Everyone loves Reddit!
Especially Chinese tech companies.
Tencent is investing millions in Reddit.
Which is weird, because Reddit is blocked
in China.
So what’s their real motivation?
Welcome back to China Uncensored.
I’m Chris Chappell.
Reddit.
The tech company that calls itself
the “front page of the internet”
is looking to expand it.
Reddit has just raised 300 million dollars
in the company’s fourth round of funding.
Half of that is from a major Chinese tech
company.
But who cares if it’s from a Chinese company?
Because this round funding puts Reddit’s
valuation
at an astronomical 3 billion dollars.
Now that’s a lot of money,
especially if you consider what Reddit actually
is.
It’s basically a no-frills online message
board
where people create discussion threads called
Subreddits
and then vote up or down posts
they think are awesome or lame.
Example—a Subreddit called ‘funny’.
Where Reddit user B_rodriguezzz
posted a photo captioned
Jamaican Super Lotto winner taking NO CHANCES
...was upvoted by 119 thousand people.
Or the Subreddit “Who’s the dumbest person
you’ve ever met?”
which features a post by a teacher
about a 9th grade student who allegedly
“ate an entire 24 pack of crayons,
puked,
and then did it again the next day”
and “tazed himself in the neck before a
football game.”
NoahtheRed’s post was upvoted nearly 18
thousand times.
Anyway, you get the idea.
This company is worth 3 billion dollars.
And that’s of course why Chinese tech giant
Tencent
is investing a whopping $150 million in Reddit.
Tencent is headed by Ma Huateng,
also known as Pony Ma...
Who’s apparently trying to figure out exactly
why offering to invest 150 million in Reddit
has sparked such a torrent of fury.
See, Reddit users started rebelling
as soon as they heard about the Chinese funding
deal.
Rebelling how?
By posting content that would be banned in
China.
Like Tank Man,
the guy who famously stood up to stop tanks
that were rolling out of Tiananmen Square
in 1989
that had just run over pro-democracy protesters,
including these students on hunger strike.
Or also on Tiananmen Square,
but more recently
police brutally arresting practitioners
of the banned Falun Gong spiritual group.
But not all the backlash is gloomy.
There’s the cheery design proposal
for Reddit’s new logo
featuring Winnie-the-Pooh.
The cuddly bear is often censored in China,
because of its obvious resemblance
to Chinese leader Xi Jinping.
But don’t worry,
it’s unlikely Xi Jinping will see
all those Winnie-the-Pooh memes,
because since last August,
Reddit itself has has been banned in China.
Now Reddit users are afraid that their beloved
platform,
known for uncensored free speech,
is going to get censored to meet
the demands of the Chinese Communist Party.
See, Tencent has a history of censoring things
the CCP doesn’t like.
Its Chinese platforms QQ and WeChat
are both heavily censored,
and they work with Chinese authorities
to give them access to user data.
Amnesty International did a report back in
2016
on tech companies protecting users
against threats to privacy
and freedom of expression.
The results?
Not so good for Tencent.
“Chinese firm Tencent came bottom,”
the report reads,
“scoring zero out of 100,
ranked as the company
taking least action on messaging privacy,
and the least transparent.”
Snapchat,
which Tencent owns a 10 percent share of,
came in third from the bottom.
Who would have thought the app
that scans millions of users
with advanced facial recognition technology
so they can wear cute dog ears
would have privacy issues?
But defenders of Tencent’s investment in
Reddit
say that Tencent is a private company,
so there’s no real danger they’d bring
in censorship
or leave a back door
for the Chinese communist party to access,
right?
Well, Tencent is a private company...
with Chinese characteristics.
What I mean is, in China,
pretty much every company that’s made it
big,
is only big because it has links to the Communist
Party.
Here’s Tencent CEO Pony Ma,
and another famous tech CEO, Jack Ma—
no relation—
clapping during a speech Xi Jinping gave
two months ago inside the Great Hall of the
People.
Boy, they were given great seats.
In that speech where everyone was forced to
clap,
Xi Jinping said that the Communist Party
would maintain leadership “over all tasks.”
That includes tech companies.
Both Jack and Pony were also honored at that
event
for their “outstanding contributions”
to China’s economy.
So yeah, they may be called private companies.
But they’re still under the direction of
the Party.
According to the Financial Times,
more than 35 Chinese tech companies,
including big ones like Sina and Baidu,
have quietly set up communist party committees,
which “assess a company’s daily operations
to ensure they do not stray from party objectives.”
Think of it like your company’s HR department,
but one that’s working for
the authoritarian state you live under.
You do not want to get called in
for that performance assessment.
 
But it’s not all bad!
Xu Zewei,
founder of Chinese fintech platform 91 Finance,
was quoted in the Financial Times article
as saying that “to be affiliated with the
Communist party
is good for our brand”
and “when recruiting,
we specifically seek out party members.”
Trey McArver, co-founder of a consultancy
that advises companies on how to do business
in China,
put it even more bluntly.
“No company,
private or state-owned,
gets ahead in China without aligning itself
with the party’s larger goals.”
