China’s cloud storage opens new tech battlefields

By Chris Dalby Source:Global Times Published: 2016-4-4 22:48:01

Illustration: Luo Xuan/GT

The amount of suspicion between American, European and Chinese companies and governments has grown to a fever pitch. The likes of Huawei and ZTE have been blocked from investing in Western countries for fear of industrial theft or espionage. Similarly, Chinese and Western government institutions alike have long reported hacking attacks from the other side. This brings up the issue of cloud storage. For most such institutions or corporations, physical data storage is becoming outdated or too risky. Yet Chinese firms are unlikely to trust the cloud storage options offered by Apple or Google. In July, Alibaba opened a new cloud storage center in Silicon Valley. In September, Tencent announced a multi-billion-dollar investment in new data centers across China. However, now comes the important next question: How will the process of cloud storage adoption take place in China, with such domestic options available?

The first stance from which to assess the potential, long-term success of China's cloud storage options is to compare the past trajectories of other Chinese competitors to Western digital giants. Certain American Internet giants, such as Yahoo, have found success in China. However, this has often been through careful asset purchases, such as Yahoo's stake in Alibaba. Others, such as Facebook and Google, have fallen foul of Chinese regulators, allowing for Renren, Weibo and Baidu to rise. There are two schools of thought here. The first says that Western companies could have thrived, if not for being blocked. However, repeated surveys of Chinese Web users show that the likes of Google are not missed and that Chinese equivalents would be preferred anyway. The second states that, in a field where innovation is key, Chinese Web platforms are losing out by not being able to vie with Western powerhouses. 

There are problems with both of these, which impact how we view the potential for cloud storage. At the core of these issues is that many Chinese technology companies find that a focus on the Chinese market gives rise to plentiful opportunities for innovation and profit. The sheer scale of the Chinese market gives Tencent a different long-term approach from that of Apple.

However, customer service is an area where the Chinese offering rivals anything in the West. Baidu offers two terabytes of free storage while Tencent offers up to 10 terabytes. This is where international users find these services preferable, sometimes for nefarious activities. While Chinese authorities are catching up to pirates and beginning to shut down pirate sites across the Internet, cloud storage is a more difficult area to police. A number of services allow for publicly uploaded files to be freely searchable, making it a boon for illegal uploads of all kinds.

In October 2015, Beijing sought to close this loophole, by cracking down on the responsibility of China's cloud companies. Notifications to users about copyright content, prompt removal of protected material, removal of layers of exchanges between users and banning pirates were just some of the measures that Baidu, Tencent and others had to implement to avoid fines and remain in the government's good books.

This might have driven Chinese users toward other, non-Chinese options, except that accessing Dropbox is only possible with a VPN. There has also been a trade-off. While Chinese cloud storage services are now subject to the same content control measures as social media networks, the government has made a huge push to get them to expand their services abroad. Tencent and Baidu are household names but Aliyun, Ucloud and Qingcloud are all expanding across the US, Europe, Asia and the Middle East.

Should this push help to net Chinese cloud storage an expanded international clientele, it would also mark a new chapter in the rise of Chinese technology companies. While the likes of Alibaba and Xiaomi are already present in the world, Tencent and Baidu could yet open a global battlefield against Google and Apple. Admittedly, it would take some real PR for them to rival the American firms, given the allegations that are aimed at many Chinese firms, but further progress is certainly possible.

The author is a Mexico-based analyst of Chinese politics and economics.

Posted in: Columnists

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