First published in the Daily Maverick 168 weekly newspaper.
If Big Tech in the US thought it was under the whip, it should spare a thought for its counterparts in China.
Unlike the looming crackdown in the US, with a raft of new laws and emboldened watchdog agencies, American firms have somehow avoided consequences on the stock market.
Not so in China. Tencent, the icon of the mobile-friendly tech firm, has lost more than $120-billion or 20% in market value since last week. It was among other big names, which saw as much as $1-trillion wiped off their stock at one point.
China appears to have run out of patience with its own tech titans, and has instituted its own brutal, regulatory crackdown.
In April, internet giant Alibaba was fined $2.8-billion for anticompetitive practices, a sign that the once-bright star of Jack Ma’s Ant Group has waned just as much. Its planned $37-billion (R550-billion) listing was also cancelled late last year.
Impending congressional oversight, by a younger, more tech-savvy class of elected officials, hardly compares to being branded “spiritual opium” by no less than the Xinhua News Agency – in essence the official mouthpiece of the ruling Communist Party.
“No industry or sport should prosper by eradicating an entire generation,” Xinhua wrote about the gaming habits of youngsters, some of whom play mobile games for as much as eight hours a day. It called games “electronic drugs”.
Watching endless hours of TV is okay. But gaming is rotting the youth’s brains, or whatever the argument is. Talk about the prejudice of successive generations. Remember when evil incarnate was rock ’n’ roll and the medium under threat was radio?
And talk about culture clashes. In China, mobile gaming is “spiritual opium” and “electronic drugs”. In the West, it’s “successful user engagement”.
But, as analyst Ke Yan of DZT Research warned, “You can never pay too little attention to any Xinhua story.
“The word choice of ‘spiritual opium’ is especially harsh. It would be surprising if the regulators won’t do anything about this,” he told Bloomberg.
The story about the dangers of gaming appeared in the Xinhua-affiliated Economic Information Daily, where Tencent’s hugely popular Honor of Kings mobile game was mentioned.
After previous criticism about gaming, Tencent introduced face recognition to prevent children from using their parents’ credentials to make in-app purchases. Nice innovation, albeit overlooked in the milieu.
Not surprisingly, the news hasn’t been much better for Naspers, which owns 28% of Tencent via Prosus. It has lost R200-billion in market value because of the Tencent sell-off.
The backlash against the power of tech firms is clearly a global phenomenon.
Along with a more aggressive oversight role by US President Joe Biden’s administration, the European Union is also scrutinising tech firms, and already has its eyes on the ethical quagmire that is artificial intelligence regulation.
“It is unprecedented to see this kind of parallel struggle globally,” Daniel Crane, a law professor at the University of Michigan, told The New York Times. “The same fundamental question is being asked globally: Are we comfortable with companies like Google having this much power?”
The short, sad answer is no. The problem is that now the giants of surveillance capitalism have all this data about us, they’re not just going to stop using it.
In China, there are real consequences. Disgraced CEOs get fined; some go to jail.
An appropriately placed story in a government mouthpiece can wipe off billions of dollars in shareholder value. That gets tech firms’ attention. If only it worked the same in the West, where the US’s Big Tech seems bulletproof to threats of new laws and lawmaker inquiries.
On Wall Street, where the real power still remains, Facebook, Google, Amazon and Apple could face government scrutiny, but they continue to return those juicy profits.
US regulators and legislators could do with China’s much bigger stick. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.