Good morning! It's a busy week, so we'll cut to the chase. In this week's Protocol | China: how China's tech incumbents can benefit from stringent censorship, meet a livestreamer-turned-politician, and Tencent's new West Coast office.
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The Big Story
Censorship is a big business, and a built-in advantage for China's tech incumbents
In a remarkable interview with Protocol | China last Friday, a former censor in China named Liu Lipeng dished on how Chinese censorship has evolved since he started working in the field nearly a decade ago.
- China's "red line" has shifted, Liu said. Gone are the days when you could probably badmouth China's leadership online and get away with it, as long as you a) weren't famous and b) your comment was unlikely to turn people out on the streets.
- Pathbreaking research published by Harvard scholars in 2013 showed that Chinese censors mostly feared "collective action" in real life, but Liu says these days, anyone deviating from mainstream political ideology is "damned."
Don't assume censorship is the enemy of Chinese big tech. Sure, it's an (unprestigious) cost center, many censors don't enjoy their work and Chinese tech companies sometimes push back (or play dumb). But because the Chinese government delegates censorship to major tech companies — and even requires them to develop their own lists of censored words they think the government won't like — it's also become an obstacle to smaller upstarts that can't fund elaborate censorship regimes.
- Liu told Protocol that each company keeps its own banned word list, which has become a "proprietary asset." Think of it as the dystopian equivalent of KFC's secret fried chicken recipe.
- ByteDance in particular has invested heavily in censorship, Liu says, with "at least 10,000 content moderators in Tianjin alone."
- The payoff: Incumbents that master the censorship game face lower regulatory risk, and have added protection from new competitors — who will have to build their own censorship operations, including those word lists, from square one.
Big tech may benefit from delegated censorship, but Beijing surely does. Ambiguity is a feature, not a bug, of the censorship apparatus. Pervasive doubt about what's allowed and what isn't among users and tech companies ensures that most companies go further than the government would strictly require — and that they remain on their toes, constantly expending energy wondering what's allowed and what isn't.
On Protocol | China
- China's top livestreamer is becoming a politician too, whether she likes it or not. Huang Wei failed in her bid to become a TV star in the early aughts, but she has a knack for a newer medium; the 36-year-old, now known as Viya, is China's top livestreamer and a billionaire. Beijing has noticed, and is increasingly using the star to push rural ecommerce, which it sees as key to its poverty alleviation efforts. Shen Lu has more.
- Let's compare Biden and Trump's China blacklists. Some Beijing policymakers hoped (naively) for a "reset" in bilateral relations under President Joe Biden. Instead, his administration has largely pursued his predecessor's tough-on-China policy, and last week it lengthened the list of Chinese surveillance and defense companies in which U.S. investment is banned. Zeyi Yang breaks down who's off, who's on and why.
Big Brother Beijing
- Xiaohongshu's June 4 misstep. On the 32nd anniversary of the Tiananmen Square massacre, popular social media platform Xiaohongshu's Weibo account — with over 14 million followers — got shut down. According to The Wall Street Journal, it was all because of a weekend post ("Tell me loudly, what is today's date?") that happened to be sent on the most sensitive day on China's calendar. At the time of writing, Xiaohongshu's account is still unavailable for "suspected violations of laws and regulations." Not yet revealed: whether a rogue employee wanted to make a point, or whether whoever wrote the post had no idea that Tiananmen was a thing. (Our money's on the latter.)
- China's provincial-level governments have become data privacy champions. Last month, Protocol reported that China's Personal Information Protection Law could introduce data privacy protections stronger than those found in the U.S. Now, China's provincial-level governments are starting to lay out their own data privacy regulations, with Fujian releasing a draft on May 26 and Shanghai organizing a data privacy law symposium on May 27 to discuss how to legally use personal data. And on June 1, the city government of tech hub Shenzhen released a new draft regulation for data privacy and protection that levies hefty fines — up to $7.8 million, or as much as 5% of a company's revenue in the prior year — for improper data collection and usage.
- No more $0.01 flash deals for grocery apps. Grocery delivery apps, including those owned by tech giants Meituan and Pinduoduo, recently got a finger-wagging from regulators telling them not to offer any "one-cent flash deals," reported Chinese publication LatePost. These used to be a powerful tool for platforms hoping to compete for customer traffic, but now the state has taken a strong stance against dumping amid a larger trend cracking down monopolistic tactics.
China Goes Global
Tencent gets busy on the U.S. West Coast
Chinese tech behemoth Tencent just opened another office in Playa Vista, California. It can house 300 employees and would double the size of its LA-based team, the Los Angeles Times reported. The new office will most likely be used to help Tencent pursue its goal of becoming a global gaming giant. In July last year, Tencent created LightSpeed Studio in LA to focus on making blockbuster console games. It also snatched Scott Warner from Ubisoft this year, who is recruiting console and PC game talent for a new studio.
One Company You Should Know
Anker returns home
Many of your favorite Amazon purchases come from China, but no single China-based Amazon seller has become as successful as Anker, the Shenzhen-based manufacturer churning out electronic accessories, especially chargers. Today, it has a market cap of $9.5 billion and continues to grow fast. Despite its Chinese origin, Anker is quintessentially global; it gets 98% of its revenues from outside of China. But Anker held its first-ever domestic product launch on May 25 in its home city Shenzhen, announcing plans to invest heavily in China's domestic market. After all, "a truly international brand cannot be absent in the Chinese market," Anker's CEO Yang Meng said, according to Chinese financial publication Jiemian.
Straight From China's Web
- ByteDance and Tencent are feuding. Last Friday afternoon, ByteDance dropped a PR bomb: a 50-page internal handbook documenting everything it says Tencent has done since March 2018 to hamper competition. The details are juicy, from WeChat blocking links to ByteDance-owned apps, to a screenshot of Tencent recruiting communication managers "who can quickly spread propaganda ...about competitors' improper behaviors." It's not news to anyone that ByteDance and Tencent have openly feuded for years, but this marks a significant escalation. ByteDance later deleted the post, and Tencent hasn't publicly responded. The next PR battle is probably not far off.
- A video gaming nostalgia hit. Combine the gameplay of Animal Crossing with late 2000s nostalgia, and you get Mole Manor, a mobile game that has gone viral over the past week. The game was a craze in the early era of social networks, attracting 50 million active users around 2010, but gradually lost its relevance as users migrated to mobile platforms. On June 1, it finally released a mobile version, resulting in 2 million iOS downloads on the first day, according to Chinese outlet DoMore. The players are mostly adults who want to revisit their childhood favorite.
One More Thing
QQ gets a new lease on life
What's cool enough for China's Gen Z? Not Douyin, despite counterpart TikTok's runaway success with young users abroad. Instead, China's Gen Z (or, "post-2000," as they call themselves) love QQ, the 22-year-old Tencent-owned communication tool. Despite being geriatric by the standards of the web, the messaging tool is reportedly introducing new features monthly to meet the ever-changing demand of its young users.