China

Is China killing its social commerce golden goose?

No. But Beijing makes sure livestreamers are in check.

A screenshot of Huang Wei (Viya)

Viya, 36, was one of the most celebrated influencers in China. It took one day for her to disappear from the public view.

Screenshot: Protocol

For five years, Viya was the face of China’s $363-billion livestreaming sector. She was a billionaire with a powerful social commerce empire and emerged to become a political icon. Until suddenly, just days before Christmas, she became a national subject of scorn: The top Chinese ecommerce influencer was fined a whopping $210 million for tax evasion, and her online presence was completely erased.

The downfall of China’s livestreaming queen signals Beijing’s determination to play catch-up in regulating the booming live ecommerce sector that not only is shaping China’s digital economy but also is defining the global live ecommerce landscape.

Beijing routinely cracks down on tax evasion by celebrities to keep industries in line. The fine imposed on Viya, however, was higher than any previous fines on high-profile entertainers. Given Chinese authorities’ year-long strikes against ecommerce, online education and gaming throughout 2021, many observers wondered: Is Beijing killing the live commerce golden goose?

The short answer is: No. Livestreaming sales not only have become an integral part of ecommerce, but also are now economically critical to China’s agriculture and manufacturing sectors. But the impact is still widespread. Since Viya’s success is emblematic of Chinese ecommerce giants’ growing commercial power and social influence, “this severe punishment reinforces authorities' stance of reining in the disorder, [or] barbaric growth in the online ecosystem,” Xiaomeng Lu, a director in Eurasia Group's geo-technology practice, told Protocol.

Taobao, a subsidiary of ecommerce giant Alibaba, first introduced live commerce in 2016. The innovative approach to sales now accounts for more than 30% of China's entire ecommerce business — while the figure for the United States is only 3%. The streamers play a critical role, linking consumers and suppliers. Many of them live broadcast for hours uninterrupted, entertaining hundreds of thousands of viewers while selling heavily discounted products in real time.

Since 2016, Viya has emerged to become a strong sales force and one of the sector’s most celebrated entertainers. In 2020, she sold $31 billion worth of goods, including a rocket-launch service, on her livestream show. This was an annual gross transaction volume larger than that of the most profitable shopping mall in China.

Her exponential success in the live commerce sector earned her not just wealth but also social and political prominence. With a net worth of $1.25 billion, she ranked among China's wealthiest 500 individuals in 2021. And the state promoted her to a public figure who embodied virtues of a self-made female entrepreneur.

Looking back, however, Viya’s fall from stardom was not entirely unexpected. About a month before Viya was named and shamed, two other less-prominent live commerce influencers, Zhu Chenhui and Lin Shanshan, together were fined $15 million for tax evasion. Last September, the State Administration of Taxation encouraged livestreaming influencers to self-report and “timely correct tax-related problems” by the end of 2021 to avoid harsh punishment. The notice had prompted more than 1,000 influencers to pay back taxes, according to state news agency Xinhua. But Viya failed to see which way the wind was blowing.

Though the mega-fine on one of the most high-profile Chinese influencers caught insiders as well as observers off guard, experts don’t think Beijing’s move means reversing the broader industry trend favoring the livestreaming sales model.

Viya’s stellar commercial and political ascendancy collided with Beijing’s pursuit of policies to stimulate the rural Chinese economy with ecommerce, modernizing agriculture and digitizing traditional manufacturing. Her abilities to promote agriculture products from far-flung regions made her a quasi-ambassador for the industry’s "poverty alleviation” agenda. Last October, she won a prestigious National Poverty Alleviation Award for helping sell farm products on her platform.

“Livestreaming sales is here to stay and will continue to grow,” said Xiaofei Han, who researches social commerce in China at Carleton University. “It has tremendous economic potential … It drives spending and generates employment, but the state is going to standardize industry practices to ensure its long-term, healthy growth.”

An unintended consequence of subjecting dominant influencers like Viya to deep regulatory scrutiny could be redirecting traffic and businesses to less-prominent influencers, experts say. But the change may take a while to materialize. Viya’s tax evasion enraged the public, which has been keenly critical of individuals and companies accumulating tremendous power and wealth since Ant Financial’s IPO fiasco in late 2020.

“It takes a long time for influencers to build trust with their followers, “Han said. After Viya’s descendancy, “it could take an equally long time for her colleagues to regain public trust in their business practices.”

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins