Eric Schmidt: Huawei has engaged in unacceptable practices
Schmidt and Huawei
Huawei faces national security challenges and has committed unacceptable acts, Google's former boss Eric Schmidt told the BBC.
But he says the West should react by competing with China and its technologies instead of loosening up.
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Mr. Schmidt is now Chairman of the Defense Innovation Board of the Pentagon.
The UK is currently reviewing whether Huawei should continue to help build its 5G mobile networks under increasing pressure to exclude the Chinese company.
"There is no question that Huawei has applied some practices that are unacceptable to national security," Schmidt said of a BBC Radio 4 documentary.
He said it was possible to view the company as a "signal intelligence" tool - a reference to spy agencies such as the British GCHQ or the NSA in the United States.
"There is no question that information from Huawei routers has finally gotten into the hands that seems to correspond to the state," added Schmidt.
"However that happened, we're sure it happened."
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Huawei has consistently rejected allegations that it is an arm of the Chinese state or passed on customer data to the authorities.
"It's just not true," Victor Zhang, the British chief of Huawei, told the BBC.
"Huawei is a private company that is 100% owned by its employees. Huawei is independent of any government, including the Chinese government."
Prejudice against China
According to Eric Schmidt, the real problem with Huawei is the challenge for the U.S. leadership: a Chinese company that operates on a global stage and develops a better product than its competitors.
"It is extremely important that we have a choice," he told the BBC.
"The answer to Huawei ... is to compete with a product and product line that are just as good."
The U.S. has banned Huawei from using U.S. chip technologies, but has allowed U.S. companies to work with the company on 5G standards
Eric Schmidt was a managing director for a decade and then as CEO of Google and its parent company Alphabet.
He admits that he underestimated China's innovative ability during his long career in Silicon Valley.
"I shared the prejudices about China with them in my years," he said.
"That they are very good at copying things, that they are very good at organizing things, that they throw a large number of people at them. But they won't do anything new. They are very, very good at if you do that want to steal our things. These prejudices must be removed.
"The Chinese are just as good, and maybe even better, than the West in key areas of research and innovation.
"They put more money into it. They use it in a different way, it is government-directed in a way that differs from the West. We have to pull ourselves together to be competitive."
He denies that the Chinese model of government investment in technology in itself is more successful than a free market model. However, he believes the West must make the most of its strengths by:
invest more in research funding
Ensuring closer cooperation between the private sector, government and science
Stay open to the best talent from around the world
"Most people would rather live and work in the West than work in China," he says.
Schmidt believes that one of the problems in the United States, and particularly in Silicon Valley, is historical blindness to the role of the government in supporting research.
"Everything you see at first glance in Silicon Valley came from initial academic grants of one kind or another."
Last year, he chaired a United States National Security Commission that dealt with artificial intelligence.
China's progress in this area is a major concern.
"I would say they are a few years back," he says.
"Not five years and not ten years. And there are indications that China will close the gap in the next few years.
"So the question is: what happens then? Well, artificial intelligence obviously has military and national security applications."
China's work in the field of quantum computers is comparable to that of the West and could even be ahead.
Mr. Schmidt joined Google in 2001 and gave up his last position as a consultant to the company in February
Mr. Schmidt regards the decoupling of the technology sectors in China and the USA as "undesirable" and believes that this will lead to two different systems.
"Once you separate these global platforms, you won't get them back," he says.
"We benefit from a common platform for exchange ... and I am worried that the countries will understand each other less by building these platforms.
"China will dominate whether we couple or decouple. They have the resources, they have the money, they have the technology.
"The question is whether they work on global platforms or on their own platforms. The more separate the platforms, the more dangerous they are.
"It is in the West's interest that every technology platform contains Western values."
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Mr. Schmidt is careful when it comes to selecting national champions and supporting them. But he says there are weaknesses in the West's own capacity, especially in the fact that there are no foundries that manufacture semiconductor chips. He says it would be better for China to use chips from Western companies than to build their own.
The rise of nationalism and protectionism around the world is "very worrying," he concludes, pointing out that more than half of Silicon Valley's startups were founded by foreign nationals.
Faced with a challenge from China, he draws on his own experience in Silicon Valley.
"The best strategy is to look at it as competition, similar to technology companies that have brutal competition," he said.
"[It gets] as rough as it could be - largely unregulated between the different players - where we want to win."
The New Tech Cold War will air on Friday at 11:00 a.m.CET and on Tuesday at 4:00 p.m. CET on BBC Radio 4.
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