Are companies completely beholden to the Chinese market? Do they have any leverage to stand up to the Chinese government? Here are three factors to consider.
1. Companies cave to demands for censorship when their competitors cave
The fervor over the NBA and Blizzard might remind you of controversies a decade ago when U.S. social media companies were trying to enter the Chinese market. Google, for instance, exited China in 2010 ostensibly to protest government censorship.
China’s primary form of foreign censorship — “the Great Firewall” — blocks Chinese viewers from Facebook, Twitter, Google and many other foreign websites. Using a proxy server or virtual private network (VPN) lets Chinese netizens circumvent the firewall, but few people in China do this, even before the government began clamping down on VPN use.
Chinese users generally don’t try to evade censorship because they don’t need to — they have homegrown social media options like Weibo, WeChat and Douyin. These Chinese tech companies censor content for the Chinese government. Sometimes, they make their own censorship decisions to preempt government sanctions; other times they take directions from the government.
In contrast, U.S. tech companies like Google and Facebook dominate in almost every other market. When governments other than China demand censorship, our research found U.S. companies can more easily resist because there aren’t domestic alternatives. Users will circumvent government censorship to keep accessing their preferred U.S. social media platforms. In China, however, low overall domestic demand for U.S. social media platforms puts U.S. companies at a disadvantage.
In 2018, reporters and Google employees revealed the company was working on a secret search engine, Dragonfly, to meet Chinese censorship demands by leaving off sensitive topics. Facebook, too, was working on a censorship tool designed for the Chinese market.
So why would Google and Facebook want to develop censorship tools? Bending to Chinese censorship demands would let them compete with Chinese tech giants.
2. Companies that dominate the Chinese market may be more resistant to censorship
In contrast, platforms without strong Chinese competitors may be more resistant to censorship because citizens will continue to use them. When Beijing began blocking Instagram during the 2014 Hong Kong protests, we, along with co-author Will Hobbs, estimated over 16 million users in China jumped the Great Firewall to continue using the popular photo-sharing app. Once Instagram users were across the Wall, they signed up for Twitter and Facebook, and started looking at political content on Wikipedia. We found the block of Instagram proved to be a “gateway” to other political information that was arguably more dangerous to the Chinese government than Instagram itself.
What does this mean for the NBA and Blizzard? Basketball has become a popular sport in China, and the NBA is the most popular sports league. Unlike Facebook and Google, there’s not an equally attractive Chinese alternative. Even if nationalistic professional basketball fans in China are angry at the NBA, they may also be disappointed they can’t watch their games.
While the NBA faces an economic hit for resisting censorship, it may have more leverage vis-a-vis the Chinese government than U.S. social media companies do. If Beijing bans NBA coverage, die-hard fans might seek alternative ways of viewing games that involve circumventing censorship — like the Instagram scenario. This potential gateway risk could give more incentives to the Chinese government to strike a deal with the NBA rather than blacklist it.
The case with Blizzard is more complex. China is one of the world’s largest gaming markets, where a mix of Chinese and foreign companies compete. Maintaining its Chinese user base while resisting government censorship demands would be difficult for Blizzard unless other gaming companies joined in.
3. Caving to censorship can hurt corporate bottom lines
As the NBA and Blizzard quickly found out, giving in to Chinese censorship can create a backlash in other markets — and that can hurt the bottom line. Blizzard, for instance, experienced a user boycott in reaction to Blitzchung’s suspension.
Self-censorship by companies can also hurt efficiency. Is Blizzard going to screen gamers and employees for their political views? In a recent large-scale experiment, we applied for jobs in foreign companies, private companies, state-owned companies and public institutions operating in China. We found most companies in China, including foreign-owned firms as well as local Chinese companies, do not screen out job seekers for their political views, in part because they want the best talent. Companies in China are not enforcing government censorship across the board when making business decisions that are less visible to the government and to the public.
Companies often have leverage — through market demand for their products or by operating out of the spotlight like the companies in the job-seeker experiment. GitHub, blocked briefly by China in 2013, can now operate there because Chinese programmers demanded access to the software development hub, as there were no viable domestic alternatives. If companies can find ways to use their leverage, research suggests they might be better able to resist government demands for censorship while bolstering their bottom line.
Jennifer Pan is an assistant professor in the department of communication at Stanford University.
Margaret Roberts is an associate professor in political science at the University of California at San Diego. Her recent book, “Censored: Distraction and Diversion Inside China’s Great Firewall” (Princeton University Press, 2018), examines censorship in China.