Alibaba IPO – A vindication of China’s Internet?

This is a guest post contributed by Anuj Srivas, tech. journalist and blogger, until recently the author of Hypertext, The Hindu.

The differences between Jack Ma – the founder of Chinese e-commerce giant Alibaba – and an average Silicon Valley CEO are numerous and far-reaching. Mr. Ma’s knowledge of mathematics, for instance, was once so poor that it almost prevented him from attending college. Contrast this to the technological genius of Apple co-founder Steve Wozniak or the academic-based origins of Google’s search algorithm.

His background as an English teacher, who dabbled in a number of different sectors before being fascinated by the Internet industry, is more characteristic of the average American investor that was duped by the dot-com bubble than it is of a Bill Gates or a Mark Zuckerberg.

And yet, today, Alibaba stands shoulder-to-shoulder with much of Silicon Valley. Its recently launched initial public offering (IPO) raked in a little over $20 billion, turning it into the world’s biggest technology flotation.

Is this event an inflection point? To some, it may seem to be a natural course of affairs after Yahoo! threw Alibaba a lifeline back in 2005. But is there something else to take away from it other than the obvious comparisons with India’s fledgling Internet industry?

Foremost, it is enormously pleasing to see Jack Ma, like Lenovo’s YY, clearly avoid subscribing to the Silicon Valley ideology of ‘transparency through opacity’. The CEOs of Google, Yahoo!, Facebook and Microsoft paint a picture of openness, sharing, and transparency wherever they go. The world of the cloud seems to make life easier (“look, no wires!”) but in fact wraps its users in an opaque black box. We have no tools that allow us to track our information and data, let alone allow us to take charge.

Of course, Mr. Ma (who sticks to doling out life and management tips in his speeches) is clearly constrained by the circumstances that allowed Alibaba to become what it is today: namely, the way China views, approaches and governs its Internet. This brings us to one of the more interesting implications of Alibaba’s IPO.

For decades now, China has been the poster-boy for how the Internet would look if we stopped fighting for a transparent, open and censorship-free system. The Great Firewall of China has continued to stand, quite proudly, in the face of international criticism.

The country itself has managed to make more than one U.S technology company come around to its way of thinking. As US government official Tom Lantos commented after Yahoo actively helped China in its censorship efforts, “While technologically and financially you [Yahoo!] are giants, morally you are pygmies.”

What are we to take away from the fact that China is in the process of undergoing one of its harshest ever Internet censorship/crackdown periods since 2003 (when it started construction of its Firewall) while Alibaba may yet go down in history as the biggest technology IPO ever? China’s approach to the Internet is a deadly mixture of censorship, propaganda and protectionism. The victory of Alibaba at the New York Stock Exchange will prove to be fodder for three takeaways.

First, that China’s protectionism-censorship stance (there cannot be one without the other) works. Despite years of criticism and threatened sanctions, China currently houses three of the world’s ten most valuable technology companies. After Alibaba’s IPO, how can Beijing look at its Internet governance approach with anything but approval? This is a moment of triumph for the country’s Internet regulators.

Second, that investors do not, and will not ever, care about censorship.

Third: will other countries, already outraged by the NSA and the Snowden incident, be emboldened to take China-like steps when it comes to governing their local Internet industries? There is little doubt that most countries that need to be build their own digital infrastructure, but China and Russia have shown us that their version of digital sovereignty comes with a lack of privacy and the introduction of a censorship regime. Asian, African and Latin American countries will have to escape this trap; the success of Alibaba does not help this.

On the other hand, this will also prove to be the biggest challenge for China’s Internet. If the country wants its Internet firms to go international, it will find it tough to take refuge behind its current Internet governance policies. Companies like Huawei and ZTE, which are in the telecommunication business, have to constantly defend themselves every time they enter a new country. Alibaba, which of course will not be plagued with national security issues, will have to consciously and unconsciously defend the Chinese Internet wherever it goes.

It would be instructive to monitor Mr. Ma and whichever ideology he chooses to adopt and market in the near future. I have a feeling it will tell us quite a bit about the fate of China’s Internet.

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