Originally aired on January 25 @ 1:30 AM - 2:00 AM EDT
Companies operating abroad often face a trade-off in values, between openness and centralization or competitiveness or control. As an increasingly attractive market, China is betting this won't deter business.
In this episode, Grant, Nandini, and KH will dissect this issue in the context of China's 'Great Firewall', and will discuss what Internet restrictions might entail for businesses operating there.
Welcome everyone. This is episode six of Vue Internet, a show that initially began as a French view on technology history and culture and is now broadening its initial ambition. My name is Karl Henrik. I'm on the sales enablement team here at Cloudflare and I am based in San Francisco. Hi all, I'm Nandini. I'm also based in San Francisco and I'm a public sector accounting executive. Hi everyone, I'm Grant Humphreys and I'm also based in the San Francisco office. I'm a mid-market account executive and this is Bao Bao, my golden doodle or unofficial mascot for the series, which is perfect because he also speaks Chinese. 你会说中文,对吧?好,good boy. I'm happy to mention Chinese because that is in fact the topic of the day. The title of this episode is The Great Firewall and for those who don't know, that is the kind of combination of legislative actions, regulations and technologies that the Chinese government uses to really regulate the Internet there. One of the reasons we wanted to cover this topic is that because we work for Cloudflare, we're inherently passionate about making the Internet more open and reliable and we're really interested in just the nature of operating businesses in China, what that entailed for companies who move there, the kinds of trade-offs that they need to make and then from our side, what are these values that these businesses need to keep in mind when they're operating locally. As I mentioned, this great firewall is not just a singular technology or singular technical feature, if you want to call it that, it's more a combination of legislation, regulation, technologies and actions by the Chinese government and one of its ideological foundations was a quote from Deng Xiaoping, who's kind of commonly known as the father of modern day Chinese economy, who said, you know, if you open the window for fresh air, you're kind of bound to let some flies blow in as well and so the great firewall was really meant to regulate that and keep the Internet as kind of clean as it possibly could be while keeping in mind that there are certain things that they would prefer not to have on there. So I guess just to kind of kick it off, Grant and Nandini, are there any particular instances of kind of great firewall activity, something you've seen recently that you thought might be interesting to cover or look into more deeply? Yeah, so I've actually, I've been to China, I did a year of schooling in Xiamen and I've also seen what it's like in Taiwan. So without getting too political, different experiences and one of the first things you notice when you're in mainland China is certain things you search for either don't come up or you get an error returning or it constantly loads, things are blocked. I mean, most people realize and a large portion of the population actually uses VPNs for that purpose. So things like Wikipedia, Facebook, Twitter, a lot of these standard social media apps and information apps or search engines that we use are in fact blocked in China and then those services are filled in by local Chinese ones such as Baidu, Youku for YouTube, Weibo for Twitter, a lot of things like that. So that's kind of when you, if you were to get off the plane today in Shanghai, Beijing or anywhere else, you would kind of notice that. Minus a VPN, that virtual private network, you would not be able to access those, which is I think maybe the first thing people kind of run into when they get there. A second layer that kind of comes up is when you start using Baidu and some of the Chinese ones, you kind of see how the content is kind of tailored. And again, that's just the different philosophy of we're used to in the West of, hey, a purely full raw Internet and all that that entails versus something that's more controlled, something that's more, you know, I would assume for the benefit of people trying to censor that. Kind of like back to your metaphor about the window, trying to make sure that not everything bad comes in, you know, just two different philosophies. So that's something that's very interesting. And the Great Firewall has, from its inception in I think it was 1994 under Project Golden Shield, has greatly expanded, changed, altered the way that it filters and kind of just decides what content is delivered and what is not or which is delivered slowly versus which is delivered, you know, fast. It's very interesting how much time, energy is put into maintaining this other side of Internet philosophy that we in the West really don't ever interact with. Yeah. I mean, I just, I think that what strikes me are sort of the comparisons that we can make between like Western approaches versus like Chinese approaches. And it's, what's, there's two things that I think first come to mind. Like one, we as Americans are, we see this Chinese Great Firewall and we're just sort of like appalled. We're like, alarmed is probably a better word. We're like, oh no, that's terrible. Those poor citizens of China or something like that don't have access to like this information and knowledge and abilities to communicate and access like, you know, just Western thought and all that other stuff. And even just like other, not even just Western thought, just thought in general, academia