Twitter’s Plans May Run Into China’s Attitudes Toward the Internet

Twitter disclosed last week that it had confidentially filed for an initial public offering. The secret filing means outsiders are left guessing about many details of the social media giant’s business.

We can be fairly certain, however, that Twitter has no meaningful financial contribution from China. Nor are more than a handful of its reported 240 million active users among the nearly 600 million people on the Chinese Internet. Twitter, like Facebook, YouTube and several other foreign Internet services and news Web sites deemed sensitive, is blocked by China’s “Great Firewall.”

Twitter, however, may still have opportunities to generate revenue from China.

While Google’s consumer Internet services have basically become irrelevant inside China since it refused in 2010 to censor its search results in China, the company earns several hundred million dollars a year selling advertising to Chinese firms that want to reach customers on the Internet outside China.

Facebook, which reportedly tried to enter China via a joint venture with Baidu in 2011 before eventually abandoning those plans, also generates revenue selling access to its global users to Chinese firms.

Sheryl Sandberg, Facebook’s chief operating officer, was in Beijing last week to promote her book “Lean In” and attend the World Economic Forum summer session in Dalian. Ms. Sandberg met in Beijing with Cai Mingzhao the head of State Council Information Office. The office posted on its Web site a photo of Ms. Sandberg and Mr. Cai along with a brief statement noting that the two sides discussed the “important role the Facebook platform plays in helping Chinese companies expand overseas.”

The government’s so-far successful approach in harnessing the Internet is another example of China’s long history of trying to use Western technology to strengthen China while limiting the impact of those developments on Chinese society and the political system.

Beijing allowed the development of a domestic Twitter-like service when it approved Sina’s plans to build a microblogging service. Weibo, which began in August 2009, quickly became the most important and disruptive social media service on the Chinese Internet. Sina, a Nasdaq-listed company with a $5.5 billion market capitalization, reported earlier this year that Weibo had 54 million daily active users.

Sina Weibo has increasingly challenged the Chinese government’s traditional control of the media, leading the government to try repeatedly to rein it in without completely neutering it. Those efforts have never fully worked, as the China Insider column of May 6 noted in discussing a coming crackdown on Weibo and online rumors:

On May 2, China’s State Internet Information Office declared war against online rumors because they “have impaired the credibility of online media, disrupted normal communication order, and aroused great aversion among the public.” One report suggests the regulators have some of the most influential users of Sina Weibo, those with millions or tens of millions of followers, in their sights. Online rumors have been a real problem, but crackdowns against them can be used for broader goals. …

There have been campaigns against online rumors before. The most concerted efforts to reign in Weibo began after the sixth plenum of the 17th Party Congress in October 2011 when official media declared that “Internet rumors are like drugs” and propaganda work should focus on “strengthening the channeling and control of social media and real-time communication tools.”…

The regulators may not always succeed the first time, but it would be a mistake to assume they will not keep pushing the issue, especially when propaganda work and ideology are so core to the party’s control.

This latest campaign is now in full swing, and its scope and intensity have exceeded the previous efforts. The government has issued judicial guidelines to provide a legal framework for prosecuting the crackdown and has arrested dozens.

Charles Xue, an American citizen, well-known venture capitalist and one of the most influential Weibo bloggers with over 12 million followers, is the poster child for the campaign. He was detained on prostitution charges in late August and over the weekend starred in an official media campaign aimed at intimidating those who speak too freely online.

So far, investors do not care about the moves to rein in social media. Sina shares are up nearly 50 percent since late April, and Tencent, operator of a lesser microblogging service as well as the fast-growing social messaging mobile app WeChat, on Monday crossed $100 billion in market capitalization for the first time.

Twitter has opportunities to sell advertising to Chinese enterprises, but it is probably under no illusions that it can expand into the Chinese Internet. The company, along with other global Internet firms, may do well to pay attention to the Chinese government’s efforts to win allies for its approach to managing the Internet.

Last week, Lu Wei, the head of the State Internet Information Office, gave the keynote speech at the fifth China-United Kingdom Internet Roundtable. In his speech, called “Liberty and Order in Cyberspace,” Mr. Lu presented a vision of the Internet as a medium to be managed. That vision is far different from the one articulated by then-Secretary of State Hillary Clinton in her speech in January 2010, “Remarks on Internet Freedom,” in which she argued that “it’s critical that its users are assured certain basic freedoms.”

The actions by the American government to exploit the Internet and use it for surveillance, as disclosed in some of the classified documents provided by the former National Security Agency contractor Edward Snowden, may help China sell its view of Internet governance to many countries around the world. And that would not help the efforts of Twitter and other American Internet firms that are increasingly looking to international growth.