Protocol | China
The people, power and politics of Chinese tech, every Wednesday.
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The huge cost of censorship at scale

The huge cost of censorship at scale

Good morning from sunny, 70-degree San Francisco! This week in Protocol | China: a view from inside ByteDance's vast censorship machine, a China-free tech supply chain, and digital currency wallets that look like pandas.

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The Big Story

"I was helping to bury myself in China's ever-expanding cyber grave."

Ever wondered what it's like to build a formidable censorship system? Protocol | China's Shen Lu has this insider account from a former member of the tech team behind ByteDance's vast control apparatus.

ByteDance is part of a shadowy content moderation industry that's vital for all big tech companies looking to stay in Beijing's good graces. Shen Lu's report shines a light on a number of things about the TikTok and Douyin parent, which is contemplating an IPO and reportedly seeking a pre-IPO valuation of $180 billion.

  • As of early 2020, ByteDance employed or contracted 20,000 Douyin content moderators that work at several "bases" throughout China.
  • ByteDance's Trust and Safety team, which oversees content moderation for Douyin, had 50 staff on its product team and 100 to 150 software engineers on its tech team.
  • The anonymous source received multiple requests to build an algorithm that would automatically detect Uyghur-language Douyin livestreams and cut them off; that product was ultimately not built.
  • Meanwhile, some big-name influencers are white-listed and left alone; their compliance is assumed.

The big problem with censorship at scale is that it's inherently risk-averse, so inevitably over-inclusive.

  • Censorship is expensive, and being over-inclusive also reduces human labor costs.
  • And some sweeping suggestions reflect the cultural blind spots of censors. For example, since most content moderators don't understand Uyghur, they cannot monitor it closely for "dangerous" speech, so some would prefer to just cut off the language entirely.
  • Marginalized groups like Uyghurs in China would only get more marginalized as a result of practices like that. Meanwhile, powerful people who know the "unwritten rules" get an even bigger megaphone.

The next censorship frontier: audio. With so many Chinese companies trying to create Clubhouse-like audio drop-in apps, expect audio censorship moderation companies to receive more funding.

  • It's worth noting that moderation of live audio experiences such as Clubhouse comes with its own challenges. But expect China to be ahead of the curve on making it happen.

Up Now on Protocol | China

  • Meet the "village chief" of China's digital ghost town. Billionaire Wang Xing is CEO and founder of Meituan, one of China's biggest tech companies. So why is he still obsessed with an obscure social media platform he founded a generation ago? Zeyi Yang explains how failed social platform Fanfou became Wang's own version of Clubhouse.
  • Jingdong Logistics prepares for its Hong Kong IPO. Here's everything you need to know about the company that aspires to be China's Amazon and dominate a Chinese logistics market that could reach $3 trillion in spending by 2025.

Big Brother Beijing

  • Beijing finalized its online lending rules. The China Banking and Insurance Regulatory Commission will pour cold water on China's frothy online lending sector: Finance platforms like coulda-been IPO darling Ant Financial will need to pony up 30% of their own capital for a loan, way up from the 2% to 4% they've been contributing. Banks won't be able to use more than 50% of their ready (Tier 1) capital for internet loans and can't use more than 25% on any one platform. The rules will take effect in July 2022.
  • Cool ways to store your digital yuan IRL. Most digital currency wallets look like sleek gadgets. Not so in China: State-owned banks in China have been rolling out hardware wallets for China's Digital Currency Electronic Payment that vary wildly, from panda keychains to gloves to walking canes, reports PingWest. After all, a digital currency wallet doesn't actually need to look like … a wallet. It's part of a state effort to make fintech more inclusive, particularly for elderly users.

A MESSAGE FROM INTEL AND MICROSOFT AZURE

Azure Intel

For corporate IT managers, there are many motivations to move dynamic workloads to the cloud. It provides an irresistible trifecta of flexibility, scalability, and costs savings for those managing varying workloads. Here's how to keep your data safe while it's in the cloud.

Read more.

China Goes Global

  • ByteDance hops into global finance. Chinese tech publication 36Kr reported Tuesday that ByteDance is set to launch an overseas wealth management arm called "Stellar Fortune" that will serve clients in Europe, the U.S., Japan and elsewhere. Last year, ByteDance was reported to be applying for a digital banking license in Singapore. In the meantime, ByteDance has also applied for licenses to open an online stock brokerage called Squirrel Securities in Hong Kong.
  • Singapore's sovereign wealth fund invested in a Chinese SaaS play for manufacturers. Black Lake Technologies just raised $77 million in a Series C led by Temasek, as it looks to expand deeper into China and Southeast Asia. The firm's factory management platform is easy to use, about one-tenth the price of foreign competitors, and a good fit for the many small factories dotting China and Southeast Asia that haven't entered the digital age. "When Chinese factories 'wake up,'" founder Zhou Yuxiang told TechCrunch, "their speed of digitization will definitely leapfrog that of their American and European counterparts."
  • Toward a China-free U.S. tech supply chain. Nikkei Asia reported Wednesday that President Biden is prepared to sign an executive order that would "order the development of a national supply chain strategy" to make semiconductors and other important products like medical devices less reliant on supply chains that run through China. Taiwan, Japan and South Korea are reportedly partners in this effort.
  • Chinese private equity firm readies an SPAC listing. The Information reported Wednesday that Beijing-based Hony Capital plans to apply to list a $300 million special purpose acquisition company on Nasdaq. It will seek out companies with a "significant presence" in China with a particular focus on health care and consumer goods.

One Company You Should Know

Dingdong Maicai is already at your door.

The Chinese grocery delivery company backed by Sequoia Capital is considering a U.S. public offering this year, according to Bloomberg. The app is just three years old but made an aggressive expansion last year, moving into 27 cities amid heated competition in the huge grocery delivery sector. No one company has yet dominated the crowded field, and Dingdong Maicai is likely banking on an early IPO to raise enough money to outspend other competitors, some of which are backed by giants Tencent or Alibaba. Dingdong receives more than 850,000 daily orders — all mobile. It doesn't even have a website.

Straight From China's Web

  • China has "more than 100 teams" trying to make a Clubhouse clone, PingWest reported Tuesday. That includes Duihuaba (对话吧), or "Dialogue Bar," produced by streaming platform Inke, which its builders say took four days to produce. The app's project leader told 36Kr that he asked Inke's C-suite on Feb. 3 whether he should make a clone. By that evening, the COO gave him an answer: "Start now." It recently removed the app from stores for undisclosed reasons.
  • Every Chinese tech firm wants to make your electric car. Last Friday, rumors hit that smartphone maker Xiaomi planned a move into the auto industry. They're just the latest tech firm to venture (far) outside of their original core competency. In January, carmaker Geely inked a deal with Baidu to make smart electric cars, with the first model due to launch in 2022. Alibaba is working with China's biggest automaker, Shanghai-based SAIC Motor, on a similar venture, which already released a sedan with wireless charging in January.
  • A Lalamove customer dies. The Hong Kong-based on-demand logistics company — think Uber meets U-Haul — completed its series F fundraising in January at a $10 billion valuation. Reports from January say the company is mulling a foreign IPO, which probably means Nasdaq. But the company's under fire after the tragic death on Feb. 6 of a 23-year-old woman in the southern city of Changsha, who jumped out of the moving truck she'd ordered on Lalamove and fell to her death. The victim's family questioned why the truck driver, who has been arrested, deviated from the designated route. They also asked why Lalamove doesn't install cameras or recorders in its trucks. Lalamove quickly settled with the family and apologized.

A MESSAGE FROM INTEL AND MICROSOFT AZURE

Azure Intel

For corporate IT managers, there are many motivations to move dynamic workloads to the cloud. It provides an irresistible trifecta of flexibility, scalability, and costs savings for those managing varying workloads. Here's how to keep your data safe while it's in the cloud.

Read more.

One More Thing

Monkeying around with facial recognition.

According to a local television station in Shaanxi province, researchers from China's Northwest University are using artificial intelligence to identify 4,000 golden snub-nosed monkeys, an endangered species unique to China, living in the region. Once the technology is mature, it will be deployed in the wild via infrared cameras that will automatically recognize the identity of each monkey and track its behavior.

Recent Issues

Lobbying, China style