February 23, 2022
Photo: Wang Yukun/Getty Images
In this week’s newsletter: the Big Tech selloff amid new tech regulations, a new campaign to build data-processing capacity in China, and AirDrop activism that was induced by censorship.
China’s regulatory moves against tech are continuing into 2022 — but in a more technical, granular way, just as we predicted. While the Olympics were winding down, ramped-up news and speculation about further restrictions in two sectors — food delivery and gaming — spooked the market, causing Tencent, Alibaba and Meituan to shed $96 billion in market value.
In addition to imposing harsh limits on the amount of time young gamers are allowed to play, the National Press and Publication Administration last summer also suspended the approval process for new games. More than seven months later, that hiatus is still going on — and rumors are that the suspension will last throughout 2022.
Food delivery has also been hit hard. Chinese regulators began issuing new guidance last summer asking internet platforms to treat delivery workers better. This time, regulators dropped the hammer.
China boasts both the world’s largest video gaming market and the world’s largest food delivery market. Investors are clearly concerned about future crackdowns that will have a great impact on how China's internet giants conduct their business activities, which could trigger more market volatility down the road.— Shen Lu (email | twitter)
Protocol’s AJ Caughey tracked all gaming licenses China issued from 2009 to 2022 to assess how approvals changed over time, using data collected from AppInChina.
The current hiatus on approvals isn’t the first freeze. In 2018, the NPPA suspended issuing licenses for several months. Just before the first moratorium, approvals were booming — the number of games published grew exponentially, and even foreign games were regularly approved. Since 2019, though, approvals have dramatically dropped, with foreign approvals becoming even more rare.
When, or if, NPPA begins approving licenses again, there’s no guarantee it will issue as many approvals as they did in 2020. It’s not game over, but new approvals may well be a trickle rather than a flood.
The global nature of business makes tracking your company's operations trickier than ever before. Overseeing supply chains and an international, dispersed workforce is tough. Maintaining visibility over all aspects of your operations is even tougher. The changing norms of business make location services no longer a "nice to have" but a "need to have" — and at the forefront of the geospatial intelligence revolution is Esri.
The U.S. added Alibaba and Tencent sites to its list of “notorious” counterfeit markets. The two ecommerce services were included in an update of the Review of Notorious Markets for Counterfeiting and Piracy, a list maintained by the Office of the United States Trade Representative. Zeyi Yang explains the significance of the move.
The death of a content moderator has reignited overwork debates. Unlike some other overworked workers who power the Chinese internet services, content moderators’ plight was nearly unknown to the public until the recent tragic death of a worker at Bilibili. Shen Lu has the story about the aftermath and the industry practices that overburden armies of censorship workers who keep all social platforms running.
“Data from the East, Computed in the West.” China officially launched a campaign to build up data-processing capacity in its western regions, the NDRC announced last Thursday. Conceived in 2020, the 东数西算 (roughly translated as “Data from the East, Computed in the West”) campaign wants to build data centers in China’s less-developed Western provinces, taking advantage of cheap energy and low real estate costs. The scheme highlights Beijing’s push for data infrastructure and resource redistribution in the digital era.
Alibaba’s connections are under scrutiny, again. Beijing recently asked Chinese state-owned enterprises to check their investments in and other links with Ant Group, Alibaba’s fintech arm, Bloomberg reported Monday. After Ant Group’s thwarted IPO in 2020, the company has been subjected to a massive overhaul to meet regulators’ demand.
Tax authorities raided Huawei’s India offices. Several India-based offices of Huawei were searched by the Indian tax authorities last week, Reuters reported. Local media said officials inspected and seized Huawei’s company records as part of a tax evasion investigation. The news came shortly after the Indian government banned 54 more Chinese apps for security concerns. While Huawei said it would “fully cooperate” with local authorities, Beijing appears more upset. A Ministry of Commerce spokesperson said the ministry is deeply concerned about India’s “suppression of Chinese firms.”
China is poised to produce globally prestigious games. China’s gaming industry is still known for producing microtransaction-hungry mobile games, but that may change soon. A report at Polygon unpacks the ambition of Chinese game studios to make globally recognized blockbuster games and how they are gradually reaching that goal with recent successes such as Genshin Impact and Naraka: Bladepoint.
Censorship induces AirDrop Activism.As censorship mounts around a human-trafficking case that has gripped the entire country for over a month, Chinese web users are turning to creative ways to continue the campaign of saving the victim, a mother of eight chained in her own house. Social media users reported that they received photos calling for continued investigation into the trafficking case through Apple’s AirDrop function while riding subways in China. Hong Kong protesters used similar organizing tactics in 2019 to breach the firewall.
Metaverse. Metaverse. Metaverse. Everyone wants to ride the metaverse wave. Chinese financial publication Yicai reported that over 16,000 entities filed metaverse-related trademark applications over the past year. China’s intellectual property authority warned against “malicious” trademark registrations that have nothing to do with the technology at all, and the hottest sector in China is bound to face regulation. A metaverse trade group published an industry “self-regulation convention" this week, proposing that metaverse business serves the real economy and resists speculative capital, which could lead to market bubbles.
A small win for tech workers. Regulators recently imposed a meager 3,250 RMB ($514) fine on the parent company of Qunar.com, a Beijing-based Chinese online travel agency, for overworking employees in violation of China’s labor law, according to Caijing magazine. The company said workers agreed to work on holidays and it compensated them for overtime, but it still acted unlawfully because workers clocked in more overtime than the law allows. Though the fine was negligible, it still garnered much attention: It’s novel for a tech company to face any penalty for overworking employees because up until recently, employees working after hours and on vacations was common practice not only in tech but across sectors.
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