Brutal web vice of the People's Republic crushes innovation, growth

Analysis Recent high profile scandals in China, the fall of Poliburo member Bo Xilai and the US Embassy dash of human rights activist Chen Guangcheng, have highlighted the limits and the grim extent of country’s world-leading online censorship regime.

However, web firms within the People’s Republic and online businesses looking to expand into the region will now be more worried about whether they can survive and thrive there given the increasingly prohibitive restrictions placed on them.

Most people have now heard of the Great Firewall of China, the colloquial name given to the URL and keyword filtering and IP address blocking technology put in place by the Communist Party as part of its giant Golden Shield Project. The government maintains it is there to help prevent social disorder, fraud and the spread of pornography, but it would seem to any outsider that its key aim is to quell any political dissent and keep the party in power.

As important as the technology, however, is the army of censors policing the internet in China. No one knows exactly how many work for the government in these Orwellian roles – some have said as many as 30,000 – but it is clear that the authorities today increasingly expect the web firms themselves to pick up the bill, and the management headache, of self-censoring content on their platforms.

The authorities’ biggest problem of late has been social media and especially the Twitter-like weibos (microblogs – the most famous of which is Sina Weibo) which have sprung up over the past year or two, providing web users with an alternative platform via which to consume and spread information.

It was primarily in response to the unprecedented explosion of content on these platforms – and presumably the fear of social media nurturing revolutionary intent, as it had done during the Arab Spring – that the government recently announced a series of restrictive measures.

First, the web bosses were ordered to step-up self regulation to prevent ‘harmful’ content being spread on their sites; then journalists were given strict guidelines designed to discourage them from publishing anything they had gleaned on such sites; and finally the government instituted a real-name registration policy to discourage users from posting an inflammatory or illegal content.

But even these rigorous measures failed to stop rumours flying around social media as the Bo Xilai scandal was breaking that a failed coup had taken place at the Party’s headquarters in Beijing.

The government hit back swiftly after the incident, closing 16 websites, arresting six rumour-mongers and doling out unspecified punishment to web platforms Sina and Tencent.

Taking a turn for the worse

What makes matters worse for those web companies operating in China, or foreign firms pondering a move into the country, is that this tightening of censorship laws is unlikely to recede once the politically sensitive once-in-a-decade power handover in the Party is completed next year. Rebecca MacKinnon, former Beijing bureau chief for CNN and censorship expert, told The Reg that while things tend to go in cycles of “loosening and tightening”, the overall trend is towards tightening.

Sina, for one, predicted a gloomy start to 2012, thanks in part to the substantial increase in overhead costs placed upon the firm because of the new regulations. Operating costs in Q1 rose 60 per cent year-on-year, due in a large part to HR and infrastructure costs for its weibo business.

According to the Wall Street Journal, Sina’s full-time staff rose 50 per cent to 5,400 from 3,600 in 2010, and it is still on the look-out for more in-house censors.

However, while Sina has been increasingly outspoken about the effects of censorship on its business, rival Tencent appears to be thriving, and such established players have to grin and bear it if they want access to China’s huge internet population, according to MacKinnon.

“My sense is that when it comes to doing business in China there are a range of different costs businesses have to incur and internet companies factor these in,” she siad. “Everyone has to pay it so it’s not seen as a competitive disadvantage and whatever business you’re in there are some fairly unique costs to pay in China.”

Jeff Kim, chief operating officer of content delivery network CD Networks, told The Reg his firm’s advice to clients who want a web presence in China is not to allow any user-generated content on their sites at all. The firm advised The Economist, for example, to ditch its blogs and any satirical content – areas which can draw the ire of the censors very quickly.

“If you are a customer who wants to get their apps or website into China we charge a $10,000 set-up fee – this covers infrastructure, licenses, checking the site content – but it could be more if there are more sites or apps,” explained Kim. “It’s not like you’re putting your site on Amazon S3 here.”