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enterprise| enterpriseauthorTom KrazitNoneAre you keeping up with the latest cloud developments? Get Tom Krazit and Joe Williams' newsletter every Monday and Thursday.d3d5b92349
December 10, 2020
Mastercard and Visa will no longer process payments to Pornhub, spokespersons confirmed to Protocol.
The developments come after an investigation by the New York Times found that the porn site allowed users to upload adult videos with minors, among other troubling allegations.
"Our investigation over the past several days has confirmed violations of our standards prohibiting unlawful content on their site. As a result, and in accordance with our policies, we instructed the financial institutions that connect the site to our network to terminate acceptance," the company said in an emailed statement.
Mastercard will also investigate whether its cards are used to support "potential illegal content" on other websites.
In an emailed statement, Visa said the recent allegations of illegal activity led to the company "suspending Pornhub's acceptance privileges pending the completion of our ongoing investigation."
"At Visa, we are vigilant in our efforts to stamp out illegal activity on our network, and we encourage our financial institution partners to regularly review their merchants' compliance of our standards on this and other platforms," Visa said.
Joe Williams
Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.
Power
Yes, GameStop is a content moderation issue for Reddit
The same tools that can be used to build mass movements can be used by bad actors to manipulate the masses later on. Consider Reddit warned.
WallStreetBets' behavior may not be illegal. But that doesn't mean it's not a problem for Reddit.
Image: Omar Marques/Getty Images
January 27, 2021
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
January 27, 2021
The Redditors who are driving up the cost of GameStop stock just to pwn the hedge funds that bet on its demise may not be breaking the law. But this show of force by the subreddit r/WallStreetBets still represents a new and uncharted front in the evolution of content moderation on social media platforms.
In a statement to Protocol, a Reddit spokesperson said the company's site-wide policies "prohibit posting illegal content or soliciting or facilitating illegal transactions. We will review and cooperate with valid law enforcement investigations or actions as needed."
<p>It's still unclear whether any such investigations will result from this, and White House press secretary Jen Psaki said that Treasury Secretary Janet Yellen is "monitoring" the situation. But the fact is, Reddit writes lots of site-wide rules that have nothing to do with whether certain behavior is illegal. Reddit is <a href="https://www.protocol.com/reddit-powermods-war" target="_blank">unique among platforms</a> in that it leaves much of its content decisions to the moderators of different subreddits. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
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</div></p><p>Still, the company does have rules. It <a href="https://www.reddithelp.com/hc/en-us/articles/360043071072" rel="noopener noreferrer" target="_blank">prohibits</a>, for example, "directing unwanted invective at someone" or "following them from subreddit to subreddit," classifying that as harassing, bullying behavior. Redditors aren't allowed to send "large amounts of private messages to users who are not expecting them" or repeatedly post "unrelated/off-topic/link-farmed content," because, under Reddit's <a href="https://www.reddithelp.com/hc/en-us/articles/360043504051" rel="noopener noreferrer" target="_blank">rules</a>, that's spam.</p><p>That means if Reddit decides that what r/WallStreetBets is doing is dangerous or disruptive, it could very well take action. That would be tricky for Reddit. Given the range of offensive stuff that regularly appears on the platform, it could be tough to justify outlawing stock trade tips. So far, that hasn't happened, and the Reddit spokesperson was unable to comment on whether any content policies related to the GameStop issue might be implemented in the future. Reddit co-founder Alexis Ohanian, for one, seemed unconcerned in a Twitter <a href="https://twitter.com/alexisohanian/status/1354407436732387335?s=20" rel="noopener noreferrer" target="_blank">thread</a> Wednesday. "It's a perfect storm at a time when lots of people are hurting, interest rates are so low, inescapable student loan debts loom, and every major institution has caught Ls during a /global pandemic/ over the last year," Ohanian wrote. "This is something to believe in."</p><p>That may be true for now. But experts on social media manipulation argue the model WallStreetBets has created could morph into a bigger long-term problem for Reddit. "The WallStreetBets manipulation of [GameStop] is now the best template for how one could monetize an influence operation," <a href="https://twitter.com/alexstamos/status/1354499573209653251?s=20" rel="noopener noreferrer" target="_blank">tweeted</a> Stanford researcher Alex Stamos who, as Facebook's former chief security officer, worked on detecting and rooting out foreign influence operations after the 2016 election. "I don't know if any laws were broken this time, but Reddit now has a problem: it is the home for a community of hundreds of thousands of people who have demonstrated the ability to move billions of dollars based upon the urging of, at most, a couple dozen anonymous accounts."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
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</div></p><p>Facebook's current chief security officer, Nathaniel Gleicher, agreed with Stamos, <a href="https://twitter.com/ngleicher/status/1354517057673392129?s=20" rel="noopener noreferrer" target="_blank">tweeting</a>: "Good reminder that while political [information operations are] a serious threat, there are many harmful cases of these tactics driving financial gain."</p><p>Gleicher added: "[Money] is a driver across security threats, from hacking to phishing to good old bank fraud, & [information operations are] no exception. Getting ahead of how these tactics enable fraud is essential to disincentivize bad actors."</p><p>To be clear: There's no evidence that the GameStop mob has any ties to a malicious influence operation, and aside from some hedge funds that tried to short GameStop in the first place, it's not immediately obvious who WallStreetBets is hurting. What are hedge funds anyway if not an institutionally sanctioned pool of people betting on the success or failure of businesses for profit? For now, it's easy to root for the underdogs banding together to stick it to the man. </p><p>But one thing that seems obvious from the last decade or more on the internet is that the same tools that can be used to build mass movements — be they political or financial — can be used by bad actors to manipulate the masses later on. If and when that happens, Reddit will have few excuses for not being prepared. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
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Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
The failed Visa merger was a lucky break for Plaid
Plaid COO Eric Sager says the deal's collapse won't derail the fintech startup.
