them all kind of office park. But if you were to pop into town, sit down at a pub somewhere, and you were to find one of the 40 or so people who work there, and you were to get them talking, maybe a little loose lipped, about what it is they do at HCSEC. Well, the first thing you'd probably notice is they do not call it that. Everyone who knows just calls that building the cell. In 2005, British Telecom is doing a $10,000,000,000 upgrade to telecommunications infrastructure in the country and they made this pretty significant buy from a then little known Chinese telecommunications company called Huawei. One piece of equipment Huawei was responsible for is called a core switch. Essentially, it's a directory for information within the cell network. Over the years that followed, British telecoms started noticing a disproportionate amount of what one employee called chatter coming from these Huawei core switches. They were sending something, some data, somewhere. Without digging deep into the code of that hardware, they couldn't figure out what. See, at the time, there was technically no law saying the British Telecom had to tell the British government that they were buying equipment from a company that could have potential ties to a foreign government. But when the authorities found out what these boxes were doing and who they had bought them from and that they were already installed and in use all over the country Well, the government decided that, well, if the only way to know what this equipment we've already bought and installed is doing is to peel it apart, that's what we're gonna do. The cell, the nickname of the Huawei Cybersecurity Evaluation Center, was the operation tasked with hunting for back doors and security vulnerabilities inside of Huawei equipment. And the cell was funded by Huawei. The logic was, since this is a problem caused by this company, we're gonna make them pay for the solution. A cybersecurity task force funded by the organization they were tasked with investigating. And over the years that followed, as scrutiny into Huawei spread around the world, some pretty obvious questions began to emerge as to whether this arrangement was basically just Huawei policing themselves. With customers in Europe, The Americas, Africa, and of course China, Huawei claims to connect a third of the world's population. They are a global superpower knit into the fabric of modern communications in the digital age all over the world. And, they're also a really easy case study into this much larger what it means to get our technology from a company with allegedly very deep ties to government with a robust technological surveillance network. I don't know if that pub in Banbury is open right now, and if it is, if there's anyone sitting at the bar. But if it is and if there is, and they're one of the 40 or so people who work at the cell, they're almost certainly talking about one thing. The fact that just this week, The United Kingdom placed a blanket ban on five gs infrastructure from Huawei across the country. And the stuff that's already installed is gonna be purged by 2027. We wanted to understand a little bit more about this company that's become an emblem for this much bigger question. So this is our brief history of Huawei and their quest to connect that last two thirds of the world. Here, on Hacked. 1938, in the suburbs of Palo Alto, Bill Hewlett and David Packard formed a company we now call HP. They founded that company in their garage. 04/04/1975, Bill Gates and Paul Allen founded Microsoft in a garage. 1976, in a garage in Palo Alto, Jobs and Wozniak started Apple. Huawei doesn't have a myth set in a garage in Menlo Park, but just because they don't market themselves around a garage myth doesn't mean they're not of the size and influence globally to warrant that kind of an origin story. For context, today, Huawei is a bigger smartphone manufacturer than Apple is. You can find plenty of news on the hour to hour day to day drama unfolding with Huawei on the world stage, but Scott and I wanted to go back to the beginning to take you through a bit of a history of this company right up to today. To give you a little insight into this monolith that most of us probably don't know much about. It starts with this guy named Wren.

Speaker 2: Yeah. I think that's an interesting story because the founder, Wren, was an ex soldier in the People's Liberation Army and left, you know, military command to go off to found one of the international largest tech companies in the world. I think he claims, that he was just always a low level soldier, but he also claims that he's a bad businessman. So either both of those are wrong or

Speaker 1: I think to, like, figure that out, we need and maybe this is just me projecting, but let's say, like, a guy who sounds conspicuously like Johnny Ive explaining, the corporate history of Huawei and specifically of its founder rent. Do we do we have have that kicking around anywhere? And extra points if it's set to, like, really, really emotional stock music.

Speaker 3: Most people think that Huawei has come from nowhere, when in actual fact, it's taken thirty years to get to where they're going.

Speaker 1: Yeah. Exactly. That's that's exactly what I was talking about.

Speaker 3: Mister Ren, the founder, lived through a very difficult time in China's history, which included famine, the cultural revolution. He'd had a pretty hard life.

Speaker 2: Yeah. So Huawei, I think was founded in 1987, and, I think they started manufacturing, PBX systems, which is kind of like an old school well, I guess it's still used today, so it's not that old school. But a phone switchboards, like a way for corporate companies to have switching between, you know, when you dial and you hit extension 301, it's a PBX system that jumps you to that phone. You know? And then in '28, they started doing, or they claimed to have started doing their own kind of independent research and commercialization, developing their own IP around the PBX systems, you know, getting into r and d in, like, '92, looking at ways to expand telecommunication infrastructure across China. Then they start getting, you know, pretty substantial and pretty big. They start, you know I don't think anybody cares about revenue milestones.

