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The logic driving China’s big tech clampdown

Shortani 5y ago
I find it interesting that the paper does not mention other potential motivations for the changes and seems to take the CCP's statements at face value. Maybe they are simply directly reporting on what has been stated, but it does make sense that the CCP is concerned about the shifting power of control. I think this has little to do with privacy and protections of peoples' rights and everything to do with a tug of war happening above the citizens heads.
- not2b 5y ago
  I think that the article is implying all of that without saying so directly (maybe trying not to be banned in China). They refer at several points to the government's fear of companies having more data on people than the government does, making clear that this is about maintaining control and power.
- yorwba 5y ago
  It's hard to run a country if you make public policy announcements that don't reflect what you want. Even if you tell your inner circle not to take the policy seriously, there'll be a lot of outsiders taking it at face value, especially in a country with more than a billion people. Based on what they heard coming from the central government, various municipalities are working on stricter laws (e.g. Shenzhen's new data regulations http://www.szrd.gov.cn/szrd_zlda/szrd_zlda_flfg/flfg_szfg/content/post_706636.html http://www.szrd.gov.cn/szrd_zlda/szrd_zlda_flfg/flfg_szfg/co... ) and economic publications are talking about the potentially astronomic fines and steps compliance departments are taking to manage that risk https://mp.weixin.qq.com/s/bAbyNyg4FZSsbrY9he5BkA https://mp.weixin.qq.com/s/bAbyNyg4FZSsbrY9he5BkA Sure would be a bummer if the government didn't really mean it that way, but companies end up improving their data management practices anyway.
baybal2 5y ago
This website "Asiatimes" is, despite the name, almost wholly authored in US, and London. I cannot understand the Western desire to always rationise, and overthink actions of "smart, sophisticated Asian regimes." It's now almost a trope of some kind. Some times the Occam's Razor explanation of events is the one which is true, and in this case it's the extremely vindictive regime just ruining lives, and fortunes of people whom they think are good targets to attack today, and there is nothing "smart, and sophisticated" about it.
- throwaway4good 5y ago
  Really sounds like you are just letting your prejudice guide you, instead of trying to find out what is going on.
- nemothekid 5y ago
  >Some times the Occam's Razor explanation of events is the one which is true, and in this case it's the extremely vindictive regime just ruining lives, and fortunes of people whom they think are good targets to attack today, and there is nothing "smart, and sophisticated" about it.* I don't understand how an explanation built up on tropes is the simplest one. One what basis is the CCP "extremely vidictive"? How is the simplest explanation that the government decided to blow up the economy "just because". Your explanation seems very counter intuitive - in some way you take the opposite view as your criticism; reducing the chinese to some barbaric government system, and not the world 2nd largest super power.
  - baybal2 5y ago
    > in some way you take the opposite view as your criticism; reducing the chinese to some barbaric government system, and not the world 2nd largest super power. China became world's 2nd largest economic power because money were almost raining on them from the sky, and not because of any level of sophistication. Were they actually trying to play a better role beyond basic technocratic guidance, China wouldn't be a 2nd largest economy today, but a 1st one, and by a large extend. With them seeing that the West was willing to pour money on them even when they were failing as hard as they did, they had not a single incentive to not to blow up the economy "just because", as you said, every few years, and being anything else than this "barbaric government system." The extend of economic mismanagement during the so called "China's golden decade" was just that bonkers. 10, 11 digits sums were going up in flames, or vanishing in Swiss bank accounts almost monthly back then. It's only when it got so bad as it is now economically, did the CPC turn on the current crisis mode. It is now slowly reverting to its pre-199x state — the perpetual crisis. It will be becoming increasingly more paranoid as the situation deteriorates, and increasingly more panic prone. The history shows that's how it was with every marxist, communist, or hardcore socialist regime in the past.
throwaway4good 5y ago
I think this short write up of the problems of consumer internet companies from a (Chinese) societal perspective is extremely on-point and obviously also applies from a western perspective: https://insider.techbuzzchina.com/c/policies-and-regulations/7-18-21-huang-qifan-comments-on-consumer-internet-8b7496e6-d361-4fd3-af94-426644c6f4dc https://insider.techbuzzchina.com/c/policies-and-regulations... 1. Companies burning money in an effort to scale up and obtain a monopoly. 2. Using human weaknesses to design products and acquire traffic. 3. Monopolistic online platforms taking asymmetric measures to collect information from users and infringing on their privacy. 4. Discriminatory pricing. Sometimes I wonder whether we in the west are capable of doing a similar crackdown? Or we have past the point of no return and companies like Facebook, Google, Amazon etc. are simply too powerful and too politically influental?
