November 22, 2017

Breakingviews: China’s Skype Crackdown Invites Messaging Wars

by Breakingviews

The message on call and chat apps is starting to come in clearer. Apple said on Tuesday it removed Microsoft’s Skype from its store in China, as foreign communication services get squeezed out of the market. This suppression strategy also supports homegrown developers, such as Tencent’s WeChat, and their overseas expansion plans. Chinese tech should gird for retaliation.

Beijing’s Communist Party has long required online operators to comply with domestic censorship laws. U.S. companies have either accommodated, or left, as with Alphabet’s Google. Others, including Evernote, created local versions of their software.

Travelers from the People’s Republic transport China’s great firewall with them on local SIM cards, which block access to services like Facebook even when they roam. Thus, even compliance fails to help much. WeChat has a near-monopoly on Chinese smartphones.

The idea of U.S. authorities endorsing a similar sort of policy may be distasteful, but cannot be ruled out in the current environment. Forcing the vast Chinese diaspora to migrate to encrypted American chat tools could be an affordable way to infuriate Beijing. Blocking WeChat might well qualify as muzzling speech, but Donald Trump, irritated by his own free press, is unlikely to be swayed by such idealism.

American technology executives, for their part, seem more worried about other risks. Oracle, for example, recently wrote a letter to U.S. lawmakers calling for a harder line against Chinese investment. The U.S. Federal Communications Commission’s plan to dismantle so-called “net neutrality” rules that prevent internet providers from restricting access to certain websites also could provide a way, however troubling, to curb the likes of WeChat.

Short-term economic damage might be limited. Neither side generates much profit in the other’s market. The United States exported $54 billion in services – a category that includes internet, finance and travel – to China last year. It sent as much to Canada, and more to the United Kingdom.

Chinese tech outfits do, however, want to go abroad. They also need to tap into America’s engineers and infrastructure. The prospect of all-out messaging wars could lead to plenty of collateral damage.

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