Speaker 1: So this is from audio of an interview with, like, Ren himself. He's a pretty normal looking wealthy 75 year old guy, and he's telling this this is really interesting. He's not telling a garage origin story, but he is telling kind of this uniquely Chinese tech company myth. He's telling the story of his childhood, before the Cultural Revolution, how he was lucky because his family could afford salt. But it's interesting to hear him talk about his transition later in life out of the army and into what was becoming kind of the modern Chinese economy. He says, After leaving the army, we are no longer tied to it. Retired soldiers had quite a hard time adapting to the market economy. We'd gotten so used to the planned economy. He later says, I had no experience when I started Huawei at 44.

Speaker 2: 97? I think they got big into GSM, which was kind of a pre three g, cell coats or telco cell phone infrastructure. I think they started expanding that across China. So I know in the late nineties, Europe and and Asia specifically, started to ramp up their cellular infrastructure even faster than we did in the Western world. And it was probably big for them as they started blowing up and expanding it across Asia.

Speaker 1: That was pretty early.

Speaker 2: Well, the, like, I remember I was in Asia in the early two thousands, and cell phone infrastructure was crazy. Talking about, like, you know, middle of nowhere in Myanmar, and there's, you know, perfect cell reception, middle of a river. And they just didn't have the physical infrastructure installed like we did here, So they just went straight to straight to to wireless.

Speaker 4: Huawei basically started very, very small.

Speaker 1: This is professor David de Kremer from the National University of Singapore Business School. And David is talking about this kind of bigger narrative in the rise of Huawei. It's connection to what he calls the opening up of the Chinese economy and warning the stock music, she continues to be very emotional.

Speaker 4: 1987, Shenzhen in an apartment and Shenzhen was labeled what we would call today a special economic zone. It's only 1988 that formally private companies were allowed in China, but there was no real good ideas yet about what it takes to be a company.

Speaker 1: It's impossible to untangle Huawei from both, like, the literal and sort of abstract idea of what China calls special economic zones. Special economic zones are basically designated areas in China where the formerly purely communist centrally planned country could experiment with, like, like, a little hit of capitalism on the side. It's companies that are typically born in these areas that went on to be exported to the rest of the world.

Speaker 2: And it was in 2000 where I think they really started to push out of their own national borders, and they, established a research center in Stockholm and Sweden. And, they also capped over a 100,000,000 US in international sales. So I think that was kind of their big push into the international markets.

Speaker 1: And it's kinda like in the mid two thousands when they started, like, heaving into The States.

Speaker 2: Yeah. Because in 2001, they, established four r and d centers in in The United States, so furthering pushing their growth outside of China. 2005, they followed up with, all international orders exceeding their domestic sales. So essentially, everything outside of China was more than their Chinese sales. So it was about 2005 when they went from being a predominantly Chinese company to a predominantly international company.

Speaker 1: Which is where our timeline kinda connects back up with our opening story. This Huawei's footprint in The UK and The US just continues to expand throughout the February.

Speaker 2: In 2005, British Telecoms then selected them to be, like, a preferred vendor and supplier for, British Telecom, which is a big deal.

Speaker 1: And in 2007, the rest of Europe followed.

Speaker 2: So, essentially, every cell infrastructure and telco infrastructure in Europe had Huawei equipment in it. And it's probably still there in most cases.

Speaker 1: Bringing us in a cool 12 or so back to the twenty tens where our opening story about The United Kingdom, HCSEC, and the cell picks back up. Where the modern tale of Huawei of this company embroiled in this much larger fight about China's role in the international economy, where that really begins in earnest.

Speaker 2: Yeah. So the twenty tens, I think, you know, a big interesting milestone there is the establishment of the cybersecurity center in The UK, also known as the Cell.

Speaker 1: Such a good name.

Speaker 2: Such a good name.

Speaker 1: You let spies name stuff, and they're gonna name it in a spy y way.

Speaker 2: Yeah. I don't I don't hate it.

Speaker 1: No. I like it. I'm here for it.