and everything like that. But then at the same time, you do have a lot of people who are in China who really do support this approach. And a lot of youth that are kind of like under this, following this political movement and this approach to the Internet and believe in it. And that's the first thing that's sort of like, wow, that's really is like a clear difference in thought that's not going away anytime soon. And then the second one is how different are our different approaches as far as like making other people take on our viewpoints, right? So we have in the Western view, we believe in like free speech, free Internet, open societies, all that other stuff. And we have a long history of trying to enforce this very specific viewpoint on the rest of the globe. And now you see China, it's not like I think, in like, in the 90s, there was a sort of like a thought process of like, one, best of luck in trying to regulate your Internet. And then two, if you can regulate it, it's only going to be to your detriment, it's only going to be a one sided thing that like China is going to be doing, you know, but we're actually seeing that they are not only, you know, putting this great firewall for themselves, but even those ideas are being distributed and into other countries and adopted. And, you know, if you have a country that's like, you know, we'd really like to regulate what our citizens can see, read and talk about our politics or politicians, and we need a better way of doing this, China's willing to step in and be like, hey, here's our algorithm, or here's our software that we've been using, you could try it out for yourselves. So that's, to me, like, there's some clear parallels in strategy. I don't really understand what the what either approaches ultimate motivation is, like, should the whole all the world be all a democratic society? Or should all the world all be like, like a communist society. And I don't really know what the benefits are for that kind of approach and motivation and strategy. But I, the parallels are very interesting to me. I will say, because I actually think this is interesting, is the notion of governmental kind of involvement over what is moderated is actually impossible to scale, right? I mean, there's just so much content out there. And in the end of the day, one of the interesting things about the great firewall is a lot of this stuff that is supposedly in violation of Chinese rules and regulations is reported on by the people, the citizenry, it's kind of like an IT ticket, you put level of priority level of urgency. And if you have 5 million people in the country that are all reporting on the same thing, well, you know, more likely than not, the government will action on it. So so there is an element of crowdsourcing involved with this, too. And one of the interesting things about the great firewall is you can replicate content that is, quote, unquote, objectionable, to a certain extent, if you are objecting to it. So in a way, you can get a message out there and saying, oh, I disagree with what X person said in Shanghai. But just by virtue of having that debate on the Internet, that might be something that reflects well on the government, right, of having a lot of people kind of stand up and say, I'm outraged at this. So in a way, that message can get out there, if even just by virtue of making it seem like a debate. One of one of the kind of more interesting parts of this whole debate, there was a great article on stratechery by Ben Thompson last year, about Daryl Morey, who was the kind of general manager for the Houston Rockets, I'm sure you've kind of both read about this. And he was widely critiqued at the time, because he retweeted a photo that said, you know, fight, fight for Hong Kong, or like stand with Hong Kong fight for freedom, something like that. And the interesting thing about that whole debate wasn't that kind of broadcasters locally acted on it right away. But the fact that Twitter is actually banned in China. So the question there is like, how would people see it in the first place? It must have been reported on by someone on Weibo or WeChat, or kind of reposted there, rather than immediately seen by officials on Twitter itself. So the whole debate there is also about like platforms, right? What is the right platform that you need to actually activate? And are there ways that you can leverage a Weibo or WeChat to actually push forward, you know, kind of like government, government objectives, because Daryl Morey, kind of the week after that, he had to step down, he had to resign, because the NBA is such a huge force in China, right? I mean, they, they make tons of money from the Chinese market. And it's not really worth, it's like something worth kind of giving up, if that makes sense. Well, and Carl, even going further, you bring up these conundrums that come up. And you know, the, our idea, Western idea of looking at the Internet is free, like has its own conundrums and issues. But in China, you see things like that, but it's from a business perspective, you need this to accomplish that. But you have this government mandate to, let's say, perfect examples, not use a VPN. So you've got programmers, software developers, all these types of tech workers in China, that are allowed to use VPNs, because they need to access GitHub, they need to access these other non-Chinese local sites for development work for powering the economy, powering, you know, the software, and, and all these things that are important as China continues to like, you know, ramp up its economy. So it's just funny, it's almost like, you know, the Chinese government knows that people are using VPN. And like