August 2, 2020: Antitrust in China, Open Source 5G, Electric Vehicles IPO, ByteDance, Huawei

This issue covers the period between July 27 - August 2, 2020 with six news stories – three from English language sources, three from Chinese language sources. I purposely did not include anything related to the antitrust hearing (too many out there) and TikTok’s situation in the U.S. (too volatile). Instead, I chose stories that have some longer term implications or just interesting information that hopefully can add value to your perspectives. Disclaimer: all translated article titles are done by me, not official translations from the media outlets.

“China's central bank urges antitrust probe into Alipay, WeChat Pay” (English Source: Reuters)

My Thoughts: While the antitrust hearing on Capitol Hill of Apple, Amazon, Facebook, and Google sucked up all the tech and business oxygen last week, the People’s Bank of China has been quietly pushing for an antitrust investigation of the two dominant payment platforms in China, Alipay and WeChat Pay. These two platforms account for roughly 94% of the entire payment market share in China -- technically not a monopoly but quite a duopoly. China’s antitrust regulatory body is also looking to update its rules and policies to adapt to a changing technological landscape -- something its American counterpart would be wise to do as well. Even though there has not been a lot of antitrust probes in China in general, Tencent is already a “repeat offender”. As I documented in Part I of my “Open Source in China” series, there was an epic antitrust legal battle between Tencent and Qihoo360 (a large Internet security company) in 2010, commonly known as the “3Q War”. (Spoiler alert: Tencent prevailed.) That was a company vs company complaint. The current one is coming straight from the country’s central bank.

“Telecoms networks look to fix Huawei problem with open source software” (English Source: Financial Times)

My Thoughts: One of the key advantages of open source software is vendor-neutrality; whether you are a country or a company, if you use open source, you are not locked-in to the wills and whims of another company’s software or hardware stack. Western countries like the UK, who are averse to using Huawei to build their 5G networks, are quickly discovering the risk and financial cost of being locked-in to one of the other two 5G equipment providers: Nokia and Ericsson. Based on this article, their technology is apparently not even that good. Thus, OpenRAN, an open source 5G software stack first created inside Rakuten, the Japanese e-commerce giant, is rightfully getting more attention. Large telecoms from several countries that you normally wouldn’t see together in one sentence -- NTT (Japanese), Orange (French), China Mobile, AT&T -- have formed an alliance around OpenRAN. As I argued in the context of COVID-19 and public health in “COVID, Open Source, Industrial Policy”, open source technology can and should be a larger portion of any country’s industrial policy and vision. The OpenRAN project is still young with no public code repositories on either GitHub or GitLab, but it’s very much worth watching.

“Li Auto raises $1.1bn in US as China's EV startups race to IPO” (English Source: Nikkei Asian Review)

My Thoughts: Almost exactly a month ago, in the July 5 issue of Interconnected Weekly, I shared some thoughts on Li Auto’s possible IPO in the U.S., openly wondering if the American capital market will receive its listing with open arms. We now have our answer. Not only was the response enthusiastic (the listing date was apparently moved up by one day because of overwhelming demand), it’s an indication of more IPOs to come by Chinese electric vehicle companies. This article describes some of the other players quite well. Raising money on Tesla’s tailwind is evidently a good strategy, even though Li Auto’s vehicles are actually hybrids of battery and traditional combustion engines -- more Prius than Model 3.

“ByteDance acquires cloud container tech startup CaiCloud” (Chinese Source: Capital Whale)

My thoughts: While the world obsesses over TikTok, ByteDance actually has a growing B2B enterprise product line. This acquisition of CaiCloud, one of the earlier startups to get into the cloud-native container platform business, is the latest example of that growth. The CaiCloud team will be absorbed into ByteDance’s B2B unit, Volcano Engine, that serves the China market. In early 2019, ByteDance launched a product called Lark, a workplace productivity suite similar to Slack and GSuite, that serves both the China and overseas markets. Zooming out, the fascinating thing about building a tech company the size of ByteDance is that you have to create a lot of internal tools and services to help your massive workforce be productive -- much of which can be repackaged and sold to other companies as enterprise software products. ByteDance is much more than just Gen Z’ers lip syncing to Kevin Hart routines.

“20 years of open source in China; Who’s up, who’s down?” (Chinese Source: CSDN)

My thoughts: As long-time readers of this publication know, I write quite a bit about open source and its impact. I write not because I know, but because I want to learn. From this article, I learned some new information about the history of open source creation (not just adoption) in China, which dates back at least 20 years. The first open source project was conceived in 1995 out of Tsinghua University, an open source BBS message board. MiniGUI, a graphic user interface (GUI) software for Linus, was started 20 years ago and is still used today. It’s always good to know about the past, before creating the future.

“Huawei Do or Die; Sacrifice for Strengths” (Chinese Source: NanGuoBiTe (independent blogger))

My thoughts: I don’t normally cite independent bloggers. This one is interesting because: 1. It shares some fascinating techlores about Huawei’s history that, while hard to verify, are fun to read; 2. It represents a common public sentiment that mixes patriotism, martyrdom, and fear when viewing the ongoing technology sanctions against Huawei. The author holds begrudging respect for the U.S.’s advancement in technology and science, while conjecturing that the Chinese government won’t save Huawei and it’s left to fend for itself. That predicament will force Huawei to sacrifice, prevail, and eventually emerge stronger. Most notably, in the author’s mind, the time horizon of this struggle is 10-20 years, which stands in stark contrast to Wall Street’s quarter-by-quarter mindset, and DC’s election-by-election mentality.

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