China has the world’s most centralised internet system

THE HEADQUARTERS OF Western tech giants are typically horizontal affairs, in keeping with their supposedly flat corporate hierarchies. Facebook’s Silicon Valley campus is a jumble of two-storey buildings connected by parks and bridges. Google’s is a collection of dozens of separate structures spread over an entire neighbourhood in Mountain View. Employees commute between them on colourful bicycles.

By contrast, Tencent, China’s biggest tech titan, has gone fully vertical. Its brand new home consists of two office towers, 39 and 50 storeys high, which are among the tallest in the coastal city of Shenzhen. The only horizontal elements are three sky bridges connecting the towers, which boast facilities such as a running track and a rock-climbing wall. Once everyone has moved in, the buildings will accommodate more than 10,000 employees.

Tencent’s towers are a fitting symbol of China’s internet, which is already the world’s most centralised by far. The state has always kept close tabs on what is going on in its virtual space, and more recently has teamed up with the country’s online giants, notably Tencent and its main rival, Alibaba, to control that online world even more tightly. What is happening there can be seen as a counter-project to the West’s Web 3.0—a kind of Hamiltonian internet. The project may provide further proof of what the late Melvin Kranzberg, an influential historian of technology, once stated as its first law: “Technology is neither good nor bad; nor is it neutral.” In other words, it all depends on the aims it serves.

When China started building its “Great Firewall” around its version of the internet 20 years ago, Wired magazine, then the central organ of online culture, wondered whether it would suffer the fate of its physical predecessor, the Great Wall, which largely failed to protect the country against raids. But it has got more and more effective. In particular, its operators have learned to balance the aim of keeping out Western democratic values with the need to maintain close links to the world economy. China’s recent clampdown on virtual private networks (VPNs), services that tunnel through the Great Firewall, seems designed to fine-tune these filters.

Within China, censorship is, in essence, outsourced to the internet firms. In April Toutiao, a popular news-aggregation service, found itself in the cross-hairs of China’s top media regulator for posting “vulgar” content. The firm’s chief executive, Zhang Yiming, quickly issued an apology, saying he should have realised that “technology has to be guided by the core values of socialism.” He also promised to hire another 4,000 censors, on top of the 6,000 his firm already employs. The total number of “content controllers” working in China’s internet industry, some reckon, is more than 2m.

Nearly the same number, it is thought, work for the Chinese government, injecting propaganda and misinformation into the social-media flow. In one study in 2017 a group of researchers at Harvard and other American universities found that this “50-cent party”, so called because members supposedly receive 50 cents (in yuan) for every piece of content, generates nearly 450m posts per year. Most of them do not attack critics of the Communist Party and the government, or even discuss controversial questions. “We show that the goal of this massive secretive operation is instead to distract the public and change the subject,” the authors conclude.

Despite this tight government control, Chinese internet firms enjoy extensive commercial freedom. Indeed, they are less regulated than Western ones, which is a big reason why the competition is much tougher and innovation in some areas, such as ride-hailing and rental bikes, has been faster. Kai-Fu Lee of Sinovation Ventures, a venture-capital firm based in Beijing, compares Chinese entrepreneurs to gladiators. Hardened by the copycat wars of the 2000s, during which most of them tried to replicate Western ideas, they have now come into their own. And unlike startups in Silicon Valley, those in Beijing or Shanghai sometimes tackle dominant firms head-on.

All the same, Alibaba and Tencent are the acknowledged leaders, particularly in financial services (Baidu, China’s number three, struggles to keep up). With their respective subsidiaries, Alipay and WeChat Pay, they dominate mobile payments. In the big coastal cities, these services have all but replaced cash for smaller purchases and generate immense amounts of data, which the companies then use to target advertisements, improve their e-commerce services and power artificial-intelligence (AI) offerings. Alibaba and Tencent also control much of China’s venture capital. According to McKinsey, a consultancy, between them they make about half of all VC investments in mainland China. In America the tech titans account for only around 5% of such investment.

But as Xi Jinping, China’s president, tightens his grip on the country, the tech giants, too, have found themselves more constrained. In addition to being forced to ensure that the government retains its monopoly on information, they are now also being required to help make China a “cyber-superpower”, turning them into “quasi-state-owned companies”, in the words of Max Zenglein of the Mercator Institute for China Studies, a think-tank. Nowhere is this clearer than in AI, where the country wants to be the world leader by 2030 and plans to build a domestic industry worth $150bn.

China’s biggest advantage in AI is data, of which, thanks to more than 770m internet users, it has more than any other country. But instead of decentralising this treasure trove, as the Web 3.0 movement hopes to do in the West, China’s plan seems to be to centralise them even further to make the most of them. Each of the tech giants has been put in charge of specific types of digital information, turning them, in effect, into national data champions. Alibaba collects data needed for smart cities, Baidu for autonomous vehicles and Tencent for medical imaging.

Some in Beijing even want to enroll blockchain technologies in their quest for technological world domination—further proof that, as with the internet itself, technology is what you make it. The government has clamped down hard on Bitcoin and other crypto-currencies because it considers them a threat to government control and a danger to the financial system. But shorn of their anonymity, distributed ledgers can be a boon for regulators: they can provide visibility, for instance on who owns what. In early June it emerged that China’s central bank has built a blockchain-based system that digitises cheques, allowing it to track them. It also seems to be considering issuing its own crypto-currency. And NEO, a Chinese firm which has launched a blockchain similar to the West’s Ethereum, is exhibiting some distinctive Chinese characteristics, such as a digital-identity service.

Leading thinkers in China argue that putting government in charge of technology has one big advantage: the state can distribute the fruits of AI, which would otherwise go to the owners of algorithms. Feng Xiang of Tsinghua University, one of China’s most prominent legal scholars, recently warned that “if AI remains under the control of market forces, it will inexorably result in a super-rich oligopoly of data billionaires who reap the wealth created by robots that displace human labour, leaving massive unemployment in their wake.” If government can ensure that AI serves society instead of private capitalists, he argues, the technology promises to create wealth for all.

Essential services

Such thinking has also been gaining some traction in the West, although so far only at the political fringes. The underlying idea is that some types of services, including social networks and online search, are essential facilities akin to roads and other kinds of infrastructure and should be regulated as utilities, which in essence means capping their profits. Alternatively, important data services, such as digital identity, could be offered by governments. Evgeny Morozov, a researcher and internet activist, goes one step further, calling for the creation of public data utilities, which would pool vital digital information and ensure equal access to it. Ben Tarnoff, a left-wing writer, argues that “data resources” should be nationalised and put under state control. “Data is no less a form of ‘common’ property than oil or soil,” he recently wrote.

As with Web 3.0 projects, however, such ideas face many practical problems, whether in the West or in China. AI is still in rapid flux. Putting a utility in charge of data would almost certainly slow innovation. National data champions would also make life harder for startups, which may need digital information in a different form. And picking winners has generally proved tricky.

More important, to most Western thinkers the idea of governments controlling their people’s data has something Orwellian about it. Even in the West, where such data utilities would presumably be democratically controlled, the potential for abuse would be huge. Not least, it would provide police and spooks with direct access to people’s data.

When it comes to democracy and human rights, a Jeffersonian internet is clearly a safer choice. With Web 3.0 still in its infancy, the West at least will need to find other ways to rein in the online giants. The obvious alternative is regulation.