This article by Rachel Lu and David Wertime originally appeared on Tea Leaf Nation on March 31, 2013 and is republished as part of a content sharing agreement.
Could the growth of Weixin, China’s hottest new social network, be in danger?
Weixin, developed by Chinese Web giant Tencent and marketed globally as WeChat, is a free mobile communications app with about 300 million total users. It allows users to reach out to old friends–and find new ones–via voice message, photo sharing, video chat, and walkie-talkie. Weixin was introduced in 2010 and has grown rapidly domestically and internationally ever since.
But the government may have other plans. On March 31, State-run China Central Television (CCTV) posted the following [zh] via its account on Sina Weibo, a popular micro-blogging platform:
Head of the Ministry of Industry and Information Technology (MIIT) Miao Wei has stated that the MIIT is currently considering whether to require Tencent, the operator of Weixin, to implement a fee on [the service]. They have already asked Tencent to submit a plan to the Ministry. Miao also stated that fees in addition to data fees paid to telecom operators are entirely reasonable, but the supervising bureaus can view the matter from the users’ perspective, so although fees on Weixin are possible, they will not be onerous.
The comment follows a March 28 statement by another powerful Chinese official that Weixin “should charge a fee.” Tencent has so far held fast its position that it would keep Weixin free.
The move is widely seen by users as a way to placate China’s powerful telecom operators – China Telecom, China Unicom, and China Mobile — who are trying to defend their turf since their core business of voice communication and SMS are threatened by Weixin. All three are state-owned enterprises, also called SOEs. Weixin’s rapid growth may have cannibalized SMS [text message] fees for China’s mobile providers; in 2012, Caijing magazine reported that “the number of SMS messages sent by China Mobile users witnessed record low growth in 2012.” With its powerful voice communication features, Weixin may also have taken a bite out of the operators’ voice fees.
The latest statement from the MIIT has gone viral on Sina Weibo, with over 18,000 users sharing the post and over 6,000 weighing in to comment. User @dhljl [zh] echoed a widely held sentiment that
the day Weixin charges a fee is the day it is destroyed.
Weibo commenters apparently comprised many Weixin users as well, as they rushed to defend the service with argument, epithet, or humor. Tweeted businessman Wang Weijia (@王维嘉):
If Tencent does not want to charge a fee, what law can the government or telecom operators rely on to force Tencent to charge a fee? This is totally unprecedented in history.
Outraged users also point out that the potential fee would be a double-whammy, since users already pay telecom operators for data downloaded over their networks, including for content sent on the Weixin app. @ImKayWu tweeted,
The telecom operators cannot compete with Weixin so they try this underhanded move. Shameless. If we enjoy something nice for free it seems to get in their way.
If the contemplated fee were to become reality, it would mark government’s departure from a relatively laissez-faire approach toward Chinese Internet companies and hark back to the bad old days of planned economy. While the Chinese government engages in active Internet censorship, it has nonetheless given Chinese companies a rather free hand to make business decisions, including whether to charge fees.
One reason for the heretofore hands-off approach is authorities’ stated desire to encourage “indigenous innovation,” a policy announced in 2006 intended to reduce reliance on foreign technology (and line the pockets of Chinese business). In some ways, the so-called Great Firewall of Censorship, which renders Facebook, Twitter and Google Plus unreachable via standard Mainland connections, is part of this policy.
And some would argue that it has worked. China has produced some of the world’s largest Internet companies, including Alibaba, Tencent, Sina and a slew of others, making China one of the world’s largest e-commerce markets and contributing billions of dollars to the economy. [Editors’ note: This is not an endorsement of the Great Firewall.]
With a fee on Weixin, Chinese authorities would undermine that objective and it could kill the golden goose. Weixin has risen to become a potential rival to all comers worldwide, including WhatsApp and LINE, or even Skype and Facebook. As @杨哲__ wrote,
At the start, users chose Weixin because it was free. Now, Weixin [has become] an open sharing platform, and not just because of voice and text communication…Weixin’s competitors have come to include Weibo, Facebook, and [other] social networks.
Weixin’s appeal is indeed vast, particularly within China. It has become known as a way for young Chinese to find romantic hook-ups using its location based services. With its photo-sharing, walkie-talkie, and group-chat functions, it has also become a valuable tool for dispersed families to keep in touch.
The smart money says that Chinese authorities, and the SOEs with whom they remain closely tied, will not follow through with their threat. At best, it would represent a short-term revenue boost to telecom providers, but at the expense of one of China’s most promising and innovative new products. Even that much cannot be guaranteed. The fee may simply drive erstwhile Weixin users into the arms of the inevitable next-generation Weixin copy-cats, who would gladly continue to siphon revenue from the Big Three.
At worst, the move would enrage users and simply shift wealth from everyday Chinese users and an innovative private company to three SOEs. The appearance of an unholy alliance between government and SOEs prompted one Reuters columnist to call the latter a “vampire squid” late last year, and that perception has only intensified with recent negative state media coverage of Apple, Inc. that appears protectionist in nature.
Without knowing Chinese authorities’ true intent, it’s at least likely that they have used recent statements as trial balloons, gauging reaction on Weibo and other social media platforms in order to determine the extent of possible blowback. It would not be the first time that the Chinese Internet, with its relatively free-wheeling commentary, were used as a window into public sentiment by officials who lack more democratic means of pulse-taking.
If China’s government is listening, the message that grassroots users are sending is clear. As @山西大学在水一方 wrote, “Nation, what do we common folks look like in your eyes? Tools to make money? What are you doing to make peoples’ lives better?” In other words: keep your hands off our Weixin.