Lawmakers telling US companies not to buy from Huawei and ZTE

-Hello and welcome to Inside Scoop. I'm Sumi Das. And joining me via Skype is Jay Greene, senior writer for CNET.com. Now, over the summer, Jay wrote about Huawei and he actually went to China and visited the company. And of course Huawei has been in the news recently. On Monday, the House Intelligence Committee released some findings. And what were those findings regarding Huawei? And also, another company, another Chinese company, ZTE. Tell us about it, Jay. -Yeah, that's right. So, the House Intelligence Committee has been investigating the 2 companies, they sell telecommunications gear. And has been investigating them on allegations that they might be able to help the Chinese governments spy on US businesses and maybe even government agencies that would use their gear. And so the-- the report accuses Huawei and ZTE of doing just that, of enabling the Chinese government to snoop and it-- Maybe most importantly discourages American businesses from buying gear from either company. -So, tell us exactly how the snooping would be done. Would it be basically, I've read a backdoor through your mobile device for the companies to snoop on your data? How does that work exactly? 'Cause I think there's some confusion about this. -Sure, yeah. It would be a backdoor. Not necessarily through your mobile device but you know, they sell routers and other networking gear, and so theoretically if there's e-mail being shared, if there are documents being collaborated upon, Huawei and ZTE's gear couldn't allegedly have backdoors in them, that the Chinese government could use to snoop on documents being created and shared within corporate networks that companies for example might presume to be secure. -What do you think about the findings? I mean, you went to China, you visited Huawei, do you think that there's some truth to them? -What's [unk] question, I-- to be perfect and honest, I don't know. It is the sort of thing that is next to impossible to prove that they're being-- that they are wrong, right? Unless the government creates you know, specific allegations. It's really hard for Huawei or ZTE to say I'm not you know, we're not enabling spying because there's no actual evidence in front of them, they're just allegations. And what was interesting about the report is that it really includes no specifics. The government says there's some classified information that they are unable to share but they provide no specifics that actually show that Huawei or ZTE has in fact enabled spying. -So that I think is the part that I'm having trouble with. That's the basis fro this findings in a published in the report. You know, okay there might be classified information that we're not [unk] to, but it does seem a little tenuous to be. -Yeah, well, and certainly that's what Huawei and ZTE are jumping on. The one point that the government would make is that-- well, first I can't you know, provide classified information but beyond all that, what they'll say is listen, the Chinese government has-- China broadly has been hacking and trying to get in and snoop on US, you know, networks from time of Memorial just as the United States government by the way has been doing the same in China. But so, the Chinese government has the motive and gear from Huawei would theoretically provide them with the and actually ZTE as well. So, what they're saying is, we wanna stop this before that actually happens or becomes widespread, but I do think it is an entirely fair point to raise that there are no specific allegations of this. -Tell us a little bit about the response from ZTE and Huawei. We do know that in a statement that basically Huawei had said, you know, this was a pretty determined outcome, the findings in this report. -Yeah, that's right. I mean, I think both companies really came back very hard at the report and you know, cues the government of setting out to find exactly what it found out, and so, I think really both companies have been very much critical of the report of the-- of the lawmakers that put it out there, you know, accusing them of essentially trying to find conclusions to justify what they were gonna write. -So two questions now, what the consumers need to know and what do costumers need to know? Competitors of the devices, the equipment, the gears sold at Huawei and ZTE. -Yeah. Yeah, I would say, for consumers there's not a whole lot there. I mean, Huawei and ZTE both make mobile handsets. Those really aren't related to this. I mean, you know, if you have some concerns about the company, maybe you don't wanna buy their gear, but really this is focused on the networking gear that businesses buy. As for businesses, it's gonna be an interesting thing, you know, why we compete with a number of companies, Cisco is very big among them, Ericsson as well and different markets. I suspect those companies now have a bid of an advantage particularly among US businesses that may well be reticent to buy Huawei's gear and ZTE's gear based on this report. -Jay Greene, senior writer for CNET, thanks so much for your insight. -Thanks, Sumi. -For Inside Scoop, I'm Sumi Das. Thanks for watching.