Without us ‘there is no Google’: EU telcos ramp up pressure on Big Tech to pay for the internet
Tensions between European telecommunications firms and U.S. Big Tech companies have crested, as telecom bosses mount pressure on regulators to make digital giants fork up some of the cost of building the backbone of the internet.
European telcos argue that large internet firms, mainly American, have built their businesses on the back of the multi-billion dollar investments that carriers have made in internet infrastructure.
Google, Netflix, Meta, Apple, Amazon and Microsoft generate nearly half of all internet traffic today. Telcos think these firms should pay “fair share” fees to account for their disproportionate infrastructure needs and help fund the rollout of next-generation 5G and fiber networks.
The European Commission, the EU’s executive arm, opened a consultation last month examining how to address the imbalance. Officials are seeking views on whether to require a direct contribution from internet giants to the telco operators.
Big Tech firms say this would amount to an “internet tax” that could undermine net neutrality.
What are telco giants saying?
Top telecom bosses came out swinging at the tech companies during the Mobile World Congress in Barcelona.
They bemoaned spending billions on laying cables and installing antennas to cope with rising internet demand without corresponding investments from Big Tech.
“Without the telcos, without the network, there is no Netflix, there is no Google,” Michael Trabbia, chief technology and innovation officer for France’s Orange, told CNBC. “So we are absolutely vital, we are the entry point to the digital world.”
In a Feb. 27 presentation, the CEO of German telecom group Deutsche Telekom, Tim Hoettges, showed audience members a rectangular illustration, representing the scale of market capitalization among different industry participants. U.S. giants dominated this map.
Tim Hoettges, CEO of Deutsche Telekom, delivers a keynote at Mobile World Congress.
Angel Garcia | Bloomberg | Getty Images
Hoettges asked attendees why these companies couldn’t “at least a little bit, contribute to the efforts and the infrastructure which we are building here in Europe.”
Howard Watson, chief technology officer of BT, said he sees merit in a fee for the large tech players.
“Can we get a two-sided model to work, where the customer pays the operator, but also the content provider pays the operator?” Watson told CNBC last week. “I do think we should be looking at that.”
Watson drew an analogy to Google and Apple’s app stores, which charge developers a cut of in-app sales in return to use their services.
What have U.S. tech firms said?
Efforts to implement network fees have been strongly criticized — not least by tech companies.
Speaking on Feb. 28 at MWC, Netflix co-CEO Greg Peters labeled proposals to make tech firms pay internet service providers for network costs an internet traffic “tax,” which would have an “adverse effect” on consumers.
Greg Peters, Co-CEO of Netflix, speaks at a keynote on the future of entertainment at Mobile World Congress 2023.
Joan Cros | Nurphoto | Getty Images
Requiring the likes of Netflix — which already spends heavily on content delivery — to pay for network upgrades would make it harder to develop popular shows, Peters said.
Tech firms say that carriers already receive money to invest in infrastructure from their customers — who pay them via call, text and data fees — and that, by asking internet companies to pay for carriage, they effectively want to get paid twice.
Consumers may end up absorbing costs asked of digital content platforms, and this could ultimately “have a negative impact on consumers, especially at a time of price increases,” Matt Brittin, Google’s head of EMEA, said in September.
Tech firms also argue that they are already making large investments in European telco infrastructure, including subsea cables and server farms.
Rethinking ‘net neutrality’
The “fair share” debate has sparked some concern that the principles of net neutrality — which say the internet should be free, open, and not give priority to any one service — could be undermined. Telcos insist they’re not trying to erode net neutrality.
Technology firms worry that those who pay more for infrastructure may get better network access.
Google’s Brittin said that fair share payments “could potentially translate into measures that effectively discriminate between different types of traffic and infringe the rights of end users.”
One suggestion is to require individual bargaining deals with the Big Tech firms, similar to Australian licensing models between news publishers and internet platforms.
“This has nothing to do with net neutrality. This has nothing to do with access to the network,” said Sigve Brekke, CEO of Telenor, told CNBC on Feb. 27. “This has to do with the burden of cost.”
Short-term solution?
Carriers gripe that their networks are congested by a huge output from tech giants. One solution is to stagger content delivery at different times to ease the burden on network traffic.
Digital content providers could time a new blockbuster movie or game releases more efficiently, or compress the data delivered to ease the pressure off networks.
“We could just start with having a clear schedule of what’s coming when, and being able to have a dialogue as to whether companies are using the most efficient way of carrying the traffic, and could certain non-time critical content be delivered at different times?” Marc Allera, CEO of BT’s consumer division, told CNBC.
“I think that’s a pretty, relatively easy debate to be had, actually, although a lot of the content is global, and what might be busy in one country and one time may or may not be busy in another. But I think at a local level is certainly a really easy discussion to have.”