In some ways, Plaid stands to benefit after its big deal with Visa fell through.
Image: Jonas Leupe/Unsplash
January 19, 2021
Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.
January 19, 2021
Plaid spent most of 2020 preparing to be gobbled up by Visa. Heading into 2021, it's going it alone again — and with a potentially higher valuation and newfound freedom from a giant corporation, it might be better off.
If it had gone through, the merger with Visa would have combined a rising star of the fintech revolution with one of the old guards of the financial services industry. But Visa said last week that it was ditching the $5.3 billion deal to avoid a "protracted and complex" legal battle with the Justice Department, which had sued to block what it considered an anticompetitive merger.
<p>"At the end of the day, it was a mutual decision," Plaid Chief Operating Officer Eric Sager told Protocol. "The DOJ lawsuit lengthens the timeline to the point where the deal just didn't make sense for either party. We just ultimately felt it was in the best interest of our customers and ecosystem of consumers for us to go our own way."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
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</div></p><p>Waiting for the merger to close had put Plaid in limbo during a turbulent year. But the aborted union is seen by many as a lucky break for a startup considered one of the most important players in the fintech revolution: one which some analysts say is now poised for bigger things with Visa out of the picture.</p><p>"When Plaid chose to sell, it made sense at the time, but I see this as a blessing in disguise" Melody Brue, senior analyst with Moor Insights & Strategy, told Protocol. "Although $5.3 billion seems like a painful missed exit, it can raise additional capital now at a much higher valuation, which likely has increased even since the breakup news broke last week."</p><p>Founded in 2013, Plaid emerged as a key fintech player by providing the infrastructure that made it easier for financing institutions — including banks and startups such as Venmo, Current and Prosper — to help consumers connect their data to financial apps. </p><p>Sager said Plaid had seen the Visa acquisition, which was announced in January 2020, as a way to expand its reach: "It would have helped us potentially to accelerate some of our international efforts. It would have allowed us to collaborate on certain kinds of product initiatives, things that we can make easier than on behalf of the ecosystem, creating even better solutions for developers and consumers."</p><p>But the merger subsequently hit road bumps. Just weeks after it was announced, the pandemic hit, triggering a global economic crisis. Then in November, the Justice Department sued to block the deal, which it argued was an attempt by Visa to take out a rising competitor.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
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</div></p><p>That led to the merger plan being scuttled last week. "It has been a full year since we first announced our intent to acquire Plaid, and protracted and complex litigation will likely take substantial time to fully resolve," Visa CEO Al Kelly said in a statement.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTUwMTU0Ni9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNDkxNTkwM30.QfG-fk8tcmMTSAEqKdXFIpkOyXIfs2BmIZFap87UrXU/img.jpg?width=980" id="c321a" class="rm-shortcode" data-rm-shortcode-id="e9b7e3f87e1baa7a205c53d80c2cdb36" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Plaid Chief Operating Officer Eric Sager</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Photo: Plaid</small></p><p>Plaid's view of how useful the merger might have been has also changed. "A year later, with the way the world has changed, some of those things suddenly look a little bit less urgent than they did at the time," Sager said.<br></p><p>The Visa-Plaid deal is just one of many <a href="https://www.wsj.com/articles/deals-are-being-dropped-as-buyers-turn-wary-during-the-pandemic-11599829200" target="_blank">aborted mergers in the U.S.</a> in recent months, many of them scrapped due to the pandemic, many of them hanging in the balance for months. Mark Batsiyan, partner at venture capital firm Inspired Capital, said the lack of clarity over the Visa merger over the past year was likely tough for the Plaid team.</p><p>"I imagine they probably didn't progress as much on their product roadmap as they would have liked because of the uncertainty of the deal," he told Protocol.</p><p>But Sager downplayed the impact of the merger process. "I don't know how much it delayed us," he said. "It's certainly true that anytime you have a deal like this, there's a certain percentage of the company, when it comes to legal teams for example, that obviously spent time on a deal of this magnitude."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
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</div></p><p>Besides, Visa's plan had been to maintain Plaid as an independent company, he said: "I don't think it really slowed us down at all. We kept building all the things that we were otherwise going to build, because we had every intention of continuing to run the business independently post-close."</p><p>And there might even be an upside to some of the waiting around: Sager said the deal has given Plaid far more brand recognition.</p><p>"It brought a lot of attention to what we're doing," he said. "It's hard to judge whether it's Visa, but the mere fact that the visibility and awareness of what Plaid is doing has been raised obviously introduces a lot of folks into the equation when it comes to things like partnerships. Now when I go to prospective customers, everybody seems to know who Plaid is versus a year and a half ago when you really had to explain what we do [and] what we could offer."</p><p>In fact, Plaid recently unveiled a partnership with the payment processing services company <a href="https://plaid.com/blog/plaid-exchange-jack-henry/" rel="noopener noreferrer" target="_blank">Jack Henry & Associates</a>. In March 2020, the startup also signed a deal with <a href="https://plaid.com/blog/fintech-everywhere-is-underway/" rel="noopener noreferrer" target="_blank">Microsoft</a> to help users sync their financial accounts with Excel. And Plaid told Protocol that it's rolling out a new partnership with a major tech company next month.</p><p>Plaid CEO and co-founder Zach Perret said in a statement that the startup will continue to work with Visa "as an investor and partner so we can fully focus on building the infrastructure to support fintech."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
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</div></p><p>Brue said scuttling the deal actually sets the stage for bigger opportunities for Plaid.</p><p>"Had Plaid consummated the relationship with Visa, it would have access to Visa's vast network of potential customers," she said. "Save for a liquidity event for investors and a nice payday for employees, that seems like the only upside at this point. As an independent company, it has the advantage of faster product decisions, better talent acquisition and a much higher valuation down the road."</p><p>Batsiyan echoed this view, saying Plaid could see even faster growth given the way the pandemic accelerated the rise of fintech.</p><p>"Fintech adoption has just gone through the roof since COVID happened," he said. "They're a nimble startup and they'll figure it out. They're well-positioned to capture a lot more value as an independent company given some of the changes that have happened."</p>
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Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.
People
COVID-19 changed how firms make payments. Visa wants to make that stick.
Gone are the days of paper checks, the company hopes.
In the card space, Visa is using the pandemic to grow virtual acceptance.
Photo: Stephen Phillips/Unsplash
October 26, 2020
Kevin McAllister ( @k__mcallister) is an associate editor at Protocol, leading the development of Braintrust. Prior to joining the team, he was a rankings data reporter at The Wall Street Journal, where he oversaw structured data projects for the Journal's strategy team.
October 26, 2020
For Visa's Kevin Phalen, comparisons between the pandemic's economic impact and the 2008-2009 financial crisis aren't fair. The current situation is far more wide-reaching. But so, too, he says, are the opportunities to overhaul the B2B payments space.
Phalen, the head of global business solutions at the financial services giant, works with businesses of all sizes to expand Visa's network through both card and non-card transactions. In the wake of the pandemic, he's seen the ecosystem for the slow-to-change payments infrastructure soften toward modernization efforts and views 2021 as a year where the company can keep extending its reach.
<p>"Fifty percent of corporate payables were still being done by checks," he said of the pre-pandemic landscape. When the pandemic hit, "We saw this rapid acceleration of digital accounts payable and digital accounts received."</p><p>In an interview with Protocol, Phalen described how the pandemic helped suppliers embrace their card business, how technology is bringing together accounts payable and accounts receivable operations, and how Visa's network can work alongside the open banking trend. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
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</div></p><p><em>This interview has been edited and condensed for clarity.</em></p><p><strong>What kinds of behavioral shifts have you seen in terms of how businesses are adapting B2B payments to the pandemic?</strong></p><p>There were two things that really emerged, and let's think about it both from a small business perspective and then a middle market, large corporate perspective. </p><p>If you think about small businesses, some didn't have an ecommerce infrastructure, and literally overnight, they had to rethink and go out and build out their presence. We saw this massive ask and need to build out their social media presence, their ecommerce presence to help them on their digital journey. The other thing was that the consumer dynamic dramatically changed, and [consumers] were very focused on the safety of their transactions. When it came to payments, all of a sudden, businesses moved from [being] a cash, check environment to [needing] to be a card environment to [needing] to be contactless. People were uncomfortable handing over their plastics, so they wanted mobile payments. The small businesses had to reimagine their business while also reengineering their payment infrastructure and rethinking things like payroll and accounts payable for their own organizations.</p><p>That's where the similarities then are when you think about middle market and large corporate clients. Unlike small businesses, most of them already had their ecommerce presence. They were omnichannel in the way they thought about payments. But all of their back-office accounts payable and accounts receivable required one thing that nobody really ever thought would be different: people going into the office to either look at their desktop, to write checks, to collect checks, to book entry checks, to go to a bank to deposit checks. Fifty percent of corporate payables were still being done by checks, so we saw this rapid acceleration of digital accounts payable and digital accounts received.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
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</div></p><p>A lot of governments were trying to distribute to their constituents, and, unlike we have here in the U.S. through unemployment cards and benefit cards, they had no way of doing that distribution. But a lot of people have Visa cards, and we could push payments through Visa Direct so that those consumers, small businesses could get their PPP.</p><p><strong>Historically, payments infrastructure change has been slow, but through the pandemic, we've seen modernization happen rapidly. Does that speak to adoption lagging in the past, or has there been a tech advancement that's played into it?</strong></p><p>I'd say it was a little bit of both. We drew a lot of analogies to 2008 and 2009, because, in a similar manner, there was a crisis. But it was very different. It was a crisis of confidence in financial institutions. It was a liquidity crunch. But it forced corporates to really understand their accounts payable and their accounts receivable. At that point, within the payments world we saw virtual solutions starting to accelerate. </p><p>Fast forward now to this pandemic, the implications were significantly larger because it wasn't narrow in that it was impacting financial institutions. It was really across supply chains. The good thing was that fintechs were already on the rise in our world for accounts payable and accounts receivable. They had the solution set, and it drove immediate adoption, which is a little bit different. We needed a forcing factor to drive it to the digital environment, and quite honestly, the pandemic helped to drive that.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
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</div></p><p><strong>If companies have adjusted to accounts receivable and accounts payable teams working outside the office environment, to what extent will we see the pendulum swing back to normal once workers return to offices in full force?</strong></p><p>I fundamentally believe the vast majority of it will stick because you can be much more efficient in a digital environment than in a manual, paper-based environment. We needed the forcing factor. Being a network, acceptance is important to us. We offer a service to go out to suppliers and say, please accept Visa cards. Since the pandemic began impacting us, we saw a 17% increase of suppliers saying they're going to take card that historically said [they] weren't going to take card.</p><p>What they did was readily admitted [that they] needed the best way, the most transparent way, the fastest way to get paid. And card-based transactions helped them to do that. Our goal will be to make sure that that sticks, but we also have to make sure that both the buyer and the supplier get value out of that electronic or digital payment infrastructure that we've built.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
