Ahoy, it’s doom and gloom for Reddit after the company welcomed investment from Chinese censorship overlord Tencent.
Well, not quite.
The reality is, in fact, it’s quite the opposite. In recruiting the company behind one of the internet’s largest and vibrant social networks — chat app WeChat — and countless blockbuster games, Reddit has pulled off a major coup and banked a huge amount of cash, both of which can help it grow to the next level.
But, right now, reports in the U.S. are suggesting otherwise. You might have seen a range of negative stories surface in the past week following Reddit’s latest round of investment — first reported by TechCrunch — which is led by Tencent and values the company at $3 billion.
Triggered by a Gizmodo story last week, fear is being stoked that a deal with the “Chinese censorship powerhouse” could lead Reddit awry and bankrupt its morality, well, whatever of that it has left. Reddit users, not ones to be slow on humor, have already plastered the site with content that would be forbidden in China, including Winnie the Pooh, the cartoon character often used to represent Chinese President Xi Jinping.
Gizmodo referred to Tencent as “one of the most important architects of the Great Firewall,” and that’s a refrain that has been repeated in countless other reports.
I get it, it‘s a delicious irony; one of the lawless parts of the internet combining forces with a company that aggressively monitors and censors its users. Plus, Reddit is already blocked in China.
But, unfortunately for Gizmodo, the fears are overblown and its descriptions of Tencent are at best naive and at worst deliberately misguided.
China’s censorship system
Tencent is no “architect” of China’s Great Firewall internet censorship program. It’s one of a number of companies which, from its success, finds itself a prominent target for the government with little room to wiggle out.
Tencent sits in an awkward position, for sure. It is the largest internet company in China — it became the first $500 billion firm in Asia last year — and that makes it a core part of the government’s ongoing campaign to control Chinese internet space.
After an unprecedented crackdown on the Twitter-like service Weibo in 2012, when the government closed down comments for three days, China’s censorship became more proactive rather than reactive. That approach leaves fewer traces, for one thing, and it allows Beijing to shift responsibility to the platforms themselves, which fear the repercussions of angering authorities.
That’s to say that today’s dynamic sees China’s top internet companies, including Tencent, instructed to monitor the content produced by their users and, where necessary, remove it.
Censoring social networks is one thing, but censoring WeChat — Tencent’s prized asset and China’s top messaging app with more than a billion monthly users — is another thing altogether. Tencent has been roundly (and rightly) criticized for implementing a range of “silent” blocks that, for some terms, prevent messages from being sent or picked up by the receiver.
Likewise, it has also purged millions of accounts from WeChat following numerous rounds of government-led initiatives that crack down on media, pornography and unsubstantiated rumors.
Those crackdowns and censorship moves are not false, but Gizmodo is painting a picture that suggests Tencent is complicit in cleaning its slate.
The truth is that the company, even a company of its size, has no choice in the matter when the Chinese government comes knocking with demands. To ignore the summons, or fail to act, would cause Tencent — a publicly listed company — serious problems that would not reflect well for shareholders. Adhering to these demands is expensive and resource-intensive, as it requires a new “content checking” division with specialist employees hired and trained. In short, it is certainly not something companies willingly opt-in to.
A rite of passage
Tencent is definitely not in control of the agenda, as anyone with an eye on tech in China can tell you. The company suffered a poor end to 2018, in part because the Chinese government decided to freeze new game licenses.
That left Tencent unable to monetize its new roster of games, a situation that saw it lose countless hundreds of millions in revenue and saw its share price drop by nearly 50 percent between March and October. The freeze has only just thawed, with a handful of licenses tentatively distributed this year.
So much for the Chinese government looking after their own.
These issues affect every tech company in China with a meaningful presence. Getting hit by government demands and censorship requests is a rite of passage for tech startups in China, like a dreaded badge of honor that shows your service has grown suitably influential to be considered a threat.
That happened to ByteDance, the company behind TikTok, the current social darling for many U.S. media. Last year, its CEO was forced to issue a groveling apology after it had “overemphasized growth and scale over quality and responsibility.”
The company resolved to increase its content checkers (read, censorship police) from 6,000 to 10,000 people, a move likely made to appease the government. Still, it was made an example of, with a number of TikTok apps removed from app stores and shuttered on the word of authorities.
Welcome to the club!
But it isn’t just Chinese companies.
