Future

Facebook (USA) v. Tencent (China): A Tale Of Two Mega Platforms

These two Internet giants share similar goals and scale, but different approaches that largely reflect the differences between how the Internet functions in the West and in China. Still, both have much to learn from the other.

Bo Wang, Tencent business development chief (GDC)
Bo Wang, Tencent business development chief (GDC)

*NEWSBITES

So Facebook has filed an initial public offering, aiming to raise $10 billion. The $100 billion market flotation value for an Internet company breaks the record set by Google in 2004.

Now, it would seem, is as good a time as any to compare this web giant to a Chinese counterpart whose ambitions – and scale -- are no less ambitious. Tencent, an online communications portal, is currently the world's third-largest Internet company, behind Google and Amazon. Founded in 1998, it went public in 2004. Now it is Facebook's turn.

Facebook has a total revenue of $3.8 billion and $1.5 billion profit for 2011 whilst Tencent, China's largest internet service portal, expects to tally total revenue of $4 billion and $1.4 billion profit for the same year. The primary source of Facebook's revenue comes from advertisements; only 11% comes from the sale of virtual goods. Tencent" s revenue mainly comes from internet value-added services, and the advertising counts for less than $300 million.

The two companies have certain similarities. Both have a very loyal social network after drawing in a sufficient number of users. But they are also very different in certain key ways: Facebook constructs a community without building up its own industry in this community, though it is considering starting up a bank. Tencent does exactly the opposite: it possesses a huge number of its own businesses and is now providing an open platform.

The price of "pirate culture"

Facebook has attracted 800 million users in a relatively short period without relying on having its own industry. This could not possibly have happened in the China's Internet market. Facebook depends on an open platform and partnerships to provide user services that require a user-friendly environment and basic rules of competition. Meanwhile, the wild Chinese Internet firmament would have swallowed up a company like Facebook; only a giant like Tencent could emerge. We'll call this a regional characteristic.

In China's Internet market, if you consider making your platform open right from the beginning, some may appreciate your efforts, but you risk not getting invited to the ball. Pirate culture is the mainstream on the Chinese web. An enterprise has to identify with this culture to survive. Some firms accumulate their users and brand name in the name of cooperation with others, but will quickly burn the bridge once they have passed over.

Nevertheless, China's environment and the rules of the game are improving. User consciousness and a sounder legal system will all help to establish a better environment in the Chinese Internet sphere.

Facebook has up to now built up an enormous community with super user stickiness. Its huge traffic is what the advertiser is after. And if it learns from the Tencent model in increasing its value-added services, its profit will soar even further.

Meanwhile, there's also plenty Tencent can learn from Facebook. Currently Tencent's community structure includes QQ.com, an open microblog, and a QQ instant message service as a paid service on smartphones. On its community platforms, it offers services like e-commerce, online games and a search engine. But it has not yet achieved substantial growth in its advertising revenue. On this front, it can learn from Facebook.

As different as their approaches may seem, these two Internet giants have very similar objectives: scale, scale, scale.

Read the full original article in Chinese

photo - GDC

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Geopolitics

Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3

-Analysis-

LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.


Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

commons.wikimedia.org

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

For if nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