This post is part of our International Relations & Security coverage.
Before we get into the rather bizarre power triangle that has come to define Internet communications and technology in China, let's introduce you to the three characters in this story:
Sina: China's leading Internet company which is traded on NASDAQ, owns Sino Weibo, the Chinese social network often described as a Twitter-like microblogging site, though it is more like a hybrid. Sina Weibo claims to have more than 300 million registered users.
Chinese government: since the advent of the Internet in China more than a decade ago, the Communist Party (CCP) has both embraced the new technology and issued a number of policies that show its fear of it. With the CCP's leadership transition [pdf] scheduled for next October, the government has launched special measures to tighten control over social media that highlight this contradiction.
Chinese netizens: love Chinese social networks. Contrary to Western perception, China’s netizens do not appear to miss Facebook, Twitter or YouTube (all three are blocked in China). However, Sina Weibo users get angry when their online activities are disrupted.
Censorship, real name registration, point system, and deleted accounts are some of the problems Chinese netizens often face. Perhaps the most relevant of the recent episodes is the crackdown on social media related to Bo Xilai’s scandal.
In March 2012, six people were arrested and 16 websites closed for “disseminating online rumors” and microblogging sites Sina Weibo and Tencent Weibo were “punished”, according to official news agency Xinhua. As a result, the two sites banned all users from posting comments from March 31 to April 3, 2012. Many saw this measure as a tactic by Sina to satisfy the government without upseting users too much. Ben Chiang, from Technode, had a fun take on the situation:
Sina Weibo: Hey Twitter, how did you keep your government’s hands off you?
Twitter: [Turned Away] No Comment.
Sina Weibo: Gotcha.
Later on, however, Sina launched the new point system to limit users’ posts on “sensitive content”, thus satisfying government requirements.Some Chinese netizens are not satisfied with this attitude. As early as November 2011, some of them wrote an open letter [zh, en] to Sina’s investors which urged investors to cut their shareholding in SINA, because “the Chinese government’s policy on Weibo has a significant effect on the prospects of Sina”.
On July 16, 2012, Chinese blogger and capitalist Isaac Mao - whose Sina Weibo account had been deleted - used his Twitter account to spread his decision to short SINA‘s share to the international audience, which caused Sina’s shares to drop. He explains his arguments in an online letter, which finishes with a warning:
Apart from user's counting complaints, Sina itself has to face the risks from authority as well. In a leadership transition year,Sina may not be able to keep Weibo service live, most probably. There will be several big inflexions upcoming in China, keep eyes open.
AnnaLisa Kraft writes on The Motley Fool:
Last summer’s hopes for great numbers in Chinese internet stocks have been dashed with a Chinese slowdown, accounting scandals and a perception (justifiably so) of more government intrusion.
Sina is probably aware of this, but the government can eliminate it with just one political decision, so what is Sina’s real power? The new Chinese government may or may not shut Sina down after October, but the recently published draft update of the government's “Methods for Governance of Internet Information Services” [zh] points to harsher policies on weibo services. So it is quite clear who is in charge in this bizarre power triangle.