Steve Thomas - IT Consultant

It was only in June that Motorway – a U.K. platform on which professional car dealers can bid in an auction for privately owned cars for sale – raised $67.7 million in a Series B round. It’s now raised a $190m Series C funding round led by Index Ventures and ICONIQ Growth, a leading Silicon Valley technology growth investment firm. Existing investors Latitude, Unbound, and BMW i Ventures also participated in the round. The startup is now claiming a valuation of over $1bn.

Part of the reason is the impact of the COVID pandemic on supply chains. Second-hand cars have boomed in price because new cars are being made in smaller numbers due to the lack of supply of computer chips and other essential equipment from China.

On Motorway consumers can sell their car via a smartphone app that also uses computer vision to assess the state of the car. The cars are then bid on by professional car dealers in a daily online auction, with the car collected for free by the winning dealer within 24 hours. Given it’s also a “contactless” process, dealers and car owners increasingly seeking to buy and sell cars online.

Motorway says it now has a network of 4,000 professional car dealers using the platform and claims it has booked a 300% uplift in third-quarter sales to $411 million compared with $105 million last year. Some 100,000 used cars have been sold on Motorway since launch, with over 8,000 cars currently being sold a month, with over $2bn projected completed sales over the next year.

Motorway is also announcing the appointment of James Wilson, former Director of Marketplace Fulfillment for Amazon UK, as Chief Operating Officer.

Tom Leathes, CEO of Motorway, said: “8,000 car sales a month is still less than one percent of UK used car sales – so there’s a massive opportunity ahead.”

Danny Rimer, Partner at Index Ventures, said: “Since joining the board, following our initial investment in June, I have experienced first-hand just how fast Motorway is growing and how agile the team is in scaling the business to support this incredible growth.”

Yoonkee Sull, Partner at ICONIQ Growth said: “The used car market’s move online is only accelerating and we believe Motorway is delivering the best consumer experience and the most differentiated supply to dealers in the UK.”

This latest investment brings Motorway’s all-time raise to $273m since it was founded by Leathes, Harry Jones and Alex Buttle in 2017.

In a call with me Leathes added: “There’s no connection with BMW particularly, but they are automotive specialists so they bring quite a lot of knowledge to the white broader market and trends that are happening. They were also part of the B along with Latitude and Unbound.”

“What motorway does differently to a lot of competitors is that we are we’re not a retailer. We don’t own inventory. We’re a marketplace. And so that that allows us to scale much more quickly,” he said.

Consolidation to have better economies of scale is one of the biggest themes in the world of e-commerce, and today a player in the world of online retail is announcing a large round of funding to double down on its approach to the concept. San Francisco-based Heyday — which buys up and then grows direct-to-consumer merchants and brands that have found initial traction, leveraging the Amazon marketplace — has raised $555 million, a Series C that it will be using to continue expanding its technology, investing in business development, and to buy up more assets. Specifically, it will also be opening deepening its engagement in Asia (with a seventh office in China); hiring more brand management experts and other talent; investing in more product development; and building out its marketing, supply chain, data science and M&A tech stacks.

The Raine Group and Premji Invest co-led this round, with previous backers General Catalyst, Victory Park Capital, and Khosla Ventures also participating.

Heyday competes against a large field of startups also raising huge amounts of money to follow their own Amazon marketplace roll-up strategies. Other big names out of the U.S. include Thrasio (which picked up a cool $1 billion in October) and Perch ($775 million in May). Heyday has been moving at a fast clip to keep up since being founded in 2020. This latest round comes on the heels of a $70 million Series B that was raised only in May of this year, with the total capital raised by Heyday to $800 million, a mix of equity and debt (Heyday did not specify the proportions of equity and debt in this latest Series C).

“Our pace is insane,” said Sebastian Rymarz, Heyday’s co-founder and CEO, in an interview. “We were born 16 months ago and are already crossing $200 million in revenues.” (That’s an annual run rate figure.) The company said its brands are currently growing at a rate of 64% year-on-year compared to the broader e-commerce market.

Heyday has never disclosed its valuation, and Rymarz would only say that this latest round was made at “a very good valuation.”