He suggested the net neutrality concept needs a bit of a refresh.
Not a ‘binary choice’
The “fair share” debate is as old as time. For over a decade, telecom operators have complained about over-the-top messaging and media services like WhatsApp and Skype “free riding” on their networks.
At this year’s MWC, there was one notable difference — a high-ranking EU official in the room.
Thierry Breton, internal market commissioner for the European Union, delivers a keynote at Mobile World Congress in Barcelona.
Angel Garcia | Bloomberg | Getty Images
Thierry Breton, head of internal markets for the European Commission, said the bloc must “find a financing model for the huge investments needed” in the development of next-generation mobile networks and emerging technologies, like the metaverse.
Breton said it was important not to undermine net neutrality and that the debate should not be characterized as a “binary choice” between internet service providers and Big Tech firms.
Breton’s presence at MWC appeared to reflect the bloc’s sympathies toward Big Telecom, according to Paolo Pescatore, tech, media and telecom analyst at PP Foresight.
“The challenge in Europe is it’s not that clear cut because you have an imbalance,” Pescatore said. “The imbalance is not down to Big Tech, it’s not down to streamers, and it’s not down to telcos. It’s down largely to the old, out-of-date regulatory environment.”
A lack of cross-border consolidation and stagnating revenues in the telecoms sector created a “perfect concoction that’s unfavorable to telcos,” he said.
“A potential landing zone for resolution is a framework for telcos to negotiate individually with the tech firms that generate the heaviest traffic,” Ahmad Latif Ali, European telecommunications insights lead at IDC, told CNBC. “However, this is a highly contested situation.”
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The Huawei booth at the Mobile World Congress in Barcelona, 2025.
Arjun Kharpal | CNBC
Despite being beaten down by years of U.S. trade restrictions, China’s telecom giant Huawei has quietly emerged as one of the country’s fiercest competitors across the entire AI landscape.
Not only does the Shenzhen-based firm appear to represent Beijing’s answer to American AI chip darling Nvidia, but it has also been an early adopter of monetizing artificial intelligence models in industrial applications.
“Huawei has been forced to shift and expand its core business focus over the past decade… due to a variety of external pressures on the company,” said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group.
This expansion has seen the company get involved in everything from smart cars and operating systems to the technologies needed for the AI boom, such as advanced semiconductors, data centers, chips and large language models.
“No other technology company has been able to be competent in so many different sectors with high levels of complexity and barriers to entry,” Triolo said.
This year, Nvidia CEO Jensen Huang has become increasingly vocal in calling Huawei “one of the most formidable technology companies in the world.” He has also warned that Huawei will replace Nvidia in China if Washington continues to restrict U.S. chip firms’ exports to the Asian country.
Nvidia surpassed $4 trillion in market capitalization last week to become the world’s most valuable company. Its cutting-edge processors and a related “CUDA” computing system remain the industry standard for training generative AI models and applications.
But that moat may be narrowing, as Huawei proves that it not only does it all, it does it well. While challenging American AI stalwarts like Nvidia is a tall order, the company’s history shows why it can’t be counted out.
Telephone switches to national champion
Huawei, which now employs more than 208,000 people across over 170 markets, came from humble beginnings. Founded by ambitious entrepreneur Ren Zhengfei in 1987 out of an apartment in Shenzhen, the firm started as a small telephone switch distributor.
As it grew into a telecoms player, it gained traction by targeting less developed markets such as Africa, the Middle East, Russia and South America, before eventually expanding to places like Europe.
By 2019, Huawei would be well-positioned to capitalize on the global 5G rollout, becoming a leader in the market. Around this time, it had also blossomed into one of the world’s largest smartphone manufacturers and was even designing smartphone chips through its chip design subsidiary, HiSilicon.
But Huawei’s success also attracted increasing scrutiny from governments outside China, particularly the U.S., which has frequently accused Huawei’s technology of posing a national security threat. The Chinese company has refuted such risks.
The export controls have ironically pushed Huawei into the arms of the Chinese government in a way that CEO Ren Zhengfei always resisted.
Paul Triolo
partner and senior vice president for China at DGA-Albright Stonebridge Group
Huawei’s business suffered a major setback in 2019 when it was placed on a U.S. trade blacklist, preventing American companies from doing business with it.
As the impact of the sanctions kicked in, Huawei’s consumer business – once the company’s largest by revenue – halved to about $34 billion in 2021 from the year before.
The company still managed a breakthrough on AI chips, and pressed ahead despite additional U.S. restrictions in 2020 that cut the company off from chipmaker Taiwan Semiconductor Manufacturing Co. A year earlier, Huawei officially launched its Ascend 910 AI processing chip as part of a strategy to build a “full-stack, all-scenario AI portfolio” and to become a provider of AI computing power.