- refenestrator 5y ago
  Worth noting that we have different incentives in the US even accounting for different philosophies. US big tech is globally influential, clipping their wings would reduce that influence. Chinese big tech is generally more about the large Chinese market and diaspora.
  - zozbot234 5y ago
    TikTok has quite a bit of influence outside China. So it seems that Chinese big tech can compete quite effectively in a global market.
    - seanmcdirmid 5y ago
      TikTok did, but none of the others except for maybe Alibaba made it. Tiktok is also popular outside of China with a product different from inside China (Douyin) that they acquired from another company after tiktok was released.
    - throwaway4good 5y ago
      So why did TikTok come out of China and not the US? Maybe it is because the monopoly of Facebook is too strong for alternatives to flourish. Point is: Even-though American big tech’s dominance is an US advantage, the monopolies still come at a cost.
wwarner 5y ago
I was mystified by the Ant crackdown until recently. Charlie Munger (Berkshire Hathaway VP) thinks it makes a lot of sense. https://www.reuters.com/business/finance/berkshires-munger-says-will-like-have-chinas-financial-structure-us-cnbc-2021-06-30/ https://www.reuters.com/business/finance/berkshires-munger-s...
- refurb 5y ago
  That’s article has zero content other than a couple quotes from Munger that say nothing more than “I agree”. Agree with what?
fmajid 5y ago
It's clear Xi Jinping considers the platform companies to be middlemen that are not actually adding value, and not "real" tech companies unlike those that actually make physical goods like chips or devices. He does not want the platforms to be able to extract monopoly rents from the real tech companies as they have in the US, and he categorically does not want China's industrial base to be hollowed out. Same goes for the financial sector. He is, of course, absolutely correct. Lax antitrust enforcement in the US (nonexistent, really) is leading to concentration and stagnation. As for EdTech, it's an arms race of tutoring to get into a limited places in good universities, with diminishing results leading to a stalemate since everyone gets tutored, and just a parasitic drain on the economy, hence efforts to clip its wings. Nonprofits like Khan Academy that are genuinely interested in improving education would continue to operate. Much the same could be said of political contributions in the US. I would expect the residential property business bubble to be next, since it's another huge misallocation of resources (although it's already started with Wanda and Vanke). https://www.aljazeera.com/economy/2021/7/28/in-its-latest-crackdown-china-intensifies-focus-on-real-estate https://www.aljazeera.com/economy/2021/7/28/in-its-latest-cr...
- ozzythecat 5y ago
  > It's clear Xi Jinping considers the platform companies to be middlemen that are not actually adding value, and not "real" tech companies I’m not sure how you arrived at this conclusion. My take away was the Chinese government fears tech companies that might take power away from the Chinese government. This is more about the Chinese government maintaining its own power and full control, and less about the value add or anti trust stance for keeping a competitive market.
  - smhost 5y ago
    It's all of the above. A large, unproductive rentier class creating a barrier to capitalist dynamics contributes to a stagnant economy, which generates popular discontent and erodes government authority.
  - baybal2 5y ago
    > I’m not sure how you arrived at this conclusion. My take away was the Chinese government fears tech companies that might take power away from the Chinese government. This is more about the Chinese government maintaining its own power and full control, and less about the value add or anti trust stance for keeping a competitive market. I keep the claim that the explanation is even more simpler: whomever becomes a big man in a country like China eventually goes down, and that's the whole story. There can only be one "big man" in such system, and he tolerates no competition. This consistently held true through the whole 40 years of modern China: whomever attains too much of the social, political, economical, cultural, moral, or even genealogical prominence consistently gets taken down. This is why most mainland Chinese have that fear of publicity, and standing out almost bordering on panic disorder. And this is why people attaining any level of prominence there keep leaving the country for the West.
arodyginc 5y ago
Clearly China wants to use other markets but tries to avoid becoming a market be it education or social platforms. Very clever strategy I'd say
- fmajid 5y ago
  It's called mercantilism, and is a well-worn strategy. The US used it against the UK, who had used it against the Dutch before them, and the Germans had also used it against the UK.
kaycebasques 5y ago
> The CCP is obsessed with data – so much so that it was recently dubbed a “factor of production” alongside land, labor, capital, and technology I've never thought of data in these terms. Makes a lot of sense for the 21st century.