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</div></p><p><strong>We've heard about pandemic-related disruptions to international supply chains from the logistics side of the house. How is Visa thinking about cross-border payments?</strong></p><p>Where we've invested a ton of money across Visa is both in what we call high-value payments and low-value payments. In low value payments … we've developed a solution site called Visa Direct. It manages P2P, account-to-account, low-value payments, both cross-border and domestic. Everything from paying a gig worker to that small business [wanting] to pull down [a] merchant settlement in the middle of [the] day, we facilitate through Visa Direct.</p><p>We also took a tack a few years ago that high-value payments needed to be done differently. It was basically one solution that has been around for 40 to 50 years with Swift, and though they've done some great things to improve the infrastructure, we reimagined high-value payments and built out B2B Connect. That allows us to connect a bank in Kansas City to a bank in Ghana in Africa and do it directly versus [having] multiple correspondences [and] everybody touching the transaction with a lack of transparency.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDU2NzExOC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNzg2NDQxNH0.JZniVfFRMXs_SdRqz8pPb5jQiEFPufoClokQnu1RV_o/img.jpg?width=980" id="1f896" class="rm-shortcode" data-rm-shortcode-id="e352e538a6a61c3e71de20c850d17b07" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Kevin Phalen views the pandemic as the forcing factor toward the digitalization. </small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Photo: Visa</small></p><p><strong>On the idea of collaborative commerce — bringing suppliers and buyers closer together — how close are you to an actual unification of the different silos?</strong><br></p><p>What we do well is build networks. VisaNet is our core card network. B2B Connect is our high-value network. Visa Direct has a network. We connect all of those networks together. When we think about domestic accounts payable and accounts receivable, what traditionally has happened is organizations — whether they're financial institutions, whether they're fintechs — grew up on one side or the other. Fundamentally within business solutions, we believe we can connect accounts payable and accounts receivable providers together to build out that collaborative commerce environment.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="5">
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</div></p><p>[Look at] the work we're doing with a company called Billtrust, where we've built a Business Payments Network. It was built out of the concept of accounts receivable, but a key component of it is how we work with accounts payable people to make it easier for their buyers to pay their suppliers and take out the friction.</p><p><strong>Where does open banking fall into that equation of reducing friction between accounts payable and accounts receivable?</strong></p><p>If you think about the European model of open banking, it is very much access, exchange of data and information and payment infrastructure, so I think open banking itself probably accelerated things. We're here to look at how somebody wants to originate that payment, but also be able to handle it from a disbursement perspective. Whether it's account-to-account, card-to-card, card-to-account or account-to-card, we can sit in the middle between our networks, which is very much some of the concepts behind open banking.</p><p>And then obviously the other is the availability and exchange of data associated with open banking. Within business solutions, that exchange of data is critical because you need it for reconciliation, you need it for invoicing and the like. Our belief is we should be sitting in the middle of that.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="6">
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</div></p><p><strong>Do you then worry at all about open banking facilitating a circumvention of your network, or do you think Visa's network still plays a role as open banking evolves?</strong></p><p>I think it absolutely does. </p><p>I think the beautiful thing about open banking is it creates the ability for fintechs to work with financial institutions, to accelerate how they're thinking about payments as well. Look at the great things that have emerged out of Europe. Now, here in North America. Singapore is another example. The fintechs are embracing this new environment; they're bringing these new features and functions into financial institutions and helping to facilitate those payments appropriately. I think competition's a good thing. It challenges us all to innovate. Visa is fundamentally a technology company based on innovation, and we're going to continue to do that.</p><p><strong>Continuing on innovation, as you're looking toward 2021, where are you focusing your efforts?</strong></p><p>I think in the card space, with some of the small businesses, it's all about virtual and expansion acceptance, especially outside of North America. Everything that we can do for contactless and mobile payments, we're going to continue to accelerate those. We're going to continue to drive Visa Direct connectivity around the world. When I think about high-value, non-card-based transactions, it's all going to be about expanding the network and expanding the use cases in which we're operating. And then lastly, the third component is this idea of collaborative commerce between buyers and suppliers. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="7">
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Kevin McAllister ( @k__mcallister) is an associate editor at Protocol, leading the development of Braintrust. Prior to joining the team, he was a rankings data reporter at The Wall Street Journal, where he oversaw structured data projects for the Journal's strategy team.