you said, it's a level of tolerance, you know, someone commenting and saying, hey, I don't like this person in Shanghai, this political figure. Everything is all good until someone says, hey, I don't like this political figure, let us go rally about that. That's when it becomes because the China has as a law saying the Internet cannot be used to dissent or undermine the government. And for them, where it crosses the line is when you try to say, hey, what looks like a riot, disturbing the peace, right? You can voice your complaints. Now, whether those complaints are then, you know, immediately refreshed faster and then erased or flooded by other, you know, content folks and moderators, that's up to, you know, debate, but you those will appear that you on Weibo could go and say, I do not like the provincial chairperson here, right. But when you say, I don't like him, and we should do something about it, insinuating you're going to rally and have some form of what China would label as public disturbance, or insubordination, insurgency, but that's, that's when the act happens. So you've got this, these rules in place, but then you also have these economic needs. And it forces it apart. Yeah, it's kind of interesting, because like, what you lay out with, like, there are these laws and everything like that in there. I imagine that like the Chinese people, then like, even when they're the way of when they are making that political statement probably has a lot more intention behind it, right? Like, for us, like, we can be like, Oh, I don't like this political figure. I don't like that one. It can be like a throwaway one. We're just like sharing the memes or retweeting and, or like, whatever, just like completely just like, two seconds, no thought, put it out there. And without any recrimination or consequence or anything like that. But it sounds like if anyone is supposed anything political, or what can be deemed against this law, there is there are heavy consequences to that. So it actually kind of makes me want to like, look into and learn more about like, what is the thought process? And what is the culture around making any political statements on the on the Internet in China? Like, wouldn't every statement then be a radical protest on in some ways? So it's yes and no. I mean, so in my experience in China was people are political, but they're not as I would say not as ostensibly loud about it as we are used to in a US kind of perspective, or like a Western sense. That being said, because I put this, there's a bit of a cultural difference as well. Call it what you will, but growing up in China, going to school, university and everything, chances are you might not be the most politically active person or as politically active as somebody who grew up in France, where it's very promoted to say, hey, voice your opinion. You know, regardless of your research level, or what you know about it, pick a side, stick with it and push it as hard as you can, right? That's there's a very big cultural divide there. Another thing that's really interesting is you have that, again, it's another sliding scale of these are words and terms that are right out banned, you can never look them up. Even if you try to, I did this when I was in China, I experimented with certain words, looking them up in French, and Chinese and English, and then even misspellings in English, and those are blocked. Some things that you look up have different pages served to you, versus, you know, another content that you might be looking for might be four pages down. So it's, for lack of a better term, it's a very ingenious, large system that you don't feel the weight of a regulation, or a feeling of like government pressure as much. And there's kind of three things, right? The main one blocking, right? A second one, what they call is kind of flooding. So you might make a post saying, I don't like so and so leader, and then you might get an immediate flood of these online censors that say, Oh, yeah, no 30 responses to your post that might downvote it or say that you're wrong. And that makes someone go, Oh, maybe I'm maybe I'm wrong, maybe I'm not gonna, I don't want to fight in your brain, right? It kind of makes you think, let me not push this, I'm the enemy here. And the third one is is friction where, you know, I can't say this is true or not. But you know, people will say that, oh, certain sites that might have a higher chance of hosting political dissident information will be slower. Or WeChat or Weibo here on these topics with these keywords will load slower. And because we can't, you know, we're impatient, and we see a loading bar, we say, Oh, nope, I'm gonna leave it. So you avoid participating in that. It's really quite fascinating. And, you know, that in and of itself could be a discussion that lasts for hours and hours or a web series that goes on. I kind of wanted to see if we could talk about just kind of Cloudflare's positioning and more about the Internet infrastructure in China, if that's okay with you guys, just because I think that's pretty fascinating. Because it's Cloudflare, again, talking about being in the middle, we're in the middle of, for a lot of our customers, and people who want to use Cloudflare, their possibly biggest market of consumers in China, you know, us, and then our CDN, and then, you know, those companies that may be US based for, you know, or France, or, or what have you with their apps. So I'm going to take it. I mean, yes, there may be half of it. Because there are a lot of kind of moving parts like taking a step back any company that has to operate in China, as we do, and probably most tech companies out there do as