Kaspersky, Huawei, and the Geopolitics of Tech Companies

May 18, 2018

7:02 am

The Russian cybersecurity software company Kaspersky Labs is opening a core data center in Switzerland in a move intended to restore customer trust. Why the image rehabilitation? In a word: Russia. Kaspersky’s home country has turned it into a geopolitical persona non grata in U.S. eyes.

Unlike some home-grown tech giants we could name, Kaspersky hasn’t recently faced any huge legal scandal. Guns aren’t smoking and whistles haven’t been blown. But, Kaspersky’s reputation has still fallen victim to the shifting winds of geopolitics.

When governments fall out, tech brands can get caught in the political crossfire. For the brand, it can mean losing ground in a hugely lucrative market, while for consumers, it can mean missing out on products enjoyed by the rest of the world.

Kaspersky’s Reputation Control

Kaspersky first addressed the issue in October 2017, announcing a global transparency initiative. The mission: “assuring the integrity and trustworthiness of its products” in fighting cyberthreats “regardless of their origin or purpose,” the Kaspersky website stated.

It wasn’t a major brand change, Kaspersky stressed, as its ongoing commitment to security remained the same. It wasn’t addressing any crises, in other words, aside from the hit to its reputation from rumors of the Russian government compromising the company. In the October post, Kaspersky announced an independent review of its source code, plus additional data processing controls, to be developed in coordination with an independent party.

The Switzerland-based core infrastructure center, announced this week and set to be completed by the end of 2019, is an even greater investment in garnering trust — and an indicator that Kaspersky is still in repair mode and sees a partial move away from Russian soil as essential for its reputation-rebuilding.

Kaspersky’s announcement followed a New York Times story in October 2017, which reported on a leak of classified documents from an NSA agent’s home computer that ran Kaspersky’s antivirus software and which had been accessed by Russian hackers, according to Israeli hackers who had witnessed the event.

“Kaspersky Lab has never helped, nor will help, any government in the world with its cyber-espionage efforts,” the company told the Times, adding that it “respectfully requests any relevant, verifiable information that would enable the company to begin an investigation at the earliest opportunity.”

Kaspersky software has since been banned for U.S. government use. But companies don’t have to face a Times expose to suffer from consumer backlash: Just see the example of the Huawei P20 Pro.

Huawei P20 Pro side on

A Huawei P20 Pro: The phone of the year outside the U.S.

U.S. Isn’t Getting Europe’s “Phone of the Year”

The Huawei P20 Pro is a great phone with some seriously desirable features: Triple-lens rear-camera, 6.1-inch OLED screen, 4K video capture — and it even pulls the “no-headphone-jack” power move. It has been termed the “phone of the year” by many. But, Huawei’s reputation in the United States specifically has hit a major politically charged speedbump: The FBI, CIA and NSA have all come out against it, alleging the company is a cybersecurity threat.

One side of the argument has been summed up by Texas Representative Mike Conaway:

“Chinese commercial technology is a vehicle for the Chinese government to spy on United States federal agencies, posing a severe national security threat,” he holds.

Though this sounds like something any state would be alarmed by, the majority of the Western world takes a different tack, hence why European consumers are happily snapping away with triple-lens Huawei phones:

“Huawei is trusted by governments and customers in 170 countries worldwide,” the company noted in a statement.

Regardless of its growing global presence, Huawei is suffering the consequences of its home country’s reputation in the United States. Both AT&T and Verizon have pulled out of distribution deals with Huawei in the wake of the PR crisis.

In short, if it wants to break America, Huawei currently has the odds stacked firmly against it.

What’s the True Risk?

Without concrete evidence of wrongdoing, should tech companies be forced to pour funds into reaffirmations of their neutrality? From one viewpoint, U.S. consumers are playing it safe in their refusal to adapt technology from countries such as Russia and China. But as a trade off, U.S. consumers are missing out on the full range of technological advancements that could benefit them.

Neither Kaspersky nor Huawei have been proven complicit in any crime, nor has their been any evidence of influence by their parent countries. Their loss of income due to reputation damage still shows that consumer opinion – and consumer choice – can be hugely influenced by political fallout on the global stage.

Global Brands Are Inevitable

One conclusion can be drawn from the fiascos at Kaspersky and Huawei: Tech companies have a new problem to deal with. As brands gain international appeal, they’ll suffer from country-wide stereotypes that would never have hurt them in the past.

Nationally-based brands are still trusted within their home countries. Yet they can now see charges lowered at them from those with a different perspective on what it means to be Russian or Chinese. Russia-U.S. relations are at a low-point, and suspicion about the Russian government’s complicity in cyber-espionage is rife. And in a global economy, the trade wars hinted at by the increasing tension between the U.S. and China would even harm plenty of companies whose reputations remain intact.

Across the globe, consumer brands are only getting stronger. The PR challenges that Kaspersky and Huawei face today will  become more widespread as more and more brands gain global recognition and Russian and Chinese tech advancement mean their own products can be truly competitive.

It’s a Lesson in Reputation Management

For better or for worse, the PR world is one in which reputation can matter more than the proven facts. This isn’t all bad. After all, allegations carry a genuine weight even if they haven’t yet translated into convictions or court cases.

But, Kaspersky hasn’t faced any legal allegations at this point. Merely the association with Russia has been enough to send its public image into a tailspin.

In the end, the biggest takeaway from all this geopolitical intrigue is that any major tech company’s PR reps may now need to moonlight as political junkies, too.

Read more about the latest in security news at TechCo

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Adam is a writer with an interest in a variety of mediums, from podcasts to comic books to video essays to novels to blogging — too many, basically. He's based out of Seattle, and remains a staunch defender of his state's slogan: "sayWA." In his spare time, he recommends articles about science fiction on Twitter, @AdamRRowe

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