January 24, 2021: AliPay & WeChat Pay Breaking Up? AWS forks Elasticsearch

Hello Interconnected Readers:

After arriving in Mexico City earlier this week, the four-hour time difference between Mexico and Hawaii is giving me a surprisingly bad jet lag, so I will spare you my usual personal letter. Let’s go straight to the news and commentaries from last week.

[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:

• “China Plans Online Payment Rules That May Hit Ant, Tencent” (English Source: Bloomberg)
• “Huawei founder praises U.S. tech in first word from company since Biden inauguration” (English Source: Reuters)
• “Stepping up for a truly open source Elasticsearch” (English Source: AWS Blog)
• “Pinduoduo employees choosing between 11-11-6 and 996” (Chinese Source: AWS Blog)
• “Cloopen Group files for US IPO, Sequoia China's Stake Reaches 20.75%, Will Become the First Chinese SaaS Company to Go Public in the US” (Chinese Source: iponews)
• “Android with RISC-V architecture is here!” (Chinese Source: CSDN)]

Kevin

Before you read on, please check out last week's deep dive post: "Is Huawei a Top-Tier VC?"

“China Plans Online Payment Rules That May Hit Ant, Tencent” (English Source: Bloomberg)

My Thoughts: the Chinese regulators’ proposed antitrust rules on the fintech industry is oddly specific -- neatly targeting the duopoly of Ant’s AliPay and Tencent’s WeChat Pay. To trigger a monopoly, either one company has to have more than half the market share (AliPay) or two companies have to have more than two-thirds the market share (AliPay + WeChat Pay). It does look like some degree of breakup and/or government ownership is in order. These rules also conveniently only apply to non-bank payment companies, leaving state-owned banks alone. As I noted in both "Alibaba and Antitrust with Chinese Characteristics" and "Google, Alibaba, Global Antitrust Standard", China has no “regulatory legacy” when it comes to antitrust, which cuts both ways.

“Huawei founder praises U.S. tech in first word from company since Biden inauguration” (English Source: Reuters)

My Thoughts: the headline of this Reuters article is misleading, because what Huawei released on the company’s public-facing message board is a letter that founder and CEO, Ren Zhengfei, wrote back in June 2020, not a timely statement on Biden’s inauguration. It is a rather curious PR move -- perhaps Huawei’s own unique and subtle way of trying to find a friendlier audience with new leadership in DC.

“Stepping up for a truly open source Elasticsearch” (English Source: AWS Blog)

My Thoughts: This is part 2 of the latest big news in the open-source world. A week ago (aka part 1), Elastic relicensed the open-source technology, Elasticsearch, to the Server Side Public License (SSPL), which MongoDB pioneered to protect itself against AWS. In response, AWS has now forked Elasticsearch and plans to maintain it going forward without Elastic under the Apache 2.0 license, which has no restrictions on use of the technology. (“Fork”, in plain words, means making a copy of the software for free -- perfectly proper behavior in open source.) When Elastic announced the licensing change, its stock popped more than 10%, so it sure looked like Wall Street investors approved of the decision. When MongoDB made its licensing change two years ago, AWS’s response was slightly different, by making its DocumentDB product compatible with Mongo’s API. As I discussed in Part II of my Global by Nature series, when an API is sticky enough, the preferred approach is to build compatibility and not fork. Lastly, it’s worth noting that not all cloud platforms behave the same way with regard to 3rd-party open-source software. Joseph Jacks of OSS Capital has a nice shorthand of the different approaches by the three big cloud vendors in the US (AWS, Azure, GCP) in this tweet:

“Pinduoduo employees choosing between 11-11-6 and 996” (Chinese Source: 163)

My thoughts: if you thought 996 was bad, it’s apparently the better option if you work at Pinduoduo. For its marketing department, the assumed work schedule was 11-11-6 (11am to 11pm for six days a week), until it was recently changed to 996. Pinduoduo’s other departments are apparently allowing employees to choose between the two options! Such generosity between the lesser of two evils. What also changed was the payment schedule of overtime pay, from yearly to monthly. Is this the kind of “work ethics” famed Sequoia investor, Michael Moritz, was praising and asking Silicon Valley employees to follow in his FT op-ed two years ago?

“Cloopen Group files for US IPO, Sequoia China's Stake Reaches 20.75%, Will Become the First Chinese SaaS Company to Go Public in the US” (Chinese Source: iponews)

My thoughts: Cloopen is a cloud-based communications service provider, similar to Twilio in many ways. That comparison, along with SaaS’s overall trendiness, is partially why investors in China have showered it with investments. Although geopolitical concerns persist, going public in the US is still a highly desired outcome for Chinese tech companies, especially in the enterprise SaaS space. While Hong Kong awards rich enough valuations for consumer tech companies, thus Kuaishou is listing there, Wall Street is still the best place for cloud SaaS companies. Whether Cloopen’s IPO will do well is a separate story; its net dollar retention rate is 95%, which is not great.

“Android with RISC-V architecture is here!” (Chinese Source: CSDN)

My thoughts: China continues to make interesting progress in the RISC-V space, the open-source instruction set architecture that I’ve written quite a few posts about. This project apparently allows the Android mobile operating system to run on RISC-V, developed by a subsidiary of Alibaba called T-Head Semiconductor. Its technical foundation is based on another open-source project called AOSP for RISC-V, developed by an R&D lab under the software research department of the Chinese Academy of Sciences.

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