well. There are like three main questions that you'll have to confront. The first one is about value laden, right? Like what, what are your values as you're going in to this new market? Like how do you promote values like security, like openness, in a closed market to a certain extent, perhaps semi closed, and kind of stay true to who you are and your foundation? The second one is product uniformity, right? This is something that we have, and other businesses have, like, to what extent can your product remain the exact same in China as it is everywhere else? And then to what extent do you have to kind of tweak it, or nudge it in ways to adapt to a local kind of regulatory environment that is not as kind of beneficial in certain ways, but still helpful for the kind of broad majority of the Chinese population, right? And so I think, thinking here of Cloudflare Stream, thinking of Cloudflare, you know, workers and other things, I mean, we have a partnership with, with Tencent, to a certain extent, in the bandwidth alliance, we have a partnership with JD Cloud, now kind of brand, brand new. And we have to consider these questions of product uniformity, because we have an entirely different network, kind of a unicast network in China. And these, these questions come up a lot. And then the third one, kind of going back to that is partnerships, right? So like, how do you leverage a kind of joint venture? Or how do you leverage an M&A kind of activity with local firms in China, to improve what you have in the offering that you have, versus kind of mitigating some of these issues that you might confront. And so kind of not delving too deeply into the Cloudflare side of things. But this is something that really any company might have to confront. When we get on customer calls, you're both aware, like we have questions around ICP licenses, and the extent towards which we can actually guarantee that you will be offered one, which is not always, because there are so many kind of different steps that you have to go through. So that's just kind of like top of mind, what might come up, but I might have left something out there. No, that's, that's, that's excellent, I mean, it's, it is interesting. If, when we're as Cloudflare, right, saying, hey, maybe we can help you with an ICP license, right, or get you to tap into the largest Internet using population in the world. Right. It's funny, because sometimes I feel like people look at us like, you're our golden ticket, get us in. And because of that, you know, that helps our bottom line, and you're a godsend. Other people are more like, hey, we already have a presence in China, can we get faster? And, you know, it's interesting, I'm very familiar with our Baidu partnership. Not so much as with our with our JD partnership with using their colos, right, their, their, their points of presence. But what's what's so fascinating to me is that at the end of the day, even when we facilitate people in and it's like, you know, using Baidu's data center, I mean, points of presence and JD's at the very, when traffic is in China, anything bandwidth wise, and all the public paths to the Internet are all government controlled. So at the end of the day, at the very top, we're all renting bandwidth from the Chinese government to business, any business that's doing that. And it is so different than what we're used to. Right. And I think it's amazing. We've got a company that that, you know, can do it. And when we have an office in Beijing, in China for that. But it just, sometimes I'm just surprised to just discover, like, man, like, there are all these hoops to jump for. And like you said, Carl, it's that justification of you have this business need and this potential carrot of getting into the Chinese market, but then you have to do this, this, this and play by, you know, PRC's government's rules, right? Some companies can do that some can't, some do it for a while, and then don't do it. Google's a perfect example, right? They were allowed for a while, and they were not. We'll see if they come back. Fascinating, truly, to me, fascinating. I'm very interested to see, you know, what the future holds for not only China's Internet footprint, but how then that affects other people in our space on aspects of security, CDN content, you know, types of content served and other benefits that we can provide people trying to break in there. So I'm actually curious to hear maybe, what do you guys think of the future, I guess, of the Internet from a Western perspective, and maybe from from a Chinese perspective? What do you think? Yeah, I would say like doing all the research, you know, that we read up in preparation for this, like a something that I, a question that I keep keeps coming to mind is, can, can big, well, one, why, I guess, yeah, can big tech be successful without Chinese market, you know, or is that like the ultimate golden carrot that, you know, makes you the best or like the biggest tech company of all? I mean, obviously, the Western companies, Amazon, Facebook, Twitter, you know, Google, all these big name ones, they are very successful by any measure, on their own, for whatever level of involvement that they have in China, which, you know, sometimes some years, it seems like they have a lot of expansion into that market. And some years it's retracted. And, and I don't see that push and pull going away anytime soon. I, but I also I kind of like, wonder, like, at what point I would actually imagine that there could be longer number of years or gaps when we, when Western companies are trying to, to work with the Chinese market, um, then, and I don't see, I don't see the Great Firewall going away anytime