That lack of detail is intentional. “I don’t want the team thinking or me getting into my head that ‘we’ve won,'” he continued. “We’re only 16 months in to what we think will be a multi-decade journey. I don’t want to celebrate valuations at this stage.”

However, as a point of reference, Thrasio is now valued at about $5 billion; Razor Group out of Berlin was valued at over $1 billion last week; and Perch also is now in the 9-figure range. As with all of these, Heyday is also profitable on an Ebitda basis, Rymarz confirmed to me.

There are millions of third-party sellers using Amazon as their primary route to market, and Heyday and others like it have seized on a prime opportunity to target them: often, these merchants lack the capital or appetite to take their businesses to the next level of growth. At the same time, as Amazon and other marketplaces mature, there are more sophisticated ways and more technology that could be used in aid of improving how to leverage them to find more buyers for products, amid a pool of me-too brands that are also finding ways to game Amazon’s algorithms.

The pitch that Heyday makes is that it has built technology that evaluates this sea of merchants to identify the most interesting of them all. Rymarz said that for every 100 merchants it looks at, it might consider buying just one.

When Heyday buys these companies, and their intellectual property, the idea is that it reaps the rewards of doing that scaling itself. It does so by integrating the business into a larger platform to manage marketing and sales analytics, production and distribution, and retail channels; and by following the company’s initial trajectory to continue developing more products to take along on that journey.

Given the number of third-party merchants and the gating factors for them scaling, this has become an area ripe for consolidation, and so, unsurprisingly, it has also become an area ripe for competition among consolidators.

In addition to Thrasio, Razor Group and Perch, others that have recently raised both equity and debt for the same ends include Heroes, which raised $200 million in August; Olsam with $165 million; Suma Brands ($150 million); Elevate Brands ($250 million); factory14 ($200 million); as well as BrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia. There are dozens more.

How Heyday differs from these others is that, at least up to now, it has focused not on quantity of merchants, but quality.

Rymarz said that Heyday currently has only 15 brands in its stable, compared to, say, 200+ for Thrasio and 150+ for Razor Group. Again, this is also intentional: “We have much larger brands, with five of them making up over 70% of our revenues.”

He positively bristles when Heyday is described a rollup play. “Amazon is a launchpad, and we are not an aggregator,” he said.

For competitive reasons, Heyday has never publicly disclosed any of the names of the brands that it owns, but they are products in categories like home and lifestyle. And the bigger strategy is not just to build up their profiles on Amazon but to extend to a variety of other channels, including placement in household-name brick and mortar chains. (Rymarz showed me several brands under the condition that I would not publish their names, but just so that I could get a better idea of what it owned. At least two of them gearing up to sell in stores like Target.)

Heyday’s pitch these days typically does not bring on any of the teams involved with the brands that it buys up (there are sometimes exceptions to that, Rymarz said), but it has been bringing on more people with extensive e-commerce experience into the team to build out its wider operation. In addition to hiring more branding and retailing teams, it has included adding a number of new executives, including a CFO (Navid Veiseh, previously at Amazon and Coupang); a CMO (Reema Batta, formerly of Opendoor and Expedia), and a chief administrative officer (Todd Heeter, formerly of Doma and Anixter).

It’s been interesting to see how so many investors have piled into the opportunity in the last couple of years. (Other big names that have been backing Amazon marketplace consolidators include SoftBank, BlackRock, Silver Lake, Target Global, Tiger Global and more.) Part of the appeal is that it gives investors a look into some of the massive e-commerce growth that we’ve seen over the last decade, in a landscape that has otherwise been dominated not by startups, but by big players like Amazon. That, of course, has become an even more acute opportunity in the last two years with the rise of Covid-19 and the accelerate shift we’ve seen to more people shopping online than ever before.

“We have been exceptionally impressed with Sebastian and his team, their vision, and commitment to operational excellence for the next generation of consumer brands,” said Jake Vachal, MD at The Raine Group, in a statement. “Heyday’s innovative approach to growing and incubating brands provides entrepreneurs access to leading technology, as well as deep-rooted expertise spanning operations and marketing. We are excited to be partnering with this team as they continue building a differentiated platform for quality, digital-first brands.”

Investors in this round said that Heyday’s particular approach was also a factor.

