China Divided By Popular Online Mobile Game

(Chinese Version)

Editor’s Note:

Recently, heated discussion was aroused over Honor of Kings, a Chinese role play mobile game that has been viral among the young generation nowadays. People’s Daily even doubted in an op-end article that Honor of Kings was commercially successful, but constantly releasing negative energy to society. In response, Li Min, producer of the game, issued a statement and expressed his grievance. Nevertheless, Tencent’s stock plunged as much as 5.1% after the article hit public attention, losing some 136 billion Hong Kong dollars (17.5 billion US dollars) in market value. In this article, the author pointed out that Chinese internet companies have reached a turning point. It is our wish that our readers can join us that together discuss the boundary of Chinese companies’ corporate responsibility in a more rational manner and renew our perception of the Chinese internet society.

Seven years ago, Tencent had a hard fight with Qihoo 360 over their PC safety assistant software; seven years later, Tencent may suffer a minor setback, though it is a lot more potent this time.

It is safe to say that Tencent is already a dominating force in the Chinese internet circle. From the aspect of registered user and user active time, Tencent is undoubtedly the top one Chinese internet giant; from the aspect of market value, it only has one rival left, Alibaba. At present, it is having a tug of war with Alibaba in the $ 300 billion level.

Still, one has to take the bad with the good. Honor of Kings, Tencent’s most successful game so far, has also brought some controversies. Even slight negligence might evoke strong criticism against the whole company, as did seven years ago.

According to statistics, with over 200 million registered users, Tencent earned RMB 6 billion simply within Q1 2017. This game not only proves Tencent’s potency in the game industry accumulated within a decade, but also demonstrates Chinese companies’ capability to set up global standards, though it remains to see if it could succeed overseas. Still, the one who wants to wear a crown must bear the weight. This setback might mark a turning point for Chinese internet companies as they move from private self-rule to public collegiality.

At its core, the controversy is: it is said that a large share of Honor of Kings’ players are primary school students. In a society where protection of juveniles and modeling of values are attached high importance, it’s natural that it will evoke controversy. Although Tencent timely carried out anti-addiction policy, nobody can tell if it is a passive response to social criticism or something Tencent has planned long time ago.

What I want to say is this should have been part of Tencent’s certainty management plan. I wonder if you still remember, but several years ago there was also a heated discussion over the attitude towards game. It was when Jack Ma, founder and chairman of Alibaba, declared that Alibaba would never make games.

The discussion ended up with nothing definite, partly because game players at that time are mainly adults who are expected to take responsibilities for their own behavior.

However, it is also likely that as Tencent’s influence grows, it needs to make some products with positive influence. As a matter of fact, Tencent has already been playing an active role in public welfare to resolve social disputes. Besides, Tencent has also played an active role in changing capital market’s valuation standards towards gaming companies.

Amid such strong social acquiescence and self-reinforcement, IM and social network giant Tencent has grown into a company highly reliant on games. As of recently, games contribute 50 per cent of Tencent’s total revenue. While the public regard Tencent’s success as some sort of legend, Tencent also seems to be satisfied with its achievement, just like its game players are immersed in the virtual game world.

Even if Tencent wants to change, it doesn’t dare to do anything bold under the pressure of market expectation. So far, games still constitute a major growth engine for Tencent. It is not until recently that Tencent realized that it was caught in an awkward situation:

Although there’s nothing wrong with Tencent legally speaking, Tencent could justify its behavior, saying that the game is not meant for pupils, and that it’s just coincidence that the games are spotted by them. To a degree, Tencent could even argue that the game marks China’s major breakthrough in cultural innovation. However, this still won’t convince parents and teachers who are worrying that young students might get addicted to games. After all, they constitute a large group in China and have a broad coalition.

It reminded me of something quite similar. After Baidu was strongly criticized due to paid medical ads recommendation system, Baidu responded by saying that all the medical advertisers had passed strict reviewing. Nevertheless, the public won’t care if these advertisers had passed reviewing or not. It was the possible consequence that really mattered.

Here comes the problem: should internet companies like Baidu and Tencent be held responsible for the negative effect caused by their products? I didn’t mean legal responsibility, but rather other kinds of responsibilities.

A common answer might be: you can’t hold kitchen knife makers responsible for robbery, hold telecom companies responsible for phone scam, as long as they follow the relevant rules and regulations.

