Winners and Losers: Some Implications of China’s Internet Restrictions

Jan 25, 2010

There is more to China’s regulation of the internet than censorship.


The global internet system is being split into distinct jurisdictions with differing – often opposing – standards, actors and regulators. In China the internet has always been subject to the laws and standards of various Beijing regulators – often referred to as the “Great Firewall of China”. As the PRC gets better at restricting and filtering access, we are witnessing the emergence of a distinctly Chinese internet that will look vaguely similar to the rest of the world’s – but in fact perform different functions and have a completely new relationship between publisher and viewer.


Fractured by Design

China had been restricting access to international websites long before the recent blockade of Facebook and Twitter. Recent events – both in China and abroad – were probably a catalyst, but the latest government moves have more to do with improvements in network monitoring and control technology than they do with national security. The policy of media control in China predates the existence of the Communist Party. The real question isn’t ‘why is the PRC blockading the global internet?’ but rather “why did it take so long?” A wide open, unregulated internet is at odds with China’s long-standing information policy – and recent moves simply bring the internet into harmony with laws governing radio, film, TV and print media. China – though officially quiet about the blockade – seems to playing the morality card as justification for its internet blockade. (It’s all about protecting the kids from the evils of foreign porn.)

The policy of media control in China predates the existence of the Communist Party. The real question isn’t ‘why is the PRC blockading the global internet?’ but rather “why did it take so long?”

The shot fired across’s bow (banned for a day or so this past June and still link-hobbled) was explained as an anti-porn move. This follows a familiar pattern among Asian gerontocracies to legitimize restrictive laws by impugning Western moral values. This argument sounds craven and hollow abroad where freedom and openness are considered worthwhile values, but plays very well to Beijing’s domestic audiences.


Fractured Web, Flourishing Profits

The blockade will be very profitable for Chinese firms – in the mid-term. Companies like Xiaonei and Kaixin, which borrowed heavily from Western pioneers, will be the big winners here. They will solidify their Chinese audiences and keep Chinese ad-spends safely onshore. Chinese firms can continue using Western models as templates for new product development while effectively hobbling the overseas firms’ attempts to localize and refine their international offering for a Chinese audience. The local media firms will cooperate with ministry edicts and public safety standards – thus allowing them input into the very standards that will bar foreign competitors from access. The PRC learned two bitter lessons from its recent involvement with big Western tech corporations. Microsoft taught Beijing that getting a foreign guest to leave once they have shared their technology is very difficult – as Windows and Office strengthen their footholds as the standards on Chinese desktops. Google introduced China to the harsh realities of math on big online networks: 20% of all Chinese viewers is still a large number (particularly when Baidu is racking up a whopping 0% of the global market). Even if the international versions of Facebook and Twitter only command 10% of the Chinese internet market, that is still on the order of 20 million Chinese. A not-inconsiderable number – and one that is growing by the day. Blockades raise the costs of marketing to or from China. Now that the local Chinese Net has been ring-fenced the global systems will never be whole again – and corporate decision-makers are required to factor the new risks and costs into their calculations. Every global IT and marketing department that chooses to operate in China will have to deal with two internets – two platforms, two budgets, two creatives– and two sets of legal standards. What about VPNs and proxy servers? China is a nation of laws, even if enforcement is sometimes lax or selective. China can get very fussy about regulatory violations when it wants to – and telling a Beijing court “… but my secretary said that everyone does it” probably doesn’t constitute a valid legal defense. Tweeting kids slipping through gaps in the firewall probably don’t have to worry – but the next iteration of “Rio Tinto-type” defendants may have to face additional charges of violating the PRC’s media and internet regulations.


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