“Heyday’s differentiated strategy and world-class team stand-out in what is playing out to be one of the most explosive new industries,” said Sandesh Patnam, Managing Partner Premji Invest, in a statement. “We are excited to partner with the leadership team to help Heyday leave a mark on the e-commerce space.”

AudioMob is a startup that provides ‘non-intrusive’ audio ads within mobile games. It turns out that gamers don’t seem to mind little ads like this popping up, and somehow AudioMob seems to have cracked the mechanic.

It’s now raised a $14 million Series A round led by Makers Fund and Lightspeed Venture Partners. Also participating are Sequoia Capital and Google. Total investment to date is now at $16 million. 

The company plans to continue its experimental audio technology, file patents in more countries, and expand its offices in London and Abu Dhabi. It’s also now claiming a valuation of around $110 million.

I met founders Christian Facey, CEO, and Wilfrid Obeng, CTO, last year when they were spinning up the startup and had gained traction early on, working with Ed Sheeran and Nas alongside brands like Intel, Jeep and KitKat.

AudioMob is now serving audio ads inside mobile games in all countries outside of China with notable rising stars being the UAE, Germany and Canada.

Christian Facey, CEO at AudioMob said: “We’re thrilled to see investors’ excitement for AudioMob’s vision for long term success and our future. We’re on the precipice of innovating a whole industry with audio and now we’re able to build out our tech and team to ensure we’re disrupting the industry in the right way and ensure we eventually become a future tech industry unicorn.”

Wilfrid Obeng, CTO at AudioMob said: “We understand that consumers don’t want to be interrupted, advertisers want their ads to be heard and game developers want to ensure monetization does not affect retention. And now we have built products which meet all three needs.”

Google selected AudioMob as part of 30 startups it funded from its Black Founders Fund in Europe earlier this year.

Companies snapping up merchants selling on Amazon to build in more e-commerce economies of scale into the model are on a rapid pace of growth at the moment, fueled in no small part by giant infusions of money from the world of venture capital. In the latest development, Berlin’s Razor Group — one of the more ambitious of the aggregators out of Europe — has now raised $125 million of equity funding in a Series B round that CEO and co-founder Tushar Ahluwalia said pushes the company past a $1 billion valuation.

In a sea of startups that have collectively raised billions of dollars to scoop up smaller Amazon-based merchants, Razor believes that its numbers speak to it being one of the biggest, and possibly the biggest of all in Europe, even as more 70% of its revenues are actually generated from the U.S..

Razor said that it is profitable on a group Ebitda basis; going to post $400 million in revenues for the year ending in December; and on track to pass $1 billion in sales in 2022, on a business model that Ahluwalia claims is not simply based on en masse “rolling up” smaller Amazon merchants that have been built on top of the e-commerce giant’s marketplace and fulfillment (FBA) infrastructure. Its ambition: yes, buy them up, but then integrate them into a wider operation and eventually move away from being wholly dependent on Amazon.

“Our pitch is not that we are an FBA acquirer, but that we work in three phases: acquire, operationalize and then transform,” he said. “Technology helps us to be very good in each of those.” Ahluwalia said that 12% of Razor’s revenues are already “non-Amazon” and the plan is for the to move up to over 20% in the next three quarters. “We’ll also be more diversified,” he added.

This Series B is an all-equity round — the equity aspect being a contrast to a lot of the raises made by startups in the same business as Razor’s, including a $400 million round Razor itself raised in March of this year, which was $375 million of debt for acquisitions, and $25 million in equity. It’s coming from a mix of new and previous investors, including Fortress Investment Group, 468 Capital, Victory Park Capital, Presight Capital, Blackrock, Jebsen Capital, Redalpine and GFC (GFC is the fund from the Samwer Brothers of Rocket Internet fame: Ahluwalia and another co-founder, Christoph Gamon, are both Rocket alums).

The reason for raising equity is to have more flexibility with the capital than Razor (or others in the space) might have when raising debt.

“We estimate that half of the Series B will be used for acquisitions with the remainder for hiring, building the operation and doubling down on certain markets like China,” said Gamon, who is Razor’s managing director. Razor currently has some 300 employees with operations in Berlin, Delhi, Austin, London, Bangalore and Shenzhen.