Speaker 2: I dig a little cloak and dagger. Yeah. Sure. That really, I think, sets the tone for sentiment towards major telcos being like and national infrastructure security commissions and councils and stuff being like,

Speaker 1: You installed

Speaker 2: what? Where? Doing what? What company? With strong ties to what country's government is in charge of what of ours? I think that becomes a real strong question especially because, you know, telecommunications obviously. We become more dependent on in the last twenty years than we ever have especially with things like smartphones. But, like, I think telecommunications and communications between people has always been seen as a critical infrastructure piece. And, like, you know, disaster preparedness, war preparedness, economy, everything requires communication. So to hand the keys to that over to a party that you might not trust, I'm not saying you should or shouldn't, but might not. Maybe not the best idea.

Speaker 1: And that's when things just, like, completely take off.

Speaker 2: You know, I think that's kind of, you know, you start to see the hockey stick go up. You know, in 2012, the US congressional panel has a official warning about the company and also ZTE, above them posing a national security risk. Like, that's a big deal. Kind of didn't really hear much dialogue and discussion about it. The CIA comes out in 2013 and openly states that Huawei is spying on behalf of the Chinese government. Now that they've rolled out to most major infrastructure, telco infrastructures across the world, that's a pretty big claim, especially when they have so much, you know, footprint.

Speaker 1: Since the very first one g systems in the early eighties, there's been a new generation of wireless mobile telecom tech coming out every decade or so. There's two gs in the nineties, three gs in the aughts, four gs in the twenty tens, you know, the decade when, as Scott just explained, Huawei was really starting to be scrutinized in the West. So it's right as that I like the the hockey stick metaphor of Scott's. Right as that hockey stick of attention is really starting to angle up in 2018 when the battleground in which modern trade tips with Huawei are being fought emerged. Talk about five g.

Speaker 2: Yeah. At the same time in 2018 is kind of when, you know, we're living in four g world, and then we start talking about five g world, and we start talking about broadband cable speeds in our phones, start looking at all this good stuff, and Huawei's got the key for it. And then all of a sudden, you've got a bunch of national security councils being like, maybe not.

Speaker 1: So after a decade or so of investigating Huawei technology while still using it in their infrastructure, all at once a whole bunch of different governments around the world start taking tangible action in 2018. They start making formal statements about their findings and hard decisions about using Huawei gear in their infrastructure.

Speaker 2: And it's like I feel like at that point, you know, you started to see discussions of the company in the public discourse as kind of like an exponential growth. Like, it wasn't very much back then. Nobody was really talking about it. And, you know, once you hit 2017, it comes up much more. And, like, today, I feel like it's an endless stream. It's like, I can just literally Google their company name, hit Google News, and get, like, 20 articles in the last hour because it's such a relevant topic right now. You You know, the UK government had a report in 2018 that said they had limited assurance, that Huawei's broadband and mobile infrastructure wasn't posing a threat. Limited assurance. I think that kind of begins the the headache. August 2018, Australia comes out and says Huawei and ZTE will both be excluded. I always forget about ZTE, but they were a large player in this too. Huawei and ZTE were excluded, in the five g rollout in Australia. Wouldn't be included, so that was 2018. I know they've officially come out, and that's a hard line of the quote unquote five eyes now, or most of them except for Canada.

Speaker 1: While Canada hasn't passed any kind of official legislation against Huawei tech, the next big kind of milestone in the story does involve Scott in my homeland. And we show up on the scene in a very, very dramatic way.

Speaker 5: It is the arrest that sent shock waves around the world and through markets as Mounties arrested Meng Wanzhou, the chief financial officer of Huawei, the Chinese tech giant.

Speaker 2: And then I think the big, like, especially for us here in Canada and The States, wherever you're listening to this, is one of the major news stories of 2018 around this, is Canada, on the request of the Department of Justice in The United States, arrest the CFO and daughter of Huawei's founder at the Vancouver Airport.

Speaker 5: Meng is often called the queen of China's tech industry, but the RCMP arrested her as she tried to change planes in Vancouver earlier this month.

Speaker 2: Pretty controversial. We executed it, arrested her. She's still here in Canada. She hasn't been deported to The States, I don't believe. Even though she's still essentially being held on house arrest.

Speaker 5: Meng is now facing extradition to The US. China has denounced the arrest as a serious human rights violation. So why did Canada make the arrest and will China retaliate?

Speaker 1: So basically what happens is The United States charges Huawei CFO, Meng Wanzhou, with wire fraud, violating American sanctions against Iran. Meng is passing through Canada, which has an extradition agreement with The US. So in an airport in Vancouver, the RCMP arrests her. As of right now, she's here in Canada awaiting trial for extradition, but the arrest is a major point of conflict between Canada, China, and The US.

Speaker 6: Well, I think if what's happened is a request was sent in through The US for extradition, we take that very seriously no matter who it is. I I think sometimes we cringe knowing that there will be political ramifications, reverberations, but, this is how we operate.

