Good morning, and happy spring! Let's get right to the good stuff. This week on Protocol | China: a video game streaming monopoly emerges, Huawei becomes a patent farm and a Chinese Intel ad campaign manages to offend … well, everybody.
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The Big Story
Meet China's would-be all-women esports team
Team Fire is the latest, most serious effort yet to create an all-women's esports club in China, a nation that loves its video games. This team plays Honor of Kings, a mobile game pitting teams of five against one another, but it faces an uphill struggle against misogyny. (Read Zeyi Yang's full story in today's Protocol.)
It's not surprising that a female esports squad emerged in China. Every few years, a new team will pop up, hoping to take a new generation of female gamers to the top.
But Team Fire got off to a promising start. Created last October, it's the first mobile esports club for women in China playing on a professional level. And on March 12, it made history as the first with more than one female player to have won in a HoK tournament game.
- Since its first win, Team Fire has dropped six games in a row. Its chances of entering the major leagues this time around are now minimal.
The club is very self critical. Protocol talked to its founder, Linda Zhang, and star player, Guo Yujun. Both said their team had a lot of work to do to be ready to take on all-male competition.
- "For our club, you can expect that some games are just un-winnable," Zhang said. "There are many worries, but the only solution is to improve my skills first," Guo added.
What they didn't mention: Misogyny is baked deep into esports culture, particularly in China, and they're having to contend with that problem just as much as they are the characters in HoK.
- Some male gamers openly opine that women are "less competitive" due to their hormones, "can't stand" arduous training and belong as YouTube hosts, not gamers. Some of the comments online sound like they were made one hundred years ago.
- This hostile climate means female gamers are less likely to play against strangers, a practice that helps pros hone their craft.
- In China, championships for female players are also few, cash rewards are low and not enough investors bother to fund training for an all-female team. The result of all this is a vicious cycle.
This is a significant business challenge and a big social problem. China is the world's largest esports community and largest market: If women gamers feel unwelcome and don't see any pros who look like them, the industry's growth trajectory could take a hit.
- "If there are more tournaments and teams for females, that section of the market will grow too," analyst Lisa Cosmas Hanson of Niko Partners told Protocol. "As with all sports competitions in history, it seems like the initial path was laid for males, and females march along after."
- Chinese digital life is rapidly taking over "real" life, and esports is an ever-larger part of online life. How women gamers get treated is increasingly the story of how women are treated — and China is moving backwards, not forwards, on that score.
On Protocol | China
- Beijing is souring on facial recognition — unless it's the one doing it. Chinese citizens are irate after state media exposed how hundreds of thousands of cameras at shops nationwide are hoovering up facial recognition without people's consent. Beijing is cracking down on the technology, while reserving the right to use it however it pleases. Zeyi Yang has more.
- A possible thaw in Alibaba and Tencent's cold war. Alibaba's Taobao Deals looks likely to reach an agreement to appear on Tencent's WeChat after years of being blocked on the platform. Alibaba needs to grow its user base, and Tencent probably feels the heat from regulators fed up with China's vicious platform wars. Shen Lu explains.
- Deepfakes are going viral in China and freaking Beijing out. Regulators acted very quickly to scold nearly a dozen internet firms after deepfake vids featuring major business leaders went viral on the Chinese web. They're surely nervous about stopping the Xi Jinping deepfakes before they start. Zeyi Yang explains how China got here.
China technorati's fave term: "involution," or nèi juǎn" (内卷).
It's a once-arcane academic term that's now an internet buzzword. "Involution" refers to a perverse form of competition, in which companies and individuals turn inward in a scramble for resources, rather than expanding outward with genuine innovation. It feeds a sense that tech's promise lays out of reach. Better to just "lay flat and catch fish," or tǎng píng mō yú (躺平摸鱼) — slang popular among young Chinese that means keeping it Zen and slacking off at work.