This is also known as The Principle of Neutrality. However, this rule may not apply to Baidu and Tencent, because:

What Baidu can bring to users is highly efficient and accurate information connection ability. This is also key to Baidu’s long-term development and business value accumulation. Although Tencent can apply the Principle of Neutrality when it comes to communication service, just as telecom companies did, it can’t shrink its responsibility when it comes to social network and game service.

After all, Tencent has always set its goal as “wining global respect” and regard credit as a key factor in its decision-making process. To a degree, when young students are playing games, their guardians (parents) are yielding their rights to Tencent. However, Tencent didn’t take necessary measures to prevent pupils from getting addicted to the game.

In addition, since it’s users’ choice that contribute to Tencent’s success, it’s natural users may ask for something more from an internet giant like Tencent. But, not every giant company returned the favor. For example, after Apple users purchase Apple’s products at a high price, they have to continue to pay for its other services. As Apple charged iOS developers for platform fee, ordinary users will have to bear the burden.

One of the fundamental forces to drive internet giants to move from self-rule to social coal collegiality is: as these internet companies grow from independent business entities into part of the economic and social infrastructure, it’s commercially reasonable to go beyond industry-level competition and turn to ecosystem-level competition, since their interests are increasingly connected to the entire ecosystem (both social level and economic level).  This is also why they have to go beyond their self interests and adopt an open mind to outside criticism.

For example, Tencent has to take into consideration not only its own interests, but also those of Apple, Android, media, other gaming companies, other game developing teams inside Tencent, game players and their social attributes, their teachers and parents, interested party in the gaming world and the government.

Another changing force, however, comes from social requirements. After all, according to the social value evaluation system, not only the weight of individual companies is small, but also the entire internet economy is just one of the various indicators. Although there are different social preferences, the balance among efficiency, equality and diversity has become a common principle. To effectively manage different factors, people would turn to the government and social organizations.

Therefore, Alibaba, as part of the economic infrastructure, has to take into consideration factors besides its own operation, including employment, offline and online lifestyle maintenance, fair distribution, overall economic efficiency, innovation protection, economic sustainability, etc; Tencent, as part of the technological, social and economic infrastructure, has to take into consideration not only the above factors, but also issues such as user time, economic management, virtual society management, overall happiness, personal career development and socialization, technology and social consequence, etc.

If they failed to actively take these factors into consideration, they will either lose their status at last, or face government and social interferences. As they undertake higher responsibility as regulators, they have sufficient reason to get involved in the new management environment. After all, amid the social value system, internet economy, or even economy, is only a part of it.

In this sense, as relevant rules and regulations are enacted, the free soil for internet boom no longer exists. Think about the management model of traditional economy and social infrastructure, and you will understand what it means. It is known that leading companies in telecom, energy and public service sector pricing have to put their pricing power under the supervision of government regulations. Besides that, this is just one example of the supervision they have to face.

After two decades of limit-free development in the Chinese internet circle, relevant government departments and economic entities have got ready to show their muscle.

The other days, EU already fined Google 2.42 billion euros for its abuse of monopoly and impediment of competition. Donald Trump also publicly doubted if Amazon was shrinking its responsibility to pay “internet tax”, if social network platforms such as Facebook and Twitter were not playing any role against anti-terrorism and fake news. Apple’s decision to prefer user privacy to anti-terrorism is, to some degree, quite short-sighted.

If Baidu PostBar incident is a wake-up call for the Chinese internet industry, then Honor of Kings’ recent setback may turn out to be a turning point of not only for Tencent but also the Chinese internet industry. It is time major internet players renew their understanding of their positioning and goal.  As they create a new world and gain huge benefit from it, they have to do more than what’s required from them, help society manage this new world. If they fall behind, other social and government forces will take over.

Nevertheless, government and social interference will increasingly become a new norm. Since it’s difficult to go beyond self interests, after all, Chinese internet giants will have to accept increasing social collegiality.

It is probable that government regulations will increase in the near future, and that internet giants scale without earning profits. As traditional forces may bounce back, social forces will gradually form and become a vital (or the most vital) part of the Chinese internet circle. At that time, if it is still an era of three giants, it would be SAT (society, Alibaba and Tencent).

From my perspective, Facebook’s founder Mark Zuckerberg is one of the few internet entrepreneurs who are well aware of the changes internet companies have brought to society so far. He specifically chose “creating a world where everyone has purpose” as the title of his Harvard Commencement Speech 2017, though it remains to see if he will change the attitude towards matters such as anti-terrorism and fake news.

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[The article is published and edited with authorization from the author @Yin Sheng please note source and hyperlink when reproduce.]   

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost. 

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