Protocol | China
More women are joining China's tech elite, but 'Wolf Culture' isn't going away
It turns out getting rid of misogyny in Chinese tech isn't just a numbers game.
Chinese tech companies that claim to value female empowerment may act differently behind closed doors.
Photo: Qilai Shen/Getty Images
January 27, 2021
Shen Lu is a Reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.
January 27, 2021
A woman we'll call Fan had heard about the men of Alibaba before she joined its high-profile affiliate about three years ago. Some of them were "greasy," she said, to use a Chinese term often describing middle-aged men with poor boundaries. Fan tells Protocol that lewd conversations were omnipresent at team meetings and private events, and even women would feel compelled to crack off-color jokes in front of the men. Some male supervisors treated younger female colleagues like personal assistants.
Within six months, despite the cachet the lucrative job carried, Fan wanted to quit.
A woman we'll call Zhang had a similar experience at her former employer, Baidu. She told Protocol that senior colleagues joked that Zhang and her younger female coworkers were hired to "please their eyes."
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Alibaba and Baidu look and act like they value female empowerment. Alibaba, the ecommerce giant, hosts a <a href="https://www.alizila.com/speakers-talk-womens-empowerment-at-alibaba-conference/" rel="noopener noreferrer" target="_blank">Global Conference on Women and Entrepreneurship</a> every year. Its founder, Jack Ma, has <a href="https://www.youtube.com/watch?v=wUuEryO0ogg" rel="noopener noreferrer" target="_blank">positioned</a> himself as a champion for women and has repeatedly said that Alibaba <a href="https://www.qianzhan.com/people/detail/271/140925-908063c9.html" rel="noopener noreferrer" target="_blank">owes its success to its female workers</a>. Ma has touted the company's <a href="https://ishare.ifeng.com/c/s/7pVlMyNV25i" rel="noopener noreferrer" target="_blank">relatively hefty share</a> of women in top management — currently, <a href="https://www.alibabagroup.com/cn/about/leadership" rel="noopener noreferrer" target="_blank">six out of 14</a> of the most senior roles are staffed by women. Search engine behemoth Baidu, too, likes to<a href="http://d.youth.cn/newtech/202012/t20201230_12640898.htm" rel="noopener noreferrer" target="_blank"> tout</a> its relatively high ratio — <a href="http://esg.baidu.com/Uploads/File/2020/06/18/u5eeb598d72472.pdf" rel="noopener noreferrer" target="_blank">46%</a> — of women in management.
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"Workplace equality is a core value of Baidu. Female employees account for 43% of Baidu's workforce and 46% of management. Women play significant roles as top executives of the company driving technology innovation and strategy," Baidu said in an email reply. Alibaba did not respond to Protocol's requests for comment.
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So why do women like Fan and Zhang have such a rough go of it?
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This is the terrible paradox at the heart of Chinese tech, one that will threaten its capacity to innovate in the future. A wave of Chinese women are joining elite tech companies and their boardrooms, often in numbers that compare favorably to tech industries abroad, but it turns out that getting rid of sexism is far more than a numbers game. Women in Chinese tech are marginalized, demoralized and exhausted. When they get home, they're still expected to shoulder most of the childcare and household chores.
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The result: Those who manage to ascend have to learn to play — and win — a man's game. This paradox is going to sharpen as more women enter tech and become aware of gender inequality.
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Women are increasingly populating Chinese tech offices. Data shows that some of China's biggest internet companies, including <a href="https://pic2.zhimg.com/80/v2-64ca7bcc8aa012b59dbd90cdb6c7b809_1440w.jpg" target="_blank">ByteDance</a>, <a href="http://esg.baidu.com/Uploads/File/2020/06/18/u5eeb598d72472.pdf" rel="noopener noreferrer" target="_blank">Baidu</a> and ride-hailing giant <a href="https://www.yicai.com/news/5260027.html" rel="noopener noreferrer" target="_blank">Didi Chuxing</a>, each employ at least 40% female staff. By way of comparison, <a href="https://www.statista.com/chart/4467/female-employees-at-tech-companies/" rel="noopener noreferrer" target="_blank">statistics show</a> that female employees fill between 28% and 42% of roles at America's five largest tech companies. In India, women make up <a href="https://go.451research.com/women-in-tech-india-employment-trends.html" rel="noopener noreferrer" target="_blank">34%</a> of the tech workforce; in the U.K., the figure is <a href="https://technation.io/insights/diversity-and-inclusion-in-uk-tech-companies/" rel="noopener noreferrer" target="_blank">19%</a>.
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Women have also made it into Chinese tech leadership. <a href="https://www.svb.com/trends-insights/reports/women-in-technology-2019" rel="noopener noreferrer" target="_blank">Seventy percent</a> of Chinese startups have at least one female executive, a higher proportion than companies in the U.S., U.K. and Canada, according to a 2019 survey conducted by Silicon Valley Bank. And more than 1,000 women have<a href="https://xw.qq.com/cmsid/20200308A0L9J400" rel="noopener noreferrer" target="_blank"> made it into the boardrooms</a> of China's public tech companies, according to a study conducted by Tianyancha, a data technology service company.
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Yet Alibaba and Baidu are not the only "greasy" companies. Leading Chinese tech firms, including Tencent, have posted job ads depicting their female employees as "pretty" or "goddesses" to attract male candidates, according to a <a href="https://www.hrw.org/report/2018/04/23/only-men-need-apply/gender-discrimination-job-advertisements-china#_ftn99" rel="noopener noreferrer" target="_blank">2018 Human Rights Watch report</a>. In 2017, WeChat's parent company Tencent apologized after <a href="https://www.sixthtone.com/news/1815/video-of-women-on-their-knees-deals-blow-to-tencent-image" rel="noopener noreferrer" target="_blank">footage emerged</a> of a corporate event where female employees were kneeling while using their teeth to open water bottles placed between men's legs. A <a href="https://www.digitaling.com/articles/16221.html" rel="noopener noreferrer" target="_blank">2012 job ad</a> for food-delivery group Meituan declared that "finding a job equals finding a woman," featuring a suggestive image of a thong hanging between a woman's legs. "Do what you most want to do," the ad concluded, using a verb for "do" that colloquially means "fuck." In the years since, Meituan has repeatedly depicted young women in its promotional ads as <a href="https://www.yunyingpai.com/extend/518996.html" rel="noopener noreferrer" target="_blank">food on the plate</a> for delivery.
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In gender studies, the <a href="https://tidsskrift.dk/scandinavian_political_studies/article/download/32616/30682" rel="noopener noreferrer" target="_blank">theory of critical mass</a> hypothesizes that deliberative bodies must be made up of at least <a href="https://www.un.org/womenwatch/daw/egm/eql-men/index.html#:~:text=Women%20have%20gained%20the%20right,States%20of%20the%20United%20Nations.&text=The%20figure%20of%2030%20percent,content%20of%20political%20decision%2Dmaking." rel="noopener noreferrer" target="_blank">30%</a> women to impact policymaking. But at least when it comes to tech, it's clear that neither a high percentage of female execs nor a workforce approaching gender parity equate to workplace equality. Julie Yujie Chen, who teaches at the University of Toronto and has researched the experience of Chinese women in tech, doesn't believe the presence of more women executives in a Chinese tech company will work in favor of female employees. "Women in tech is not a representation issue," she told Protocol. "It is about challenging the norms."
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Lin Zhang, an assistant professor at the University of New Hampshire who has interviewed dozens of female entrepreneurs in China's tech companies, said many of the women who thrive in this ultra-competitive, male-dominated industry not only have become resigned to workplace masculinity and sexism, but have internalized it. "Because of the generally hostile gender culture in China, there's not much solidarity among women," Zhang said. "Now that they're up there, they feel like, 'I have paid my dues. It's your turn.'"
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Alibaba's Fan echoes this: "Although women are much present in Alibaba's senior management, they all have transformed themselves to be greasier than the men. That's how they entered that powerful circle."
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Shi is a 30-year-old manager of a content-producing team at Nasdaq-listed video-sharing platform Bilibili. Like Fan and the other female tech workers interviewed for this story, she spoke to Protocol on the condition that she be identified by a pseudonym to avoid retaliation from her employer. Shi said the women in her company leadership "completely subscribe to the 'wolf' mentality. They are just as territorial, aggressive and exploitative as the men."
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One result is tech products that objectify women and reinforce gender stereotypes, at least in the way they are marketed and used. Didi Chuxing is helmed by a woman — company president Jean Liu — and Didi's staff was <a href="https://www.yicai.com/news/5260027.html" rel="noopener noreferrer" target="_blank">40%</a> female in 2017, the most recent year for which statistics are available. However, it encountered scandal with Hitch, a carpooling service launched in 2015 that suggested hookups between drivers and passengers in its 2018 <a href="https://new.qq.com/omn/20180828/20180828A08PZK.html" rel="noopener noreferrer" target="_blank">ads</a>. Two female Hitch passengers were <a href="https://www.nytimes.com/2018/08/26/business/didi-chuxing-murder-rape-women.html?smtyp=cur&smid=tw-nytimesworld" rel="noopener noreferrer" target="_blank">raped and killed</a> that same year. The general manager at Hitch was a woman named Huang Jieli.
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Even relatively "woke" Chinese companies demand a lot of their employees. A major culprit is Chinese tech's infamous 996 work schedule — 9 a.m. to 9 p.m., six days per week — which can wear workers down. I spoke with most interviewees after 10 p.m. in China, after they had finished a long day's work. Message alerts from colleagues often interrupted our conversations.
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This work culture further disadvantages women because of the larger milieu in which they live. Women still shoulder most of the childcare and housework burden in Chinese households. A 2019 National Bureau of Statistics <a href="https://cnlgbtdata.com/files/uploads/2020/01/%E4%B8%AD%E5%9B%BD%E7%A4%BE%E4%BC%9A%E4%B8%AD%E7%9A%84%E5%A5%B3%E4%BA%BA%E5%92%8C%E7%94%B7%E4%BA%BA2019EN-final.pdf" rel="noopener noreferrer" target="_blank">report</a> showed that women spent more than twice as much time as men on unpaid household work. "The lack of reliable childcare service becomes a structural barrier for women to advance their career," said Chen, "especially in sectors like the tech industry."
