February 21, 2021: Didi in Mexico Part II; ByteDance’s Censorship Machine

Hello Interconnected Readers:

Didi’s expansion plan in Mexico seems to follow me around (or perhaps I’m the one doing the following). I’ve been spending the last few days in a city north of Mexico City in the Bajio region, Queretaro, to meet local entrepreneurs. Queretaro is a city few outside of Mexico has heard of. Yet, on my very first meeting at a local posh coworking office, lo’ and behold, Didi is there too! Its offices are so new the desks and chairs were just assembled.

[If you’d like to skip ahead to the six news stories and commentaries – three from English language sources, three from Chinese language sources -- here are this issue’s items:

• “I helped build ByteDance’s vast censorship machine” (English Source: Protocol)
• “Can Computer Algorithms Learn to Fight Wars Ethically?” (English Source: Washington Post)
• “China Blocked Jack Ma’s Ant IPO After Investigation Revealed Likely Beneficiaries” (English Source: Wall Street Journal)
• “Xiaomi decides to build cars: Lei Jun may lead the initiative personally, seen as a strategic decision” (Chinese Source: Tencent Tech News)
• “With market cap back to $100 billion, what do investors think of Baidu's stock price turnaround?” (Chinese Source: 36Kr)
• “Ant Design’s repo got deleted!” (Chinese Source: AI Tech Camp)]

Didi’s foray into the LATAM region started in January 2018 with its acquisition of 99, a Brazilian ride-sharing company. In April of 2018, Didi entered Mexico with its bread-and-butter ridesharing service. It wasn’t until April 2019 that Didi launched its food delivery service, Didi Food, in Monterrey and Guadalajara -- two of the largest cities in Mexico. As I shared in last week’s Interconnected Weekly, Didi is investing and growing aggressively in Mexico, by offering earning incentives for drivers and cheaper services for lower income users to grab market share. What’s most noteworthy here in Queretaro is that besides Didi Food, it’s also promoting its payment gateway product, Didi Pay.

If you ask any one who is anyone in the Mexico tech scene, you’d soon learn that fintech is the hottest area of startup activity and investment. According to a report by Finnovista, there are 441 fintech startups in Mexico. And this landscape below does not include the fintech products of big players, like Rappi and Didi.

I will write a more comprehensive deep dive of what I learned about Mexico’s tech entrepreneurship ecosystem after I finish my trip in early March. But at this point, it’s safe to say that Didi’s expansion is serious, costly, and at least when it comes to my itinerary, omnipresent.

Kevin

Before you read on, please check out last week's deep dive post: "Where Will the Next 50 Million Developers Come From?"

“I helped build ByteDance’s vast censorship machine” (English Source: Protocol)

My Thoughts: This piece by Shen Lu of Protocol is important and well crafted. It is a first person account of a ByteDance engineer who’s involved in building the company’s censorship machine and reads almost like a confession in a diary. In some sense, what’s revealed is not that different from what Facebook, YouTube, and other US social media companies do when it comes to content moderation. The playbook and organizational structure are quite similar, where some engineers and product teams are devoted to building algorithms based on large datasets to automate the detection of unwanted content, supporting contractors who live in lower-cost places to do the manual moderation work. For Facebook and its peers, it's the Philippines and similar regions. For ByteDance, it’s lower-tier cities in China, like Chengdu and Jinan. Of course, the most important difference is while political speech is not censored and even somewhat algorithmically encouraged on Facebook (because it drives so much engagement and attention), it’s a red flag bluntly applied across all platforms in China with few negative consequences to the regulators. When Clubhouse was shut down in China a few weeks ago, many people asked “why?”, but the right question to ask if you want to see the issue from the Chinese regulators’ perspective is: “why not?”. There’s a ton more we can discuss, but for this weekly issue, I’ll just share a few passages from this article that to me paints a nuanced picture of content moderation in China:

“The truth is, political speech comprised a tiny fraction of deleted content. Chinese netizens are fluent in self-censorship and know what not to say.”

…

“We would openly talk from time to time about how our work aided censorship. But we all felt that there was nothing we could do.”