Razor launched only 14 months ago, but it has been taking a page from the Rocket playbook in aggressive expansion. From a standing start, the company is now on track to have some 80 merchants in its group by the end of this year, covering some 150+ plus brands. As a point of reference, in March the company had just 30 brands in its stable.

That quick expansion underscores the frenzy of activity that we have seen in this space, as startups amass large piles of capital to buy up, integrate and scale merchants that have built successful businesses around selling on Amazon, by way of the company’s marketplace and fulfillment infrastructure, but might lack the funds, talent or exit strategy to scale beyond that.

Just a couple of weeks ago, Thrasio — one of the big players out of the U.S. — raised $1 billion on a $5 billion valuation; Perch raised $775 million in May of this year, and we know of at least one other competitor to them about to also announce a major round; and these are just three recent, big deals. Others include Heroes, which raised $200 million in August; Olsam ($165 million); Suma Brands ($150 million); Elevate Brands ($250 million); factory14 ($200 million); as well as HeydayThe Razor GroupBrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia.

This gives those third-party merchants looking to sell up a lot of options when it comes to buyers.

So the trick for the Razors of the world is to both figure out how to find those that are under the radar but poised to grow, or to pay a premium, or bring together assets in a clever way that will make them more valuable in the longer term.

Razor’s pitch is that it’s able to do this by way of a tech platform built from the ground up that analyzes the long tail of merchants selling on marketplaces like Amazon, and then helps to integrate those that it acquires to operate them as a more singular business in terms of sourcing, marketing, and logistics.

Shrestha Chowdhury, another co-founder who is Razor’s CTO, said that to date Razor has used its platform to analyze and evaluate some 1.5 million Amazon merchants, and out of that it has already sourced 80,000 potential targets. Those two numbers should give you some idea of the scale and opportunity, but so should the fact that Razor has only acquired 80 merchants to date.

“Unlike most other players we don’t rely on FBA brokers,” Chowdhury said. “We source proprietary deal flow.”

And that seems to be at the crux of Razor’s approach: speed, but also a dose of trust and experience to follow through on that. “Deal-making is something extremely personal,” Ahluwalia said to me back in March. “A seller needs to like you. Our calculations have allowed us to be the first in these deal conversations.”

Epic Games announced today that its work to bring video game mega-title Fortnite to the Chinese market is shutting down.

The company said in an official announcement that the long-running test of the popular shooter title in China will conclude on November 15th. New users won’t be accepted starting today.

Tencent, a Chinese Internet giant, owns a stake in Epic Games, along with complete ownership of Riot Games, another American gaming company with an international gaming hit in its portfolio.

China’s gaming industry has been undergoing refreshed regulatory scrutiny in recent months, with the domestic government working to limit gaming time amongst youths. The impact of the Chinese Communist Party’s move to lower hours-played amongst its younger population is not yet clear, but the decision could have made the economics of building Fortnite for China.

Epic had built a China-specific version of Fortnite, was a variation on the title that is well-known in the rest of the world. A gamer-powered wiki details a suite of differences, including gameplay and monetization changes, along with different character graphics to meet local laws. The same article notes that after a certain amount of playing time users could no longer earn in-game experience points.

The decision to halt Fortnite China could be viewed as a response to the country’s changing gaming market. With even more restrictions placed on gaming time, and lower monetization possibilities due to restrictions on microtransactions, the math simply has not penciled out.

To see another American company pull its popular product from the Chinese digital realm in the wake of LinkedIn’s own decision the other month is notable. The two moves underscore how difficult it can be for non-Chinese companies to offer products inside of the nation, even if they have a local champion.

Other cultural content is not faring much better. Recent Marvel film “Eternals” doesn’t appear set to release in the country, perhaps due to its director — Beijing-born Chloé Zhao — having made comments that some construed as critical of the nation.

The regulatory environment and lessening ability, or interest to bring global films and games to China will further isolate the country from international culture. And, perhaps, in reverse, limit China’s ability to earn soft power through its own cultural creations.

Regardless, for Fortnite’s Chinese fans, their ability to play the game sans using tricks to get around Chinese authorities is coming to a close.

Epic Games is not commenting on the closure beyond the following statement shared with players in China (translated to English below):

To Fortnite China players:

Fortnite China’s Beta test will be ending, and the servers will be closed soon. For details, please see below:

On Monday, November 1 at 11 am, we will close the new user registration entrance and game download portal;

On Monday, November 15 at 11 am, we will turn off servers for Fortnite, and players will no longer be able to connect to the game through the WeGame client.