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Although a large number of young Chinese women have joined tech, they are more likely to concentrate at the lower end of the skill and productivity spectrum, such as human resources, public relations and business operations. Programming, often the power center, remains a male-dominated division, with female programmers comprising only 10.4% of its ranks in 2020, according to a<a href="https://zhuanlan.zhihu.com/p/109185515" rel="noopener noreferrer" target="_blank"> report by Chinese digital working platform Proginn</a>. (In the U.S., figures range between <a href="https://www.statista.com/statistics/1126823/worldwide-developer-gender/" rel="noopener noreferrer" target="_blank">8%</a> and <a href="https://www.frgconsulting.com/blog/female-developers-workforce/" rel="noopener noreferrer" target="_blank">11%</a>.)
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Of course, China has its share of relatively egalitarian companies. Take ByteDance. While it spent last year at the center of U.S. controversy over data-sharing with Beijing, it's seen at home as valuing diversity and inclusion. Dong, who works in the ByteDance HR department, told Protocol she chose the company for its relatively egalitarian culture. It was the only prospective employer that did not inquire about her marital status when she was job-hunting in 2018, and the supervisor of the department she was interviewing for was a woman in her late 30s.
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But Dong thinks ByteDance is swimming against the tide. She says several senior female colleagues in her team still had to quit because they couldn't juggle work and childcare demands. It's not a problem unique to China, but female workers there are getting less help than in other countries. "Tech companies in other countries are trying to create a better environment for female workers who face similar social expectations," Dong said. "But in China, they won't specifically create supportive policies for you. The baseline is lower. It's like, 'I'm already doing well by not treating you badly.'"
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Shen Lu is a Reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.
People
The pandemic is doing to credit cards what iTunes did to CDs
Mastercard's head of digital solutions explains how the pandemic has upended the way we buy.
Mastercard's head of digital solutions says the pandemic has forced many consumers to reconsider how they think about paying for things, and thinks many of those changes will last.
Photo: Courtesy of Mastercard
June 26, 2020
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
June 26, 2020
How many times have you used your credit card since the pandemic started?
In just a few months, the pandemic has upended the way that many people are paying for things. People who rarely bought things online are now ordering all their groceries via Instacart, and the few times they've gone outside they've likely also turned to digital and contactless payment methods. Much of that behavior is likely to stick around once life returns to normal, according to Jorn Lambert, Mastercard's EVP of digital solutions.
<p>The trend away from cash and plastic toward digital payments was well underway before the pandemic. But plastic cards may soon be a relic in much the same way that someone who still collects CDs is seen as anachronistic. Do you still even have a CD player? </p><p>And this isn't just a developed-world trend, according to Lambert: Even countries that don't have the digital infrastructure of Square terminals and contactless receivers are going digital, through QR codes, wearables and simple smartphones. "We believe if anything, the unfortunate events of the past months will increase openness for consumers to take things further," Lambert said. "A lot of innovation will come from it over the years to come." </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
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</div></p><p>Protocol recently spoke with Lambert about the transformation taking place in the way we buy things, what industries are changing the most, and why the plastic credit card is the new MP3 player. </p><p><em>This interview has been edited for length and clarity. </em></p><p><strong>The pandemic seems to have forced people to change the way they pay for things. Is that what Mastercard is seeing?</strong></p><p>It is an amazing time indeed, for unfortunate reasons. We've been on a journey over quite a few years of moving from analog to digital in payments. Over the years we've been building towards a solution suite that enables that, but what we're seeing the last couple of months is a massive acceleration of that. At the beginning of the COVID crisis, people were shying away from "dirty" cash and adopting contactless in a very significant way across the world. </p><p>The only way for people to buy their necessary things was in ecommerce, and we saw ecommerce grow dramatically across the world. And as the lockdown eases and people go back to their normal lives, we don't think that they will go back to their old habits, because they've now gotten familiar to a different way of paying. We expect an enormous wave of growth in digital payments as economies return to normalcy. And we're already starting to see that: In April and May as the economy ticks up, digital spending is ticking up with a vengeance. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
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</div></p><p>What I've been very surprised with and actually encouraged by is that despite our partners being in lockdown and having to deal with crises within their own companies, they're really leaning into this. I had expected so many projects to be put on hold or delayed. The opposite is happening, and people are bringing things forward; this week's announcement <a href="https://www.yahoo.com/now/mastercard-brings-tokenization-amazon-ease-162504633.html" target="_blank">with Amazon</a>, but also today, we launched Xiaomi wearable payments in Russia for the first time, and did a release in Tanzania about QR payments. Across the world we see that plethora of activity as very encouraging because it helps people, it helps merchants to continue to operate.</p><p><strong>Those announcements highlight that there's quite a difference in the maturity of digital payments infrastructure around the world. How do you manage that?</strong></p><p>In a way, technology is a leveler. So even in Africa, for example, smartphone adoption is increasing very fast. You're talking about $70 smartphones that can do pretty much the same thing as some high-end phones in developed markets.</p><p>The difference between all of those countries like Tanzania and some of the developed markets is the install base on the terminal side. In the U.S., for example, you have the terminals that can dip and swipe, and contactless is embedded so you don't replace the terminal, you just switch it on. In Tanzania, many merchants don't have any terminals and don't want the expense, and therefore a QR solution is more appropriate to get them going. Now, the U.S. is a little behind on contactless, but it's doing a very fast catch-up now. And I think with what's coming down the pipe, and with the impetus of COVID, we'll see vast acceleration as well. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