Apple, the self-proclaimed protector of freedom, removed every unlicensed VPN from its China-based App Store at the behest of the government in 2017. While, in a rare move that runs counter to its core privacy focus, it relented to state rules and agreed to store Chinese iCloud user data on Chinese soil, through a government-backed cloud service provider, no less.
The difference between Apple and the likes of Tencent and ByteDance is that the U.S. company has a choice. It entered China voluntarily and it has complied with free speech-quashing demands to keep its revenue flowing.
Tencent and ByteDance, as the biggest internet players, would have a tough time moving outside of their native China and remaining in business. Maybe, in today’s censorship-heavy era, some Chinese companies wish they had started out in Hong Kong or another domain, but few markets have the opportunity that comes with 800 million internet users.
The point is that they have no control over censorship demands and no leverage to push back. To blame them — and paint them as co-conspirators, even “architects” — is misleading.
Tencent, in fact, has a reputation as a skillful investor that can be an asset for non-Chinese companies.
Its capital and guidance helped Fortnite creator Epic Games completely revamp its business into the smash hit success that it is today. Elsewhere, Tencent is the largest single investor in Snap — CEO Evan Spiegel has said he often seeks its guidance — and its other deals include Tesla, Discord, Kik and more, none of which have resulted in the introduction of censorship.
Yes, Reddit and Tencent are strange bedfellows, but that’s exactly the point of venture capital. The best founders surround themselves with different opinions, perspectives and experiences to ensure that they are evaluating all possible strategies. Tencent can give Reddit unique insight which, for those who use it, can only be a net positive for the future health of Reddit’s business and continued service.
Respawn will premiere its ‘Star Wars’ game on April 13th
After years of work, Respawn is nearly ready to show what its Star Wars game is all about. Lucasfilm has announced that EA and Respawn will formally reveal Star Wars Jedi: Fallen Order at a Celebration Chicago panel on April 13th. The two are unsurprisingly shy about details, but you’ll meet a Padawan who survived Order 66 (the command to exterminate the Jedi) and experience what it’s like to live in an era where there are seemingly no Jedi left. You can expect “never-before-released” details of the game, Lucasfilm said, which isn’t hard when the game is largely a secret.
Spotify launches in India – TechCrunch
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Just for India, Spotify users who do not pay for a subscription can play any song on demand on mobile. There are also playlists for India and a “Starring…” feature that includes music from Bollywood movies.
“Not only will Spotify bring Indian artists to the world, we’ll also bring the world’s music to fans across India,” said Spotify CEO Daniel Ek.
This isn’t necessarily a precursor to some big action like breaking up a big company or imposing rules or anything like that. It seems more like a recognition that the FTC needs to be ready to move quickly and decisively in tech matters.
Against a backdrop of public backlash and looming federal regulations, the world’s biggest e-cigarette manufacturer has released video of the original thesis presentation that launched the company.
After years of prototypes, the age of foldables has finally arrived.
With the latest improvements, developers can use the machine to solve larger problems with fewer physical qubits — or larger problems in general.
Some thoughts from the former SVP of Walmart’s global e-commerce supply chain.
Cracks are starting to appear in Steam’s armor, threatening to make it the digital equivalent of GameStop — a once unassailable retail giant whose future became questionable when it didn’t successfully change with the times. (Extra Crunch subscription required.)
FTC ruling sees Musical.ly (TikTok) fined $5.7M for violating children’s privacy law, app updated with age gate – TechCrunch
A significant FTC ruling issued today will see video app TikTok fined $5.7 million for violating U.S. children’s privacy laws, and will impact how the app works for kids under the age of 13. In an app update being released today, all users will need to verify their age, and the under 13-year-olds will then be directed to a separate, more restricted in-app experience that protects their personal information and prevents them from publishing videos to TikTok .
In a bit of bad timing for the popular video app, the ruling comes on the same day that TikTok began promoting its new safety series designed to help keep its community informed of its privacy and safety tools.
The Federal Trade Commission had begun looking into TikTok back when it was known as Musical.ly, and the ruling itself is a settlement with Musical.ly.
The industry self-regulatory group Children’s Advertising Review Unit (CARU) had last spring referred Musical.ly to the FTC for violating U.S. children’s privacy law by collecting personal information for users under the age of 13 without parental consent. (The complaint, filed by the Department of Justice on behalf of the Commission, is here.)
But its regulatory issues followed it to its new home.
