How Social Commerce Tightens China's Grip on the Internet

On April 29, 2013, China’s biggest e-commerce firm Alibaba Group announced that it would acquire an 18 percent stake in Sina Weibo for US$ 586 million, a deal that could reshape the country’s Internet landscape. Sina Weibo is China’s most popular Twitter-like microblogging platform with over 500 million user accounts, but it has yet to find a profitable business model.

By connecting the millions of Weibo users to Alibaba, an e-commerce platform that handled more transactions than Amazon and eBay combined last year, the deal is widely heralded as a game changer that could jump-start an era of social commerce, or social media driven e-commerce, in China.

New exclusion in the era of social commerce

Alipay has become the world's biggest third-party online payment platform. By (CC: BY)

Alipay has become the world's biggest third-party online payment platform. By (CC: BY)

But the deal also marks a subtle trend which will enable the authoritarian state to tighten its grip on the Internet. As the line dividing economics and politics in the Internet space erodes, new possibilities arise for governments to pursue systematic online persecution beyond content control. Google’s Eric Schmidt and Jared Cohen spell out this scenario in their new book “The New Digital Age“:

As connectivity spreads, Internet service and mobile devices offer vital outlets for individuals to transcend their current environment, connecting them with information, jobs, resources, entertainment and other people. Excluding oppressed populations from participating in the virtual world would be a very drastic and damaging policy […]. As banking, salaries and payment transactions move increasingly onto online platforms, exclusion from the Internet will severely curtail people’s economic prospects. It would be far more difficult to access one’s money, to pay by credit card or get a loan.

As a country facing the Internet “dictator’s dilemma,” the above scheme presents great potential for China to bring the Internet’s convenience to bear upon curtailing of online freedom. By embracing the Internet, the Chinese government has reaped its benefits for economic and social developments, thereby enhancing its legitimacy. According to McKinsey, a global management consulting firm, China is the second largest e-tailing market in the world, after the United States, with sales totaling US$ 120 billion in 2011. But at the same time, the Internet has become a vibrant public sphere filled with criticisms about government policies and corruption.

The well-known Great Firewall, which blocks “undesirable” foreign websites, and elaborate social media censorship, with forced cooperation from private Internet companies, are the official responses. A recent Economist special report described the Chinese Internet, with its distinct mix of economic freedom and political “unfreedom”, as a flourishing “giant cage” which is constantly watched over.

Chinese regulators are taking steps to make this cage much stronger by clever manipulation of the economic desires and needs of citizens. The Alibaba deal is a foretaste of how this could be done. Bill Bishop, publisher of the Sinocism China Newsletter, highlights its sinister aspect in his New York Times Dealbook column:

The Alibaba deal is about strengthening mobile positioning and spurring social commerce. The government would probably be pleased to see Weibo shift from being a hotbed of social and political commentary and critiques to more of an online shopping arcade that, through integrated online payment functionality, has the voluntary real name registrations of many users.

Sina Weibo, China's biggest microblogging service.

Sina Weibo, China's biggest microblogging service. By jonrussell CC: BY-SA.


Information totalitarianism

In December 2011, the Beijing Municipal Government issued rules requiring microblogging services to verify the identity of their users. In December 2012, China’s legislature, the National People’s Congress, passed a law requiring users to provide their real names when registering with an Internet service provider. While the rules have thus far not been well implemented, China’s leadership sees this as a top priority. In late March 2013, the State Council released its task list for the next five years, which includes implementation of an Internet real name registration system by June 2014.

But the task list includes something more worrisome, namely, the establishment of a unified credit information platform and a unified social credit coding system based on citizens’ ID numbers. Combined with an online real name system, these systems will give the government an unprecedented ability to gather and act on user data. In the future, it will be easier than ever to electronically isolate outspoken individuals from economic and social opportunities. Beijing-based dissident writer Mo Zhixu calls this a state of “information totalitarianism,” one in which there will be no hiding place left for anyone (via Seeing Red in China):

First of all, once the real-name system is used in website backstage management where one ID card matches one ID number, as Alipay (支付宝) does, those ID numbers culled online will soon become useless for repeated use. Secondly, with regard to activists using ID numbers of relatives and friends, if the conventional deterrence measures don’t work, the government could resort to building control into services by bundling ID card and the correlating social credit code with matters of personal interest. That way, relatives and friends will not want to, nor dare, to lend their ID numbers to anyone else.

Having established “a unified credit information platform with gradual input of information about finance, commercial registration, tax payments, social security contributions, traffic violations and other credit information” and “a unified social credit coding system based on identification number,” personal credit information will necessarily include information about Internet use. Thus, the Internet real-name system will be tied with one’s social credit code, and even with the social welfare system. From there, it’s not unimaginable for the government to use the unified credit code as the exclusive online ID code.

When so much is at stake, the threat of being excluded from the Internet will have a powerful chilling effect. Self-censorship will be heightened to a whole new level for concerns of being excluded from commerce, finance and social security.

Alibaba founder Jack Ma recognizes that Sina Weibo has increased transparency in China, and stresses that Alibaba wants it to be more successful, but not by turning it into a glorified advertising platform. However, with the looming information totalitarianism, freedom will be eroded and manipulated in subtle ways, especially when the economic, political and ideological spaces converge. There is only a fine line between freedom and enslavement. The greatest danger comes when netizens are unaware of how power is being exercised over them, as Global Voices co-founder Rebecca Mackinnon, author of “Consent of the Networked: The Worldwide Struggle for Internet Freedom”, noted in an article for The Atlantic:

In the Internet age, the greatest long-term threat to a genuinely citizen-centric society — a world in which technology and government serve citizens instead of the other way around — looks less like Orwell's 1984, and more like Aldous Huxley's Brave New World: a world in which our desire for security, entertainment, and material comfort is manipulated to the point that we all voluntarily and eagerly submit to subjugation. If we are to avoid this dystopian fate, political innovation will have to catch up with technological innovation.


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