I find it interesting that the paper does not mention other potential motivations for the changes and seems to take the CCP's statements at face value. Maybe they are simply directly reporting on what has been stated, but it does make sense that the CCP is concerned about the shifting power of control. I think this has little to do with privacy and protections of peoples' rights and everything to do with a tug of war happening above the citizens heads.

not2b 5y ago
I think that the article is implying all of that without saying so directly (maybe trying not to be banned in China). They refer at several points to the government's fear of companies having more data on people than the government does, making clear that this is about maintaining control and power.
yorwba 5y ago
It's hard to run a country if you make public policy announcements that don't reflect what you want. Even if you tell your inner circle not to take the policy seriously, there'll be a lot of outsiders taking it at face value, especially in a country with more than a billion people. Based on what they heard coming from the central government, various municipalities are working on stricter laws (e.g. Shenzhen's new data regulations http://www.szrd.gov.cn/szrd_zlda/szrd_zlda_flfg/flfg_szfg/content/post_706636.html http://www.szrd.gov.cn/szrd_zlda/szrd_zlda_flfg/flfg_szfg/co... ) and economic publications are talking about the potentially astronomic fines and steps compliance departments are taking to manage that risk https://mp.weixin.qq.com/s/bAbyNyg4FZSsbrY9he5BkA https://mp.weixin.qq.com/s/bAbyNyg4FZSsbrY9he5BkA Sure would be a bummer if the government didn't really mean it that way, but companies end up improving their data management practices anyway.

baybal2 5y ago

This website "Asiatimes" is, despite the name, almost wholly authored in US, and London. I cannot understand the Western desire to always rationise, and overthink actions of "smart, sophisticated Asian regimes." It's now almost a trope of some kind. Some times the Occam's Razor explanation of events is the one which is true, and in this case it's the extremely vindictive regime just ruining lives, and fortunes of people whom they think are good targets to attack today, and there is nothing "smart, and sophisticated" about it.

throwaway4good 5y ago
Really sounds like you are just letting your prejudice guide you, instead of trying to find out what is going on.
nemothekid 5y ago
>Some times the Occam's Razor explanation of events is the one which is true, and in this case it's the extremely vindictive regime just ruining lives, and fortunes of people whom they think are good targets to attack today, and there is nothing "smart, and sophisticated" about it.* I don't understand how an explanation built up on tropes is the simplest one. One what basis is the CCP "extremely vidictive"? How is the simplest explanation that the government decided to blow up the economy "just because". Your explanation seems very counter intuitive - in some way you take the opposite view as your criticism; reducing the chinese to some barbaric government system, and not the world 2nd largest super power.
- baybal2 5y ago
  > in some way you take the opposite view as your criticism; reducing the chinese to some barbaric government system, and not the world 2nd largest super power. China became world's 2nd largest economic power because money were almost raining on them from the sky, and not because of any level of sophistication. Were they actually trying to play a better role beyond basic technocratic guidance, China wouldn't be a 2nd largest economy today, but a 1st one, and by a large extend. With them seeing that the West was willing to pour money on them even when they were failing as hard as they did, they had not a single incentive to not to blow up the economy "just because", as you said, every few years, and being anything else than this "barbaric government system." The extend of economic mismanagement during the so called "China's golden decade" was just that bonkers. 10, 11 digits sums were going up in flames, or vanishing in Swiss bank accounts almost monthly back then. It's only when it got so bad as it is now economically, did the CPC turn on the current crisis mode. It is now slowly reverting to its pre-199x state — the perpetual crisis. It will be becoming increasingly more paranoid as the situation deteriorates, and increasingly more panic prone. The history shows that's how it was with every marxist, communist, or hardcore socialist regime in the past.

throwaway4good 5y ago

I think this short write up of the problems of consumer internet companies from a (Chinese) societal perspective is extremely on-point and obviously also applies from a western perspective: https://insider.techbuzzchina.com/c/policies-and-regulations/7-18-21-huang-qifan-comments-on-consumer-internet-8b7496e6-d361-4fd3-af94-426644c6f4dc https://insider.techbuzzchina.com/c/policies-and-regulations... 1. Companies burning money in an effort to scale up and obtain a monopoly. 2. Using human weaknesses to design products and acquire traffic. 3. Monopolistic online platforms taking asymmetric measures to collect information from users and infringing on their privacy. 4. Discriminatory pricing. Sometimes I wonder whether we in the west are capable of doing a similar crackdown? Or we have past the point of no return and companies like Facebook, Google, Amazon etc. are simply too powerful and too politically influental?