soon. Like, it's the ideology is too, it's too deep. It's too, you know, it's, it's there to stay. And I also don't, I also actually kind of like when you think about it, I actually kind of like think of it as like an extension or an ongoing conversation or debate that's been started decades ago, really. I mean, it's, it's, it's just like a new flavor. Um, if anything, I would imagine that the, the discussion and debate is just going to take another turn, um, in a different direction, but it's just going to be the same conversation. And it does come down to like two ideologies of thought. It's not even about, um, two different ways of doing business. It comes down to like, you know, whether or not how you want to run your society and your, and your culture and your certain set of like rules that you think an ordered, um, healthy community exists. I, um, oh, go ahead, Carl. No, I was going to say, I fully agree with that. I think in large part, kind of going back to the example we had earlier of what regulation actually looks like in China, I think the silver bullet is going to be in order to portray a debate on the Internet as both sides and the outrage expressed towards something, you cannot censor that thing from being viewed because you need the population and the people to know kind of what, what sparked a certain conversation. Right. And I think that's a better place to be than kind of just removing the impetus of that conversation altogether. Um, I have a passage here from the first set of regulations that were enacted in the late nineties that I think might auger a potential future, but it said, and I quote, it said, individuals are prohibited from using the Internet to one, harm national security, disclose state secrets, or injure the interests of the state or society. And then it goes, they're also prohibited from using the Internet to create, replicate, retrieve, or transmit information that incites resistance and so on and so forth. It's kind of like a UN resolution. You have all these verbs that all essentially mean the same thing. It's like hearing that I actually kind of like imagine a world, like a future where Western countries kind of adopt more stringent rules that maybe not fully to the extent of what you just read, but certain aspects of it. And I think we're actually kind of headed towards there. You know, I don't think, I mean, like net neutrality, like the open society and conversations with like, you know, growing, you know, hate speech. Like I think the, the question that's always been grappling, like our social platforms and just platforms in general around like what should be whitelisted, what should be blacklisted has become even more complicated, even more nuanced. And I think at some point people are just going to be like, you know what, here's the line. And actually, and then later on, you know what, actually we need to like move that line even back further and further and further to some point, you know, like, I think if anything, China's approach is probably going to be more adopted by Western countries than the other way around. And, and I am, I am both optimistic and concerned at the same time. I think, like you said, nominee, like regulations are on the rise, right? Call it what you want, but GDPR, right? That's a regulation. It's for the good of things. You can wrap it, but this is going more towards that Chinese mindset of kind of regulation. The big difference is, is it regulation in-house where no one else gets to talk about it? We make all the decisions and it's not voted on. And even other international committees that also share the Internet with us, are they going to be allowed to influence our policy? Right now, that door's closed in China, right? And even though we're getting more towards like a regulatory kind of thing here, it's coming from a different place. And that to me is going to cause more and more friction between, you know, the two sides of like, Hey, doing business in China versus, you know, doing Internet business anywhere else. Now, what I'm optimistic about is that gives an opportunity for companies like Cloudflare and others that can be like a vessel to help people get ICP license and get into China, or kind of be that neutral infrastructure content delivery provider, right? Facilitator, let's just use that word, to help these companies navigate that as when friction happens, right? Certain things occur, policies that make it more difficult for people to break in to a new market and vice versa, right? So I am very interested to see as this continues, how regulatory things in the West, kind of come up, and we start looking into that, but then also seeing if China is willing to open up a little more and play ball. Will there be a joint committee of, you know, the Chinese premier, the US, you know, department, you know, other government departments, both in China, the US, Europe, the rest of the free world, all together saying, hey, let's make one resolution that affects everyone. And China says, yes, we're willing to play ball, right? Or even on the other side, we as the West are willing to make concessions, China, because we understand that you guys are the largest Internet users, and you have all this, and a lot of things are manufactured there. Who knows? But as things stand, it is quite a fascinating topic, and I feel very thankful that at Cloudflare, we can one, have these conversations, and two, we kind of experience it through our lives daily. Well, we're at the top of the hour, with five seconds left, so I'm just gonna say thank you both. We could talk about this forever, but great to see you both, and have a good rest of your day. All right, goodbye.