…

“During livestreaming shows, every audio clip would be automatically transcribed into text, allowing algorithms to compare the notes with a long and constantly-updated list of sensitive words, dates and names, as well as Natural Language Processing models.”

...

"But in China, one primary function of these technologies is to censor speech and erase collective memories of major events, however infrequently this function gets used. "

“Can Computer Algorithms Learn to Fight Wars Ethically?” (English Source: Washington Post)

My Thoughts: This is a worthwhile, long-form piece on the American military’s attitude towards applying AI on the battlefield. The general impression I got from reading this article is that the top brass of the Pentagon are more and more receptive to letting AI take the reins and make decisions. This attitude is partly due to the rising human costs of the long military engagements America has been having in Iraq, Afghanistan, Syria, and other regions. Another dimension is the real or perceived notion that America is losing the race to AI dominance vis-a-vis China and Russia. One passage I found troubling is:

“The only rules for autonomous military weapons themselves were written a decade ago by a mid-level Pentagon official trying to imagine computer capabilities that were just beginning to seem plausible.”

As many who work in the AI industry know, what’s been driving AI’s advancement in the last decade is Deep Learning. It looks like the rule makers have not done any updating to account for this advancement. While Deep Learning has been more effective than just about any other approach, why it does what it does is oftentimes hard to understand and reproduce. That makes ethical application extremely hard to both prove (mathematically) and enforce (legally).

“China Blocked Jack Ma’s Ant IPO After Investigation Revealed Likely Beneficiaries” (English Source: Wall Street Journal)

My Thoughts: Ever since Jack Ma’s Bund Finance Summit speech on October 24, which I translated, the story around Ant IPO just keeps getting more intriguing. The initial media narrative of -- Jack Ma spoke out of turn so the Chinese government showed him who’s boss -- was too simplistic, and I wrote a piece deriding it as much. This new report uncovered another angle to the story -- one about preventing future political rivals from gaining wealth and power from Ant’s IPO. One of these rivals is the grandson of China’s former president, Jiang Zemin.

“Xiaomi decides to build cars: Lei Jun may lead the initiative personally, seen as a strategic decision” (Chinese Source: Tencent Tech News)

My thoughts: Xiaomi’s founder and CEO, Lei Jun, is famous for coining the phrase: “if you stand where the wind blows, even a pig can fly”, tying entrepreneurial success to knowing and riding waves. It looks like the next wave he is trying to ride is electric vehicles. This article explains some of what that wave tangibly means in China -- guaranteed investment from government-affiliated funds, incentives from local governments to provide cheap land to build manufacturing facilities as long as there’s job creation. However, China’s own EV market is already getting crowded with NIO, Li Auto, XPeng, BYD, and of course Tesla. Baidu also plans to make its own EVs within the next three years. Has Le Jun missed the EV wave already?

“With market cap back to $100 billion, what do investors think of Baidu's stock price turnaround?” (Chinese Source: 36Kr)

My thoughts: Speaking of Baidu, its stock price has been soaring in the last few months as the company eclipses the 100 billion USD market cap milestone. I have not been terribly impressed with Baidu as a company, given its questionable practices in its search business and inability to attract top technical talent compared to other Chinese Big Tech's. However, as the author of this article analyzed, the stock market is validating its narrative as a tech company with huge growth potential. The three components of this growth story are: Baidu’s own AI chips, Mobility-as-a-Service (MaaS), and its own EVs, much of the software side will be powered by its own self-driving open source project, Apollo. While it’s too early to tell if any of these initiatives will come to fruition, from at least an investment angle, looks like I missed the Baidu wave.

“Ant Design’s repo got deleted!” (Chinese Source: AI Tech Camp)

My thoughts: While many people, including myself, have been generally critical of Chinese tech companies doing more “using” than “making”, when it comes to open source technology, that trend is starting to shift. One recent example that made some headlines is Ant Group’s open source project, Ant Design, which is a UI design framework based on React. Its repo suddenly disappeared on GitHub last week, causing a minor panic and users asking about it on StackOverflow. It’s now restored. The project is popular and widely used, with more than 1,300 contributors and over 185,000 GitHub users whose projects depend on it.

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