refenestrator 5y ago
Worth noting that we have different incentives in the US even accounting for different philosophies. US big tech is globally influential, clipping their wings would reduce that influence. Chinese big tech is generally more about the large Chinese market and diaspora.
- zozbot234 5y ago
  TikTok has quite a bit of influence outside China. So it seems that Chinese big tech can compete quite effectively in a global market.
  - seanmcdirmid 5y ago
    TikTok did, but none of the others except for maybe Alibaba made it. Tiktok is also popular outside of China with a product different from inside China (Douyin) that they acquired from another company after tiktok was released.
  - throwaway4good 5y ago
    So why did TikTok come out of China and not the US? Maybe it is because the monopoly of Facebook is too strong for alternatives to flourish. Point is: Even-though American big tech’s dominance is an US advantage, the monopolies still come at a cost.

wwarner 5y ago

I was mystified by the Ant crackdown until recently. Charlie Munger (Berkshire Hathaway VP) thinks it makes a lot of sense. https://www.reuters.com/business/finance/berkshires-munger-says-will-like-have-chinas-financial-structure-us-cnbc-2021-06-30/ https://www.reuters.com/business/finance/berkshires-munger-s...

refurb 5y ago
That’s article has zero content other than a couple quotes from Munger that say nothing more than “I agree”. Agree with what?

fmajid 5y ago

It's clear Xi Jinping considers the platform companies to be middlemen that are not actually adding value, and not "real" tech companies unlike those that actually make physical goods like chips or devices. He does not want the platforms to be able to extract monopoly rents from the real tech companies as they have in the US, and he categorically does not want China's industrial base to be hollowed out. Same goes for the financial sector. He is, of course, absolutely correct. Lax antitrust enforcement in the US (nonexistent, really) is leading to concentration and stagnation. As for EdTech, it's an arms race of tutoring to get into a limited places in good universities, with diminishing results leading to a stalemate since everyone gets tutored, and just a parasitic drain on the economy, hence efforts to clip its wings. Nonprofits like Khan Academy that are genuinely interested in improving education would continue to operate. Much the same could be said of political contributions in the US. I would expect the residential property business bubble to be next, since it's another huge misallocation of resources (although it's already started with Wanda and Vanke). https://www.aljazeera.com/economy/2021/7/28/in-its-latest-crackdown-china-intensifies-focus-on-real-estate https://www.aljazeera.com/economy/2021/7/28/in-its-latest-cr...

ozzythecat 5y ago
> It's clear Xi Jinping considers the platform companies to be middlemen that are not actually adding value, and not "real" tech companies I’m not sure how you arrived at this conclusion. My take away was the Chinese government fears tech companies that might take power away from the Chinese government. This is more about the Chinese government maintaining its own power and full control, and less about the value add or anti trust stance for keeping a competitive market.
- smhost 5y ago
  It's all of the above. A large, unproductive rentier class creating a barrier to capitalist dynamics contributes to a stagnant economy, which generates popular discontent and erodes government authority.
- baybal2 5y ago
  > I’m not sure how you arrived at this conclusion. My take away was the Chinese government fears tech companies that might take power away from the Chinese government. This is more about the Chinese government maintaining its own power and full control, and less about the value add or anti trust stance for keeping a competitive market. I keep the claim that the explanation is even more simpler: whomever becomes a big man in a country like China eventually goes down, and that's the whole story. There can only be one "big man" in such system, and he tolerates no competition. This consistently held true through the whole 40 years of modern China: whomever attains too much of the social, political, economical, cultural, moral, or even genealogical prominence consistently gets taken down. This is why most mainland Chinese have that fear of publicity, and standing out almost bordering on panic disorder. And this is why people attaining any level of prominence there keep leaving the country for the West.

arodyginc 5y ago

Clearly China wants to use other markets but tries to avoid becoming a market be it education or social platforms. Very clever strategy I'd say

fmajid 5y ago
It's called mercantilism, and is a well-worn strategy. The US used it against the UK, who had used it against the Dutch before them, and the Germans had also used it against the UK.

kaycebasques 5y ago

> The CCP is obsessed with data – so much so that it was recently dubbed a “factor of production” alongside land, labor, capital, and technology I've never thought of data in these terms. Makes a lot of sense for the 21st century.