Tension is building between China and technology companies. Increasingly, the source of it is data privacy
Here’s what you need to know this week:
- US tech states clashed with Beijing over Hong Kong
State by state:
- Apple scored a significant privacy victory over Chinese tech firms
- Microsoft ended its truce with Google
- Amazon faced a brave new world under Andy Jassey
- Facebook launched a newsletter rival to Substack
- Google lost ground on employee diversity
- Tencent bought a game company every 72 hours
Another fault line has appeared in the global splinternet. Facebook, Microsoft, Apple and Google all warned the Hong Kong government this week that they might stop offering services in the region if authorities proceed with changes to data-protection laws.
Speaking through an industry group that also includes Twitter, the companies expressed concern that laws superficially designed to stop “doxxing” could leave the tech states’ staff at risk of criminal prosecution. The only way to avoid such sanctions was to “refrain from investing and offering the services in Hong Kong,” according to the letter from the Singapore-based Asia Internet Coalition.
The dispute can be viewed in two ways. Narrowly construed, it’s a question of semantics: tightening the wording of the proposed amendment would probably assuage the tech companies’ concerns (they already know that doxxing is politically sensitive in Hong Kong: details of officers’ home addresses were exposed by anti-government activists during protests in 2019).
However, looked at more generally, the spat fits into a wider pattern of tension between technology firms and China. And increasingly, the subject of this tension has been data privacy.
- Last week Beijing moved against Didi, China’s leading ride-hailing platform, days after its US IPO raised $4.4 billion. Regulators halted new user sign-ups and ordered app stores to remove Didi after accusing the company of “seriously violating laws on collecting and using personal information”. Unfounded rumours swirled that Didi turned over user data to the United States post-IPO. Data nationalism – the desire to keep control of data within your borders – is at the centre of this dispute.
- Chinese regulators also opened data security investigations into three other US-listed tech firms, including the US-listed Boss Zhipin, an online recruitment platform, and subsidiaries of Full Truck Alliance, the commercial freight platform. “Some important data and personal information may be leaked due to US regulation,” said Zuo Xiaodong, vice-president of the China Information Security Research institute.
- In June President Xi Jinping introduced a new data security regime giving him the power to shut down or fine tech companies for mishandling “core state data” and requiring companies to seek approval before transferring that data overseas.
In a sense, China’s push for more tech regulation on data is a mirror of other regimes, such as Europe’s GDPR. But Beijing’s priority is national security rather than the protection of personal data rights. Read the tweets of Henry Gao, a Chinese law professor, for more details.
Talking of tension between the US tech states and China… Chinese tech groups backed by Baidu, ByteDance and Tencent have failed in a coordinated attempt to subvert Apple’s new privacy function: App Tracking Transparency. The firms developed a new way of tracking users on Apple devices which would have worked even if they did not opt into tracking (the tech is known as CAID). Apple was in a tricky position – rejecting CAID risked angering a country where it has a $50bn business. But the company went ahead regardless, blocking App Store updates that would have installed CAID. The workaround now seems to have lost traction. Apple has scored a significant victory: acting quickly allowed it to diffuse the situation before Beijing officials became heavily involved.
Microsoft and Google have for years agreed not to aim their lobbying firepower against each other. This week that non-aggression pact came to an end. The companies have too many differences to make it work. Disputes include how much access to give marketers to search engines – with Microsoft accusing Google of prioritising its search engine over Bing. Microsoft’s complaints about its rival’s SA360 technology have found their way into a report by the UK competition authority as well as an antitrust suit from states led by Colorado. Now Axios reports that Microsoft plans to increase the size of its legal teams by 20 per cent; another signal that, like its rivals, the company is gearing up for a critical period of regulation when old friends may become enemies.
As Jeff Bezos steps down as Amazon chief executive on the 27th anniversary of the company’s foundation, analysts have pronounced on his legacy and set out the challenges faced by his successor, Andy Jassey. The key question may be whether Amazon can maintain its so-called “Day one” philosophy. Perhaps Bezos’s most extraordinary achievement was to grow Amazon to a $1 trillion+ company while maintaining a start-up mentality (even senior employees have to print in black and white and take economy flights to save costs). “We are wary that Bezos stepping back from the CEO role may reduce the company’s appetite for bold experiments,” read a recent note to investors from Tom Slater, joint manager of the Scottish Mortgage Investment Trust. Then again, analysts were similarly pessimistic when Tim Cook took over at Apple.
Facebook: Ministry of information
Facebook launched Bulletin last week – its newsletter service for “independent writers”. The terms and conditions of signing up to newsletters like Oh, MG, by Malcolm Gladwell, and the rEAl dEAl with Erin Andrews, include some interesting data provisions, including one allowing the company to collect “additional data” on Bulletin users. Seen more broadly, the new service is part of a newsletter revival spearheaded by start-ups like Substack and Revue (here’s a piece on how the new services compare). Facebook is doubling down on the “creator economy” by launching Bulletin alongside a new podcast app. It’s now a priority for the company, as Chris Cox, the company’s Chief Product Officer, recently made clear.
Ever since Google fired its noted Black AI ethicist, Dr. Timnit Gebru, last year, it hasn’t been able to shake the perception that it isn’t supportive of people of colour. The tech state’s latest annual diversity report confirms the problem: workers identifying as “Black” or “Latinx” left at higher rates than last year. Worryingly, Google’s attrition rate was even worse for Black women. On the bright side, Google nearly doubled the number of Black people in its US leadership team to 7.1 per cent. Take note, Amazon, where Black employees make up only 3.8 per cent of senior leaders.
Tencent has bought a game company every three days since the start of the year, it emerged this week. These breakneck investments are part of the tech state’s strategy for depriving its competitor, ByteDance, of a foothold in the market. The two giant companies have waged a bidding war since last year that has seen the value of a number of independent Chinese game studios skyrocket. In one case the game studio Moonton sold to ByteDance at seven times the value it had held in earlier negotiations with Tencent.
One more thing…
Next Monday we’re hosting a Thinkin all about the global shortage of computer chips: and how it might provoke the next geopolitical crisis. Professor Rana Mitter and Jeremy Thompson, Executive Vice President, Huawei UK, are guests. We’d love you to join us.