Speaker 2: There's been a bunch of weird things, like there was a bail hearing or, like, a trial or something, like a small court proceeding in relation to the trial, and a random, third party numbered company hired a bunch of actors to go fake protest. This bail hearing holding signs being like, Freeman, and like, this is oppression, and all of this stuff. So they hired this group of, like, young millennial actors to go essentially protest and told them that it was essentially a motion picture or like a tryout. So weird things like that.

Speaker 1: And then to put a pin in a truly buck wild year for Huawei, we kick it back over to The UK one last time when defense secretary Gavin Williamson got sacked over charges that he leaked information regarding Huawei's push to provide five g infrastructure within the country. Williamson, for what it's worth, denies the accusations.

Speaker 2: It was kind of shocking just because their technology was going to be used in the critical infrastructure. Like, that was big enough that somebody needed to leak it, and, also, because they thought he leaked it, they fired him or, like, removed him from office or forced him to step down. I'm not sure what the terms were, but, yeah, kind of a big a lot of big things happening without a lot of discussion about why. You know, we're arresting CFOs. We're firing ministers. There's whistleblowers. There's, you know, all of these things going on, and not a lot of people coming out to say why.

Speaker 1: Nobody's saying why. So when you're reading about this stuff, about what it would mean to have compromised cellular infrastructure installed in your country, the word threat comes up a whole lot. And it's not immediately intuitive what that actually means. Like, no one thinks that five gs towers are gonna blow up. Like, they represent a physical threat. No reasonable person thinks they could, you know, I don't know, cause a pandemic. So when we say threat, what is it we actually mean when we're talking about Huawei? We're gonna talk about that right after the break. Starting something new isn't just hard. It can be downright terrifying. You put a lot of work into a thing. You're not entirely sure it's gonna work out. You're taking a huge leap of faith. I've started a few things. Now I know I was right for believing in, you know, the idea, the product, despite all of those fears and hesitations. But boy, does it sure help when you have a partner like Shopify on your side. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e commerce in The US. From household names like, well, hacked podcasts merch to brands just getting started, you can get started with your own design studio with hundreds of ready to use templates. Shopify helps you build a beautiful online store that matches your brand style. Did I mention that that iconic purple shop pay button is used by millions of businesses around the world? I don't know why I wouldn't. I should. It's why Shopify has the best converting checkout on the planet. It also helps boost conversions, meaning less carts, sort of getting abandoned in the parking lot and more sales for you. It's time to turn those what ifs into sign up for your $1 per month trial at shopify.com/hacked. Go to shopify.com/hacked. One more time, That's shopify.com/hacked.

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Speaker 1: That brings us to the current moment. And what we've basically seen is, like, there's like like you put it, which I really like of, like, we've got a bunch of people that ostensibly know a lot about what's going on, behaving as though they're very, very concerned about something, but we don't really have a great sense of what it is they're concerned about. Sure.

Speaker 2: A lot of confidential reports I'd love to read.

Speaker 1: Yeah. So I guess my question is, like, when we talk about mobile infrastructure, when we talk about mobile infrastructure as a security vulnerability, what does that look like?

Speaker 2: Well, it looks pretty grim. The I think there's three major categories there. You know? I think there's, you know, active surveillance. Like, if you're in control of telco infrastructure, you could be actively surveilling. You have passive surveillance. So instead of being active and, like, listening in on my calls, maybe they determine that I'm a target, and then they start going into my history and going through that stuff because that would all be captured on the infrastructure. And then I think your third and most powerful one would be, like, you know, the ability to turn off a state's telecommunications. Mhmm. And, like, you know, when you come to crisis and war preparedness, if one country had the ability to push a button and just disable another country's telco, you know, all Internet access, all that just essentially halt their nation, that's a pretty big pretty big tool. Yeah.

Speaker 1: Huawei is is like a very, very real company. It's not like a front operation like they're making technology that's meant to be competitive and of like a certain quality level and it it does by all accounts work like it's been installed for decades at this point. The fear here is that within this working stuff there's this incredibly well hidden like secret backdoor. Some kinda like hardware code combination, some way of making all of that like established working technology and infrastructure do something very very secretly that it's not supposed to? I guess I'm kinda curious, like, what is it that these 40 people in this room are actually looking for? What does that backdoor look like?

