ZTE vows to fight government’s Denial Order, may take legal action

ZTE says the order is "unacceptable" and "unfair."

Earlier this week, the United States Department of Commerce announced that the Bureau of Industry and Security (BIS) had issued a Suspended Denial Order against ZTE – effectively banning the company from using any exported hardware or software from the U.S. in its products for the next seven years.

The move came as a result of ZTE not staying true to promises it made to the Department following a violation of export control in 2016, but according to ZTE, this simply isn't true.

ZTE has been working diligently on Export Control Compliance program and has invested tremendous resources in export compliance and has made significant progress since 2016. It is unacceptable that BIS insists on unfairly imposing the most severe penalty on ZTE even before the completion of investigation of facts, ignoring the continuous diligent work of ZTE and the progress we have made on export compliance…

ZTE highlights four moves it's made to work with the Department since 2016, including:

  1. ZTE self-identified the issues in the correspondence and self-reported by ZTE immediately
  2. The Company has taken measures against the employees who might have been responsible for this incident
  3. Corrective measures have been taken immediately
  4. A prestigious U.S. law firm has been engaged to conduct independent investigation

ZTE goes on to say that the Denial Order will not only hurt it, but "also cause damages to all partners of ZTE including a large number of U.S. companies." Even so –

ZTE will not give up its efforts to resolve the issue through communication, and we are also determined, if necessary, to take judicial measures to protect the legal rights and interests of our Company, our employees and our shareholders, and to fulfill obligations and take responsibilities to our global customers, end-users, partners and suppliers.

Shortly after the BIS announced the Denial Order, it was later revealed that Alphabet was considering revoking ZTE's Android license. Should that happen, ZTE would no longer be able to use Android on its smartphones, tablets, smartwatches, etc.

I'm not sure how this will all turn out, but I can't imagine ZTE will take this lying down. We're likely going to be looking at a few months of legal back-and-forth, so be sure to grab your popcorn and get comfy.

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