What next for Facebook and Google, if they don’t break into China?

September 17, 2018
Industry News
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Peter Guy
peter.guy@scmp.com

Peter Guy says the American tech giants could take a leaf out of Chinese e-commerce company Pinduoduo’s book, or they could consider cracking the e-payment market

Technology spins off its own vicious contradictions that confound the management abilities of its billionaire founders. As if the scandal involving the inappropriate use of user data by third parties is not challenging enough, Facebook has confirmed that it is tracking users’ behaviour to rate their trustworthiness.

Only a few years ago, Chinese internet users were warned by Western critics against naively, or ignorantly, acquiescing to their home-grown tech companies’ and government’s internet surveillance. However, the revelations about Facebook and its troubling scheme are not too different from China’s plan to give its 1.4 billion citizens personal or social credit scores based on a range of behaviours.

Facebook has more than 2.2 billion users worldwide, and its operations are obscuring the line between government surveillance and corporate surveillance. Each presents a dystopic vision. It is hard to tell if any rights are absolute, when they are granted by corporate or government leaders.

Also recently, Google CEO Sundar Pichai warned that the company might have to charge for its Android software after the European Union fined it US$5 billion for forcing phone makers to pre-install its search engine and browser. Free internet apps aren’t so free after all, now that the true cost has been revealed. Then again, would anyone actually pay for a version of Facebook or Google where their personal data was left unharvested?

The rise of data surveillance by the corporation in parallel with the state creates a slippery slope for censorship. The concept of free speech is eroded, when something can be censored by the private sector because technology allows it. Investors must determine where value lies or if any value remains in a conflicted, fast-changing technology sector.

The game has changed considerably since the days when social media comprised electronic bulletin boards, which claimed they weren’t responsible for their content because they weren’t real publishers. Then came social networks like Friendster, MySpace and, ultimately Facebook, which makes tremendous profits by monetising its user data. But, now, Facebook and other social media operators are being held responsible for their content. Their business practices are under increasing regulatory threat.

Chinese e-commerce company Pinduoduo suggests there are still opportunities. A mash-up of social media and Groupon, the three-year-old company raised US$1.63 billion in an IPO this year, which gave it a value of US$32.4 billion then. It attracted 343.6 million active buyers in the year ending in June. The Tencent-backed Pinduoduo has proved that China’s e-commerce giants don’t own the entire market, especially when it comes to price-sensitive cities and rural areas.

It has built a defendable, large market segment by promoting ultra-cheap goods using Tencent’s popular WeChat app and rewarding users who make bulk purchases with friends and family. Continue Reading

 

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