But the U.S. targeting of Huawei also had the effect of turning the company into a martyr-like figure in China, building upon attention it received in 2018 when Meng Wanzhou, Huawei’s CFO and daughter of Ren, was arrested in Canada for alleged violations of Iran sanctions.
As the U.S.-China tech war continued to expand and broad advanced chip restrictions were placed on China, Huawei was an obvious choice to become a national champion in the race, with more impetus and state backing for its AI plans.
“The export controls have ironically pushed Huawei into the arms of the Chinese government in a way that CEO Ren Zhengfei always resisted,” Triolo said. In this way, the restrictions also became “the steroids” for Huawei’s AI hardware and software stack.
The comeback
After another year of declining sales in the consumer segment, the unit started to turn around in 2023 with the release of a smartphone that analysts said contained an advanced chip made in China.
The 5G chip came as a shock to many in the U.S., who didn’t expect Huawei to reach that level of advancement so quickly without TSMC. Instead, Huawei was reportedly working with Chinese chipmaker SMIC, a company that has also been blacklisted by the U.S.
While semiconductor analysts said the scale that Huawei and SMIC could produce these chips was severely limited, Huawei nonetheless had proved it was back in the advanced chip game.
It was also around this time that reports began surfacing about Huawei’s new AI processor chip, the Ascend 910B, with the company looking to seize upon gaps left by export controls on Nvidia’s most advanced chips. Mass production of the next-generation 910C is reportedly already on the way.
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To fill the void left by Nvidia, Huawei “has been making big strides in replicating the performance of high-end GPUs using combinations of lower chips,” said Jeffrey Towson, managing partner at TechMoat Consulting.
In April, Huawei unveiled its “AI CloudMatrix 384”, a system that links 384 Ascend 910C chips in a cluster within data centers. Analysts have said CloudMatrix is able to outperform Nvidia’s system, the GB200 NVL72, on some metrics.
Huawei isn’t just catching up, “it’s redefining how AI infrastructure works,” Forrester analysts said in a report last month about CloudMatrix.
Meanwhile, Huawei has also developed its own “CANN” software system that acts as an alternative to Nvidia’s CUDA.
“Winning the AI race isn’t just about faster chips. It also includes delivering the tools developers need to build and deploy large-scale models,” Forrester’s report said, though authors noted that Huawei’s products are still not integrated enough with other commonly used tools for developers to switch over quickly from Nvidia.
The ‘Ascend Ecosystem Strategy’
While Huawei’s goal to surpass Nvidia is seen as a key development in China and the U.S.’s race for AI, it’s important to note that chips represent just one building block of Huawei’s broader AI plans.
Huawei now has its hands throughout the artificial intelligence value chain, from chips to computing, to AI models and AI applications. These different AI business avenues also leverage other areas of the company’s vast technology empire.
In fact, the company’s “ICT Infrastructure” business — which includes 5.5G cellular network deployment and AI systems for industrial use — became the company’s largest revenue driver at 362 billion yuan in 2023.
The company has been deploying its Ascend AI chips and AI CloudMatrix 384 at its growing portfolio of AI data centers, which are operated by its cloud computing unit, Huawei Cloud, established in 2017 to compete with the likes of Amazon Web Services and Oracle.
These data centers, in turn, have provided the training capabilities and computing power used by Huawei’s suite of AI models under its Pangu series.
Unlike other general-purpose AI models like OpenAI’s GPT-4 or Google’s Gemini Ultra 1.0, Huawei’s Pangu model is designed to support more industry-specific applications across the medical, finance, government, industrial and automotive sectors. Pangu has already been applied in more than 20 industries over the last year, the company said last month.
Rolling out such AI applications often involves having Huawei tech staff working for months at the project site, even if it’s in a remote coal mine, Jack Chen, vice president of the marketing department for Huawei’s oil, gas and mining business unit, which provides digital and intelligent solutions to transform these industries, told CNBC.
That research enabled the company in May to deploy more 100 electric-powered trucks that can autonomously transport dirt or coal using the telecom company’s 5G network, AI and cloud computing services.
And it’s not limited to China. The technology can “be replicated on a large scale in Central Asia, Latin America, Africa, and the Asia-Pacific,” Chen said.
Huawei has also open-sourced the Pangu models, in a move it said would help it expand overseas and further its “Ascend ecosystem strategy,” which refers to its AI products built around its Ascend chips.
Speaking to CNBC’s “Squawk Box Asia” on Thursday, Patrick Moorhead of Moor Insights & Strategy said he expected Huawei to push Ascend in countries part of China’s Belt and Road Initiative — an investment and development project aimed at emerging markets.
Over a period of five to 10 years, the company could begin to build serious market share in these countries, in the same way it once did with its telecommunications business, he added.
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