The Chinese Technology Edition

On regulation, innovation, and social engineering

Colin here. It has been interesting to watch China’s approach to regulation in technology over the past few months. Anyone who has spent time in China will know that foreign competitors like Facebook and Google are blocked, WeChat is the beating heart of day-to-day life, and commerce is mobile-centric and hyper-sophisticated. It’s a world that has created a lot of wealth and power. But the power dynamic is changing, with the state recently cracking down heavily. In the case of Jack Ma, the famed internet entrepreneur, he has all but disappeared from public life. 

According to the WSJ: 

Mr. Ma failed to keep pace with Beijing’s shifting views and lost an appreciation for the risks of falling out of step, according to people who know him. He tuned out warnings for years, they said. He behaved too much like an American entrepreneur. Mr. Ma’s exit from the world stage followed a typically frank speech in October, when he criticized Chinese regulators for stifling financial innovation.

The planned IPO of Ant Group was halted at the last moment. After the ride-hailing firm Didi went public in New York, China’s internet regulator cut it off from acquiring new users and forced its apps off of mobile stores. According to the Times, “Didi pushed the limits and thrived in legal gray areas. Until China cracked down.” This is only the tip of the iceberg in terms of the state intervening in the technology sector.  

Now, video game companies are being tasked with cracking down on online gaming for children. The centerpiece of this new approach is a limit of three hours of game time per week for children. Starting soon, minors will be allowed only “an hour of playtime between 8 pm and 9 pm on Friday, weekends and public holidays,” according to a statement from Chinese media watchdog — the National Press and Publication Administration (NPPA) — that was posted by state news agency Xinhua. The new law is accompanied by a number of other policies aimed at helping curtail bullying and internet addiction in children. Also notable is the crackdown on “stanning” with the party declaring war “what it sees as toxic celebrity culture that is poisoning the minds of the country’s youth.”

Why is this interesting? 

This is very much the state placing its hand on the controls of technology and internet companies and showing them who is actually boss. But the ambitions also seem to go much deeper on addressing societal ills. The Economist reports:

Writing algorithms which lead users to “addiction or high-value consumption” would also be banned...They also require firms that deploy recommendation algorithms to “uphold mainstream values” and to “vigorously disseminate positive energy”. Such algorithms must not be used to “engage in activities harming national security” or to upset the economic or social order. As such, their aim seems to be to withhold algorithmic juice from any content that does not make the government look good.

It is important to know that all of this policy is in draft, but it is interesting to see which way the wind could be blowing when coupled with the aggressive actions already taken. Also, it begs the question of how this will affect platforms like TikTok, which boasts both one of the most addictive and invasive algorithms going (and is owned by Chinese company ByteDance). 

It is unlikely that these regulations would cross borders but it is interesting to note that a ton of the hyper-growth of Chinese apps has been propelled by the very same social cues, dynamics, pressures, and dopamine rewards that have propelled the Internet giants in the US and elsewhere. And, as WITI contributor Guan Yang (GY) points out, “the issue of algorithmic regulation is quite familiar in the US and Europe. Western regulators won't demand ‘mainstream values’ but in some ways, it's not so different from debates over what Facebook and YouTube should be recommending.” How the rubber meets the road with the hand of the Chinese state in its technology industry will be fascinating to watch as it develops. (CJN)

Brand of the day: DS&DURGA

We’re obsessed with the craft and artistic approach to scent from DS&Durga. Also, we’re very aligned with their thought that “scent is armchair travel.” The NYC-based entrepreneurs are incredibly savvy marketers as well: they started a fumetruck that drives around NYC dispensing scents while the brand shuttered its physical Nolita store in COVID. Check out 85 Diesel, or the scented candle, Big Sur After Rain. They also made a few scents for friend of WITI Liz Lambert’s Marfa outpost: El Cosmico. It is described as, “The desert airs of Marfa, cosmic axis of West Texas. Creosote shrubs and sumac primed with Chihuahuan mesa woods–mesquite, oak, and pinyon pine...” (CJN)

Quick Links: 

• The FT reports on how China’s gaming crackdown threatens its esports dominance (GY)

• Some really clever world-building around the new CBD startup, Dad Grass. (CJN)

• Peter Thiel’s origin story in NYMag (CJN)

Thanks for reading,

Noah (NRB) & Colin (CJN)

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