Where Facebook Has No Friends, Tech Bends to China's Will
(Bloomberg) -- As he took the stage at China’s premiere internet gathering this week, Facebook Inc.’s Vaughan Smith opened with a line that wouldn’t make sense anywhere else.
``Since not everyone at this event is familiar with Facebook, let me describe it briefly,’’ said Smith, vice president of corporate development.
The idea that Facebook – the U.S. social media giant that boasts more users than China has people – would have to explain itself to an event billed as the World Internet Conference may seem absurd. But every winter for four years, Smith delivers almost the same line to a Chinese audience that’s blocked from using his social network, along with Twitter, Instagram and YouTube.
Such is the surreal setting of Wuzhen, a tourist town southwest of Shanghai that each year since 2014 has been emptied of visitors, surrounded by armed soldiers and then filled with technology leaders. Rarely-seen bureaucrats from China’s regulators emerge to share the latest techniques for curbing online dissent, while Chinese businesses pay fealty to the vision of President Xi Jinping. The town’s green-water canals and worn pathways play host to the Communist Party’s vision of a world-wide web with Chinese characteristics.
This year, the ritual changed. What was once dismissed as a parochial event set to fade out of existence won new legitimacy with the arrival of the tech world’s leading figures. Apple Inc. Chief Executive Officer Tim Cook and Google CEO Sundar Pichai attended for the first time, praising the rise of China even while many of their services remaining blocked.
At the same time, China’s technology sector is coming of age. Tencent Holdings Ltd. and Alibaba Group Holding Ltd. have surged into the ranks of the world’s ten most valuable companies. Alibaba’s Jack Ma used his Wuzhen keynote to champion government policies and lecture foreign competitors on strategy.
“You can’t afford to ignore China,” R.J. Pittman, chief product officer at eBay Inc., said in a brief interview after speaking on a panel.
Irony was plentiful. Conference organizers promoted the event on Facebook, where the country’s citizens couldn’t see photos of the smiling tech and government luminaries. Wuzhen’s wi-fi network let attendees circumvent the usual censorship controls imposed on the rest of the country.
Black-clad officers kept security, while blue-coated staff acted as guides. Women wearing traditional silk dresses smiled and bowed as guests entered and exited conference rooms.
American technology executives long contended that no government could control the internet. In 2012, Eric Schmidt, chairman of Google parent Alphabet Inc., famously said that “censorship ultimately fails,” while predicting an end to China’s Great Firewall.
Instead, Xi has not only maintained bans on forbidden sites – including Google – but also presided over an unprecedented tightening of online controls. This year, his government passed strict laws preventing the free transfer of user data outside of China despite protests from global tech giants. And hundreds of apps used by activists and citizens to access the global internet – including Microsoft Corp.’s phone and video call service Skype – have been pulled from digital shelves on the government’s orders.
While the U.S. struggles with the proliferation of fake news online and allegations that Russian hackers interfered with the presidential election, China is exuding more confidence than ever. On the opening day of the Wuzhen conference, Wang Huning, one of China’s most-senior officials, called for more aggressive government involvement online to combat terrorism and criminals. He advocated for a global response team to go well beyond China’s borders.
“What we propose is we should promote a controllable security and build a new order,” Wang said through a translator. “The world’s destiny has become more intertwined in cyberspace.”
Chinese companies are more determined to exert their influence globally too. JD.com Inc. founder Richard Liu announced plans to launch his popular e-commerce platform in the U.S. and EU by 2018, featuring Chinese products. Lei Jun, CEO of smartphone maker Xiaomi Corp., said his company had pulled off a ``miracle’’ in India and planned to use the experience as a guide for global expansion.
“We want to transplant China’s business ideas into other countries,” he said on Monday.
The biggest hall, capable of seating the entire conference, hosted state dignitaries, while private-sector speakers, including Alibaba’s Jack Ma and Tencent’s Pony Ma, squeezed their panels into smaller rooms. Journalists and VIPs fought bitterly to enter these sessions, forcing security guards to physically barricade some events.
When asked about the censorship of Western companies, Alibaba’s Ma gave a strident defense of the government’s stance. Volunteers and Chinese delegates with Communist Party pins applauded.
``Google, they left – we did not kick them out,” he said. ``When you do business in any country you have to follow the rules and laws – the internet is so influential.’’
Ma insisted that China is open to Western companies, even though people in the country can’t get access to many U.S. social media and news sites. His call to adhere to rules suggests foreign companies will have to block forbidden content just like Chinese companies do, with in-house censors to complement government efforts.
“Facebook and these companies, if they come here they have to follow the rules and laws,” he said. “I listen to Xi Jinping all the time and they are open. Otherwise you wouldn’t be allowed to come to the Wuzhen meeting. When you’ve determined to come, prepare for it. Follow the rules and laws and spend 10 years. It’s not ‘if I’m unhappy I leave’. No. This is not a marketplace where you can come and go.”
Ma, Cook and other technology leaders are scheduled to speak again in Guangzhou on Wednesday.
©2017 Bloomberg L.P.