Take a company like Huawei,
the world’s biggest telecom equipment maker.
Not only does it make telecom equipment,
but it also helps the communist party
with little things on the side, like espionage.
Just last month,
the Polish government arrested a Huawei employee
on allegations of spying for China.
And federal prosecutors in the United States
are pursuing a criminal investigation of Huawei
for allegedly stealing trade secrets
from American business partners.
Investing in US technology
is one of the Chinese Communist Party’s
strategic objectives.
And it’s not just the well-known companies
like Reddit
that they’re interested in.
Chinese private companies—which, again,
once they get to a certain size,
pretty much all have links to the Party—
have been investing heavily in Silicon Valley.
That’s partly because they want to get in
on US technology.
Why?
It’s all part of China’s secret plan
to rule the world through high-tech.
Just kidding.
It’s not a secret plan.
It’s called “Made in China 2025”,
and it’s even been promoted by state-run
media like CGTN.
“China has been making great efforts
to promote its manufacturing industries
since the implementation of the Made in China
2025 plan.”
According to the US Chamber of Commerce,
it’s “a 10-year comprehensive blueprint
aimed at transforming China
into an advanced manufacturing leader.”
Well that doesn’t sound all that dangerous.
Except experts like Michael Brown,
who runs the Pentagon's Defense Innovation
Unit,
says there’s a big worry in the intelligence
community.
They fear the Chinese regime could get their
hands on
too much sensitive U.S. technology,
transfer it back home,
and pose a threat to American national security.
"They don't play by the same rules that we
do,” says Brown.
“So cybertheft is on the table
and industrial espionage is on the table.”
So China’s big play in Silicon Valley
is about way more than Reddit or Snapchat.
It’s about finding ways to acquire the newest
technologies
and ship them back to China,
where they can be help China
dominate the world’s tech industries,
inform the Chinese military,
or be useful in the state surveillance apparatus.
And just how big is China’s
big play for American innovation?
This chart from Reuters
shows that since 2015,
when the Made in China 2025 plan was launched,
the amount of Chinese cash
flowing into US startups exploded.
Last year it surpassed 3 billion dollars.
Now, I’m not saying these investors
are all accessing sensitive technology.
And Chinese venture capital is still a minority
compared to American venture capital.
But according to Adam Lysenko,
an analyst for the Rhodium Group,
the risk exists that Chinese companies
could access sensitive technology “in an
early stage
where U.S. government,
military and other security individuals
haven't had a full chance to evaluate
the implications of those technologies."
But there is is some good news
on the national security front.
The Trump administration has taken steps
to curb the risk of Chinese investment
in US technology.
Trump signed a new law clamping down on
China’s access to American innovation.
It broadens the authority
of the Committee on Foreign Investment in
the United States.
That’s the committee that examines national
security risks
of foreign investments in the U.S.
Already the committee has recommended blocking
deals.
They’ve done that several times so far,
including putting a halt to
a Chinese state-backed company’s attempt
to buy a US semiconductor company for 1.3
billion.
And the administration’s harder line
on protecting American intellectual property
has slowed the flow of Chinese funding.
And those deals have mostly stopped,
partly because of the hassle of having to
deal with
a potential CFIUS review.
So the real danger of Chinese investment in
US technology
is not so much about social media sites like
Reddit.
But, does Tencent’s investment in Reddit
mean that Reddit posts will be censored
to please the Chinese Communist Party?
Right now, it’s unlikely,
unless Reddit wants to get unblocked in China
and is willing to self-censor to do it.
Other US tech companies,
like Facebook and Google,
have been willing to self-censor
to get into the Chinese market.
Which is bad,
because it normalizes
and legitimizes state censorship.
But Tencent’s Reddit investment
seems separate from that, for now.
 
So hopefully Reddit posts like this one
can escape the long reach of Chinese censors.
Unless Reddit users give it a thumbs down.
And before we go,
it’s time for me to answer a question
from one of you who supports China Uncensored
by contributing a dollar or more
though the crowdfunding website Patreon.
"HuHanmin.. of the Hill People" asks:
"What do you think of the reporting on the
following?
"Guaido has said all lawful agreements approved
by Venezuela's National Assembly will be honored,
a statement widely seen as an olive branch
to China."
Good question, Hu Hanmin.
I think Guiado needs all the international
support
he can get right now.
And given that the Chinese regime
has been supporting Maduro
with money and weapons,
Guiado may feel it’s worth a big compromise
to get the Chinese regime to switch to his
side.
Frankly, that’s how politics works.
Guido is not in a strong position
to challenge China right now,
even if he wants to.
We’ll have to wait and see what happens
if he actually gets into power properly.
If you want to learn more,
listen to the China Unscripted podcast
where I interview an actual Venezuelan
expert/comedian about this.
The link is below.
Thanks for your question.
And as always,
I hope all our supporters on Patreon
will continue to leave thoughtful,
interesting questions within each Patreon
post,
so I can answer them on the show.
Thank you so much for your support.
You’re what keeps the lights on
here at China Uncensored.
Once again, I’m Chris Chappell.
See you next time.