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</div></p><p>One of the things, which is a common thread across all markets, is this whole notion of tokenization — what we've just announced with Amazon — to replace the traditional 16-digit number that is on the card by a token (or a proxy) stored with the commerce platforms online. If a fraudster steals the proxy, they don't have access to the real card, and they can't do anything with that proxy because it's cryptographically linked to that merchant. So that device is highly secure, but it also vastly increases the convenience for the consumer, because if the consumer needs to replace the card, they do not have to replace the token stored online, that just happens automatically. That is something we're pushing across the world; we're now in 96 markets as of today with about 2,600 issuers.</p><p><strong>Why do you think it is that major merchants turn to you over your competitors for things like this?</strong></p><p>There's things that we do as an industry, so the token standards, for example, that have been developed as industry standards: Visa has the same structure token as us, and making the ecosystem secure as a whole is important to all of us. But where we then differentiate is in how we implement and how easily we make it available. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
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</div></p><p>One good example of that is last week we implemented, with Citibank, a token connect feature: A consumer, when they're on the Citibank app, can choose to link their cards to a certain merchant. What happens when the consumer does that, from the Citibank environment, they push a token, without the consumer having to fill out forms. These types of things make the friction for the consumer very low. Nobody wants to fill out forms on the internet. That's just how we differentiate, making sure that beyond the security, we provide the smoothest experiences, the easiest ways for our partners to scale.</p><p><strong>How does that compare to your recent tie-up with Samsung and the Apple Card?</strong></p><p>That's in the same vein, but there's a nuance to that. We've grown up as a plastic company, and for the last couple of years, we've introduced digital versions of plastic, but the digital version is a companion of the physical. The world is becoming digital-first — the notion that you need plastic first and to digitize is no longer necessary. </p><p>I kind of compare it to the transition of music. You used to have CDs, and then those CDs we used to load up into an MP3 player, but, the physical was still always there. It's only later that we said, "Who needs the CD? Let's just have the MP3 player." </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="5">
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</div></p><p>In payments, it's the same. The physical is optional — and it's still quite useful because there's too many places that need the physical card. So with the Apple Card, and now with <a href="https://news.samsung.com/us/introducing-samsung-money-samsung-pay-sofi/" target="_blank">Samsung Money</a>, we've decided to go digital-first. And that means the consumer can apply for the cards on the app, they can be approved instantly, and instantly provisioned with the credential. They don't have to wait three weeks for this to come in the mail — they can pay three seconds after they've finished their application with a digital credential. And if they opted into a physical card, it will come in the mail. In addition, all of the information can be found in the app, so you don't need the number, the expiry date or security codes on the card anymore. </p><p>It's very quickly becoming a standard way of operating, and it's indicative of how the world is changing, and how we are leaning in, rather than hobbling behind a trend. It's serving us well because it's what consumers want, and certainly with COVID now, we'll see much more of that than before.</p><p><strong>The MP3 player is pretty much a relic at this point. How long do you think it'll be before the same is true of physical cards? Has your thinking changed at all because of the pandemic?</strong></p><p>We don't dislike the physical card. The card is not necessarily a bad thing — it's not an objective for us to make it disappear. Our objective is to enable consumer choice and make things easy for them. And the world is a big place. There are 40 [million] to 50 million merchants with physical terminals where you need some form factor for your credential. So I think it'll be a long time — I might have a long white beard, and I've shaven this morning. But I think we'll see it faster in certain categories than others. I think in transit, for example, it'll go really fast, in quick-service restaurants, you'll see moving to contactless and digital very fast. But before you can pay with digital for your trip to Botswana or to the Argentine Pampa, it could take a while. And that's OK: Everything we do is always backward-compatible, and we want to make sure that consumers are not stranded somewhere.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="6">
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</div></p><p><strong>Are there any areas where physical cards or cash is still going to be a necessity for a long time yet? </strong></p><p>There are definitely countries and segments where cash is very prevalent and where without access to cash, you'd be in a tough place. Even in the U.S., in farmers markets — although things like Square dongles are now quite common — you can find sometimes that cash is useful. If you go to developing economies, cash is still very much present. There's other countries on the other extreme like Iceland or the Nordics, where electronic forms of payments are very ubiquitous, and cash is a small minority. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="7">
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</div></p><p>One of the big objectives for us is to make sure that consumer choice exists. If a consumer wants to move into electronic payments, we help them with digital and financial inclusion. People who are stuck in the cash economy can never build up credit history or creditworthiness, can never get access to lending, so they couldn't set up a business. That's why a big initiative for us is financial inclusion and making sure that electronic records are being created for them to move up the social ladder.</p><p><strong>I've got to believe it must be tough to set up businesses during the pandemic, but those digital solutions would make it easier than if this had happened 10 years ago?</strong></p><p>True. For us, the pandemic has not created, but has accelerated, a more secular trend towards digital. It's something that we luckily were well-prepared for because we've been working on it for years. We already moved to a digital-first mentality, but now seeing our partners really leaning in and, and deploying solutions for consumers is great to see.</p><p>With consumers being much more comfortable now with digital solutions, I think they'll be more open to things like machine-to-machine payments, like your car independently paying for the parking or for the toll, and 5G applications coming down the line. We believe if anything, the unfortunate events of the past months will increase openness and preparedness for consumers to take things further, and a lot of innovation will come from it over the years to come.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="8">
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Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
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