According to the U.S. children’s privacy law COPPA, operators of apps and websites aimed at young users under the age of 13 can’t collect personal data like email addresses, IP addresses, geolocation information or other identifiers without parental consent.
But the Musical.ly app required users to provide an email address, phone number, username, first and last name, a short biography and a profile picture, the FTC claims. The also app allowed users to interact with others by commenting on their videos and sending direct messages. In addition, user accounts were public by default, which meant that a child’s profile bio, username, picture and videos could be seen by other users, the FTC explained today in its press release.
It also noted that there were reports of adults trying to contact children in Musical.ly, and until October 2016 there was a feature that let others view nearby users within a 50-mile radius.
“The operators of Musical.ly—now known as TikTok—knew many children were using the app but they still failed to seek parental consent before collecting names, email addresses, and other personal information from users under the age of 13,” said FTC Chairman Joe Simons, in a statement. “This record penalty should be a reminder to all online services and websites that target children: We take enforcement of COPPA very seriously, and we will not tolerate companies that flagrantly ignore the law.”
COPPA law, of course, becomes a bit complex to implement for apps like TikTok that sit in a gray area between being oriented toward adults and being aimed at kids. Specifically, apps preferred by tweens and teens — like Snapchat, Instagram, YouTube and TikTok — are often clamored for by younger, under-13 kids, and parents often comply.
But some parents are caught off guard by these apps. The FTC says Musical.ly had fielded “thousands of complaints” from parents because their children under the age of 13 had created Musical.ly accounts.
In addition to the $5.7 million fine, the FTC settlement with Musical.ly includes an agreement that will impact how the TikTok app operates.
It says TikTok is now considered a “mixed audience” app, which means there needs to be an age gate implemented on the app. Instead of locking out under-13 users from the TikTok service, younger users will be directed to a different in-app experience that restricts TikTok from collecting the personal information prohibited by COPPA.
TikTok is also complying with the ruling by making significant changes to its app. It will now restrict under-13 kids from being able to film and publish their videos to the TikTok app. It will also take down all videos from kids under 13.
Instead, the under-13 crowd will only be able to like content and follow users. They will be able to create and save videos to their device — but not to the public TikTok network. Nor can they share videos on the app with their friends if they use TikTok via a private account.
As TikTok already has a large number of younger kids on its app, it will push an app update today that displays the new age gate to both new and existing users alike. Kids will then need to verify their birthday in order to be directed to the appropriate experience.
This is not likely going to have an impact on how many kids use TikTok, however. Kids today already know to lie to age pop-ups so they can enter a restricted app. That’s how they set up accounts on Facebook, Instagram, Snapchat and elsewhere.
However, the move at least puts TikTok on a level playing field with other “mixed audience” apps instead of allowing it to pretend U.S. children’s privacy laws do not exist.
TikTok reportedly has been installed a billion times worldwide, according to recent data from Sensor Tower. The company doesn’t publicly disclose its figures, but the FTC says since 2014, more than 200 million users had downloaded the Musical.ly app worldwide, with 65 million accounts registered in the United States.
The Commission vote to authorize the staff to refer the complaint to the Department of Justice and to approve the proposed consent decree was 5-0. Commissioner Rohit Chopra and Commissioner Rebecca Kelly Slaughter issued a separate statement, shared below:
The Federal Trade Commission’s action to crack down on the privacy practices of Musical.ly, now known as TikTok, is a major milestone for our Children’s Online Privacy Protection Act (COPPA) enforcement program. Agency staff uncovered disturbing practices, including collecting and exposing the location and other sensitive data of young children. In our view, these practices reflected the company’s willingness to pursue growth even at the expense of endangering children. The agency secured a record-setting civil penalty and deletion of ill-gotten data, as well as other remedies to stop this egregious conduct. This is a big win in the fight to protect children’s privacy.
This investigation began before the current Commission was in place. FTC investigations typically focus on individual accountability only in certain circumstances—and the effect has been that individuals at large companies have often avoided scrutiny. We should move away from this approach. Executives of big companies who call the shots as companies break the law should be held accountable.
When any company appears to have a made a business decision to violate or disregard the law, the Commission should identify and investigate those individuals who made or ratified that decision and evaluate whether to charge them. As we continue to pursue violations of law, we should prioritize uncovering the role of corporate officers and directors and hold accountable everyone who broke the law.
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