Google has suspended business with Huawei that requires the transfer of hardware, software and technical services except those publicly available via open-source licensing, a source told Reuters on Sunday, in a blow to the Chinese technology company that the U.S. government has sought to blacklist around the world.

Holders of current Huawei smartphones with Google apps, however, will continue to be able to use and download app updates provided by Google, a company spokesperson said, confirming earlier reporting by Reuters.

“We are complying with the order and reviewing the implications,” the spokesperson said.

“For users of our services, Google Play and the security protections from Google Play Protect will continue to function on existing Huawei devices,” the spokesperson said, without giving further details.

The suspension could hobble Huawei’s smartphone business outside China as the tech giant will immediately lose access to updates to Google’s Android operating system. Future versions of Huawei smartphones that run on Android will also lose access to popular services, including the Google Play Store, and Gmail and YouTube apps.

“Huawei will only be able to use the public version of Android and will not be able to get access to proprietary apps and services from Google,” the source said.

Huawei commits to ‘safe and sustainable’ software

In response, Huawei said on Monday it would continue to provide security updates and services for its smartphones and tablets, but it did not say what would happen with phones it would sell in the future.

“Huawei will continue to provide security updates and after-sales services to all existing Huawei and Honor smartphone and tablet products, covering those that have been sold and that are still in stock globally,” a Huawei spokesperson said via email.

“We will continue to build a safe and sustainable software ecosystem, in order to provide the best experience for all users globally,” said Huawei, which is the world’s second-biggest smartphone maker after Samsung and aspires to the top position.

Huawei’s devices in its home market do not have Google apps, but the move could hugely damage the brand’s appeal to consumers outside China.

Almost half of the 208 million phones Huawei shipped in 2018 went to outside mainland China, and Europe is the most important overseas market where its devices currently have 29 per cent market share, according to technology research firm IDC.

Huawei’s devices in China do not have Google apps, but the move could hugely damage the brand’s appeal to consumers in other markets. (Fred Dufour/AFP/Getty Images)

Google, owned by Alphabet Inc., said it would enact restrictions on Android updates to Huawei after U.S. President Donald Trump on Thursday added the Chinese company to a trade blacklist, making it extremely difficult for it to do business with U.S. counterparts.

On Friday, the U.S. Commerce Department said it was considering scaling back restrictions on Huawei to “prevent the interruption of existing network operations and equipment.” It was not immediately clear on Sunday whether Huawei’s access to mobile software would be affected.

The extent to which Huawei will be hurt by the U.S. government’s blacklist is not yet known as its global supply chain assesses the impact. Chip experts have questioned Huawei’s ability to continue to operate without help from the United States.

Details of the specific services affected by the suspension were still being discussed internally at Google, according to the source. Huawei lawyers are also studying the impact of the blacklist, a Huawei spokesperson said on Friday.

Representatives of the U.S. Commerce Department did not immediately comment.

Minimal impact in China, but ‘critical’ elsewhere

Huawei will continue to have access to the version of the Android operating system available through the open-source licence, known as Android Open Source Project (AOSP), that is available for free to anyone who wishes to use it. There are about 2.5 billion active Android devices worldwide, according to Google.

However, Google will stop providing Huawei with access, technical support and collaboration involving its proprietary apps and services going forward, the source said.

Huawei has said it has spent the last few years preparing a contingency plan by developing its own technology in case it is blocked from using Android. Some of this technology is already being used in products sold in China, the company has said.

The impact is expected to be minimal in the Chinese market. Most Google mobile apps are banned in China, where alternatives are offered by domestic competitors such as Tencent and Baidu.

In Beijing, Foreign Ministry spokesperson Lu Kang said the ministry had noticed the report and would look into it and pay attention to developments.

“At the same time, China supports Chinese companies to use legal weapons to defend their legitimate rights,” he added, but did not elaborate.

Huawei’s European business, its second biggest market, could be hit as Huawei licences these services from Google in Europe.

“Having those apps is critical for smartphone makers to stay competitive in regions like Europe,” said Geoff Blaber, vice president of research, CCS Insight.