Straight From China's Web
- Intel tried to avoid offending anyone in China and did the opposite. Over the weekend, Intel China removed an ad that featured its newest brand ambassador, the female comedian Yang Li, after backlash from Chinese men toward (honestly, not terribly acerbic) Yang punchlines such as, "Why are men so mediocre but so confident?" Intel hoped to quell controversy with the takedown, but it led to another uproar, this time from Chinese women, who started a campaign to stand by Yang. The incident trended on Weibo's hot topic chart for days, and many female web users are encouraging each other to file complaints with Intel's headquarters in Santa Clara.
- How much can you make if your song goes viral in China? Short-video app Kuaishou has an answer. On Monday, Kuaishou released a music copyright policy that states that when a song is used on Kuaishou, either in short videos or in livestreams, the creator will be paid. The more it's used, the more the pay. Top songs can generate tens of thousands of dollars each month, according to Chinese financial outlet Jiemian.
China Goes Global
- Japan's most popular messaging app walled off China. Line, the most popular messaging app in Japan and a few other Asian countries, has decided to firewall Chinese and Japanese users' data, Nikkei Asia reports. This follows news in Japanese outlets last week that Line's contract employees in China could access Japanese users' personal information, including their names and phone numbers.
- ByteDance will take on Tencent in the overseas gaming market. Reuters reported Monday that ByteDance's video games arm, Nuverse, has agreed to acquire Shanghai-based gaming developer Moonton Technology for $4 billion. Moonton is a leading Chinese studio that has made inroads in the global market. The company's founder, Xu Zhenhua, is a former Tencent employee. This marks another chapter in ByteDance's increasingly aggressive posture toward its behemoth competitor.
- Huawei is leveraging its 5G patent privileges to offset its losses.Bloomberg reported last week that Huawei is starting to demand royalties from Apple and Samsung for using the company's patented 5G technology. It's estimated that Huawei will take in about $1.2 to $1.3 billion in patent and licensing fees from 2019 to 2021, providing a critical source of income for the company after it faced a series of financial hits due to U.S. sanctions and the loss of major contracts in Europe. Huawei currently holds over 15% of all 5G patents.
One Company You Should Know
Say hello to Huya, China's Twitch
The biggest video game streaming platform in China, Tencent-owned Huya, just released its 2020 financials. It generated $1.6 billion in revenue last year, a 30.3% increase from 2019. And it's making real money: Its total gross profit for 2020 was $347.6 million, a 53% increase on the year before. Huya is likely to become even bigger as Tencent merges it with DouYu, the second-biggest video game streaming platform in China.
Big Brother Beijing
- Beijing's nervous about that Huya deal. Reuters has reported that Chinese regulators are concerned that Tencent's merger of Huya and DouYu, which will give Tencent control over 80% of the video game streaming market, could make it a monopolist. Tencent would have to make unspecified "concessions" for the deal to go through, people with knowledge of the antitrust investigation said.
- Ring-fencing the "necessary" from the not. An alphabet soup of Chinese agencies including the State Administration for Market Regulation and the Public Security Bureau issued new rules on Monday that define common types of "necessary" personal information that mobile apps can obtain from users. The new regulations will take effect on May 1, according to the South China Morning Post. Messaging apps will be allowed to access their users' cell phone numbers, names, ID numbers, bank account information and payment information — but photo albums and address books are off limits.
On Our Radar
Baidu wants to be an AI powerhouse. Investors are shrugging.
Baidu made a lackluster secondary listing debut on the Hong Kong Stock Exchange on Tuesday. Its stock closed flat after the company raised $3.1 billion, according to Reuters. In its secondary listing prospectus, Baidu defined itself as "a leading AI company with a strong internet foundation," and not "the leading Chinese language internet search provider" it depicted in its 2005 Nasdaq IPO prospectus. As Baidu continues to position itself as an AI powerhouse, investors are wondering how much profit and growth AI can really bring to a company that seems to be lagging where it used to be leading.
One More Thing
The only way to win is … not to play.
A viral Weibo post about development snags in a simple AI game unintentionally offered a grim life lesson to China's beleaguered young tech workers. The intent of the game was for a wolf to score as many points as possible by eating sheep, but game designers discovered that instead of trying to chase after sheep, the AI wolf repeatedly chose to run into a rock and kill itself. The AI had determined that no matter how hard the wolf tried, it would usually fail anyway. That's "involution" in action.