Politics

Social networks didn’t create a coup. But they helped.

Wednesday's riot at the Capitol should change the way we think about social networks and how information is shared on them.

Social networks didn’t create a coup. But they helped.

Rioters in the Senate chambers take photos in front of the dais.

There were so many photos and videos from Wednesday's insurrection on Capitol Hill: The guy with the fur hood taking a picture at the House chamber dais; the group using a riot shield to break the Capitol's windows; the rioters using the barriers meant to keep them out as scaffolding for climbing the wall. But one, to me, sticks out above the rest: A long-haired man in a red, white and blue Trump beanie, carrying a lectern with the seal of the Speaker of the House on it. He's smiling and waving at the camera.

Almost as soon as that photo was taken, it was everywhere. It spread across Twitter, Facebook and Instagram, along with so many other moments from the events in D.C. People in the midst of committing crimes, grinning at the camera. Livestreaming themselves. Tweeting pictures of their every illegal move. Why? Because they went viral. Because the content was the point — the riot was seemingly a "do it for the 'gram" moment as much as anything else. And because, by and large, the upsides of being popular online have a way of outweighing the consequences.

As the riots started, President Trump tweeted that "Mike Pence didn't have the courage to do what should have been done to protect our Country and our Constitution." Eventually, Twitter applied a label: "This claim of election fraud is disputed, and this Tweet can't be replied to, Retweeted, or liked due to a risk of violence." Facebook did even less: "The US has laws, procedures, and established institutions to ensure the integrity of our elections," its label said.

Immediately, the calls came for Twitter to take stronger action. Chris Sacca tweeted: "You've got blood on your hands, @jack and Zuck. For four years you've rationalized this terror. Inciting violent treason is not a free speech exercise. If you work at those companies, it's on you too. Shut it down." Alexis Ohanian echoed the sentiment: "There are a lot of hard questions we're going to have to answer for our children." And Alex Stamos, the former Facebook CSO, said that "Twitter and Facebook have to cut him off. There are no legitimate equities left and labeling won't do it."

As the afternoon went on, and Trump tweeted half-hearted missives about "staying peaceful" and a video in which he repeated some of his same lies, many called for the social networks to suspend or ban Trump's account entirely. Danielle Citron, a law professor at the University of Virginia, tweeted: "As someone who has served on your Trust and Safety Board since its inception and counseled you since 2009, time is now to suspend President Trump's account. He has deliberately incited violence, causing mayhem with his lies and threats."

Social media is obviously not the only cause for what's happened in America over the last four years, or what happened in D.C. on Wednesday. But there's simply no longer any question that allowing lies, misinformation and conspiracy theories to spread unchecked and unfettered on the internet has massive real-world consequences. "Internet platforms — FB, Instagram, Google, YouTube, Twitter, etc. — enabled this," Roger McNamee said. "They amplified hate speech, disinformation, and conspiracy theories because it was profitable. They are accessories to the felonies we are seeing on our TVs ... and many others."

For evidence, look no further than QAnon, which began as a message-board conspiracy theory (not even a conspiracy, really — more like uninspired LARPing) and has since penetrated politics at every level. QAnon communities have thrived on Facebook, YouTube and elsewhere, and only recently have those platforms taken a stance against the group. Too late: Q-believing rioters were everywhere in D.C., including Jake Angeli, the "QAnon Shaman," who has become famous for his horned hat and painted face. Angeli was one of the first intruders to take a picture in the Senate Chamber. According to one video, the first people inside the Capitol Building were wearing a "Trust The Plan" shirt, a nod to a popular QAnon slogan.

In recent weeks, too, as President Trump has made few public appearances but has tweeted incessantly about the election being stolen, it became increasingly clear that something was going to happen. "What is the downside for humoring him for this little bit of time?" a Republican official asked The Washington Post. "He's tweeting about filing some lawsuits, those lawsuits will fail, then he'll tweet some more about how the election was stolen, and then he'll leave." Now we've seen the downside, or at least one of them: Those tweets affected the people who read them. And the line between online anger and offline action is disappearing.

Even during the attack on the Capitol, misinformation was everywhere on social networks. The #stopthesteal hashtag on Instagram was filled with posts claiming Antifa was actually to blame for the riots, saying it was "Hollywood ACTING," and encouraging more action from the insurrectionists. The platforms all said they were keeping an eye on things and trying to enforce their rules, but they were woefully behind.

Beyond that, social platforms played a role in at least incentivizing people to take more action. Livestreaming rioters on YouTube were collecting donations throughout the afternoon; some of Twitch's most popular videos were commentators watching those same livestreams. As the afternoon went on, the platforms cracked down on some of that content, but in almost every case, only after it had gone viral. In some cases, users did it themselves: Elijah Schaffer, a reporter at The Blaze, tweeted: "I am inside Nancy Pelosi's office with the thousands of revolutionaries who have stormed the building." He eventually deleted the tweet and attempted to explain that he was only there as a reporter, but only after he got tens of thousands of retweets and picked up 30,000 new followers.

More than any other day in recent times, the attempted coup made clear that the tech industry, and social networks in particular, haven't just been failing to police their platforms effectively: They've been asking the wrong questions altogether. They haven't yet fully reckoned with what it means that any idea, unchecked, can be spread to millions or billions of people in an instant. They especially don't know what it means when those ideas originate with someone as powerful as the president of the United States. They haven't thought through what it means to care about free speech when one person's speech can be heard instantly across the world, not just by a roomful of people. They haven't figured out what they want their platforms to be good for.

What they know now, more than ever, is that what happens online doesn't stay there. There's just no denying it anymore.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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