Speaker 2: Wow. That is a very complicated question, but you'd be talking about a lot of hardware level things. You know, it could be something as small as inside of anything that has, you know, cryptography in it. So anything that's encrypted or has the ability to encrypt or any of that. All of that stuff is based on random number generation. So if you installed a random number generator that was predictable, if you knew exactly how it functioned, but but presented itself as random, you could essentially bypass cryptography. So, you know, things like, there would be a number of ways you could do it. You know? You know, we go to hardware vulnerabilities. Like, there could be code inside of some of those boxes that doesn't even present. Like, I'm sure the the 40 people paid to rip apart infrastructure are pretty good at looking for for all of the variations of it. But I don't know. It's just it is what it is. And no offense to the 40 people sitting in a room tearing stuff apart. But, like, something like a five g rollout, they would have had to start tearing that stuff apart five years ago or three years ago. Like, they your country would be behind the curve if you expected everything to go through security, you know, protocols before it got installed. So it's like, yeah. It's an it creates an interesting predicament.

Speaker 1: And I guess it's kinda worth, like, a little bit thinking about what that predicament looks like depending on where you are in the world. Because if you live in a place where, like, your country is in a trade war with China, where your government started this dedicated branch to investigating Huawei equipment, like, you are in a very different position using this technology than any number of dozens of other countries that are buying and installing Huawei tech. Like, because you live in a place that has the resources to hold this company accountable, you know?

Speaker 2: And correct me if I'm wrong, but The UK is the only country that I've ever heard of that has a cybersecurity center that literally just rips apart Huawei gear and goes through it. So that means the, you know, x 100,000,000 people that are UK residents might be relatively safe. To obvious vulnerabilities. But how many other countries out there just wholesale Huawei infrastructure?

Speaker 1: Mhmm.

Speaker 2: Because I'm sure if you're Sudan, Huawei can show up and install your entire telco infrastructure. They probably have every single piece of the pie and can probably outbid most companies, and they show up and set it all up. And there's no field of hypertechnical, well trained cybersecurity people ripping through the pieces of hardware, going through every line of machine code to make sure that it's acting in a responsible way.

Speaker 1: So much of that, like, skepticism and caution around Huawei is, like, rooted in, like, a really explicit skepticism around the CCP, around the Chinese state. And, I guess, kinda like what they could theoretically do if they had a backdoor into all of this mobile traffic all around the world. But I think that anyone who's listening to this conversation, knows that, like, the the governments that are making these criticisms also practice a lot of that stuff. We we talked about the five eyes countries. That's literally a euphemism born out of global surveillance. I wanna talk about the difference. Like, is it that the Chinese state isn't an ally in the same way geopolitically? Like, what accounts for that difference in the way we think about these things?

Speaker 2: Like, truthfully, I think all governments have not all. Most governments probably have a tendency to use technology to surveil people, except for this was one where it went from being maybe a democratic country to being a non democratic country, as well as, you know, China was going through huge booms of growth. You know, they started to become a real superpower, like, in the early two thousands. Like, now we just accept them as a superpower, but I think that's probably a pretty recent in the last twenty, thirty years. So, like, this is, as they were growing in global authority, they were also growing in influence in critical infrastructure.

Speaker 1: I think one last thing that we gotta talk about if we're talking about all this, just to sort of end on, is the idea that by modern standards of state sponsored cybercrime and cyber espionage, this feels kind of really old fashioned. Like, when I think about the nature and volume of data that's getting piped through mobile infrastructure, five g towers, and you compare it to the sort of targeted data you'd get off a social media platform like Facebook and Google. If I am China and I'm looking for companies that could give me, like, a leg up in some future psy ops type situation, I'm gonna be trying to build the next Instagram, not the next Cisco, you know?

Speaker 2: Yeah. Well, we're just talking about TikTok. So Yeah.

Speaker 1: We're just talking about TikTok.

Speaker 2: But it's like if you had a if you had a full team of, like, behavior hackers, they could the amount of data that you would be pulling out about psychographics and people Sure. Based on TikTok behavior Sure. Because they're consuming so much content. You would know you you would be able to make a beautiful map of what you would need to do to resonate with specific demos and specific psychographics. Like Mhmm. So if you're if you're hell bent on fucking with the world and especially fucking with specific parts of the world, like, you know, conservative leaning white males of America, Like, knowing exactly what resonates with those people would be very valuable. Sure. And TikTok will tell you exactly what resonates with those people.

Speaker 1: Sure.

Speaker 2: So it's like even if it's not tracking their location or giving you access to their email or any of that stuff, Just psychographically being able to successfully model such a large data set would give you so much fucking power.

Speaker 1: How many times in that did we mispronounce the word? Huawei. Find us on Twitter hackedpodcast. Let us know. Maybe you counted, maybe had a little clicker, maybe you were keeping track. You can find us on Twitter and if you love this show, you can find us on Patreon, patreon.com/hackedpodcast. Thanks again for listening. Catch you on the next one.

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