Thank you to all the Fortnite China players who have ridden the Battle Bus with us by participating in the Beta.

If you have any questions or suggestions about the servers closing, please click here to send us feedback.

In its first-ever Congressional hearing, TikTok successfully dodged questions about what it plans to do with the biometric data its privacy policy permits it to collect on the app’s U.S. users. In an update to the company’s U.S. privacy policy in June, TikTok added a new section that noted the app “may collect biometric identifiers and biometric information” from its users’ content, including things like “faceprints and voiceprints.”

The company was questioned by multiple lawmakers on this matter today during a hearing conducted by the Senate Subcommittee on Consumer Protection, Product Safety, and Data Security. The hearing was meant to be focused on social media’s detrimental impacts on children and teens, but often expanded into broader areas of concern related, as the lawmakers dug into the business models, internal research, and policies being made at Snap, TikTok and YouTube. 

Sen. Marsha Blackburn (R-TN) asked specifically why TikTok needed to collect a wide variety of biometric data, “such as faceprints, voiceprints, geolocation information, browsing and search history,” as well as “keystroke patterns and rhythms.”

Instead of directly answering the question, TikTok’s VP and Head of Public Policy Michael Beckerman responded by pointing out that many outside researchers and experts have looked at its policy and found that TikTok actually collects less data than many of its social media peers. (He also later clarified in another round of questioning that keystroke patterns were collected in order to prevent spam bots from infiltrating the service.)

Blackburn pressed on to ask if TikTok was putting together a comprehensive profile — or “virtual dossier” — on each of its users, including younger kids and teens, which included their biometric data combined with their interests and search history.

Beckerman deferred answering this question as well, saying that: “TikTok is an entertainment platform where people watch and enjoy and create short-form videos. It’s about uplifting, entertaining content.”

While the senator’s line of questioning was a bit confusing at times — she once referred to this dossier as a “virtual you,” for example — it’s worth noting that we don’t have a full picture today as to what TikTok is doing with the data it collects from its users outside of what’s outlined in its privacy policy and, per TikTok’s 2020 blog post, how some of that data plays a role in its recommendation algorithms. And given the chance to set the record straight over its plans to collect biometric data with regard to minor users, TikTok’s policy head skirted the questions.

In a line of follow-ups on its data collection practices led by Senator Cynthia Lummis (R-WY), Beckerman was asked if this sort of “mass data collection” was necessary to deliver a high-quality experience to TikTok’s users. She noted the company’s policy allowed for the collection of the person’s location, device model of their phone, browsing history outside and inside TikTok, all the messages sent on TikTok, IP address, and biometric data.

In response, Beckerman said “some of those items that you listed off are things that we’re not currently collecting.”

He also said that the privacy policy states TikTok would get user consent if it were to begin collecting those items in the future.

Though not immediately clear, his statements were likely in reference to the clause about biometric data collection. In June, TikTok declined to detail the product developments that necessitated the addition of biometric data to its list of disclosures about the information it automatically collects from users. But at the time, the company told TechCrunch it would ask for user consent in the case such data collection practices began.

The senator said the committee would follow up with TikTok on this question.

Both senators were concerned about TikTok’s connection to China, given its parent company is Beijing-based ByteDance. But the issue of over-collection of user data — particularly with regard to children and minors — isn’t just a geopolitical concern or, as Trump believed, a national security threat. It’s a matter of transparency.

Privacy and security experts generally think that users should understand why a company needs the data it collects, what is done with it, and they should have the right to refuse to share that data. Today, users can somewhat limit data collection by disallowing access to their smartphone’s sensors and other features. Apple, for example, implements opt-outs as part of its mobile operating system, iOS, which pops up consent boxes when an app wants to access your location, your microphone, your camera, or your contacts.

But there is much more data that apps can track, even when these items are blocked.

Following the questions about data collection practices, Lummis also wanted to know if TikTok had been built with the goal of keeping users engaged for as long as possible. After all, having a treasure trove of user data could greatly boost this sort of metric.

In reply, Beckerman pointed to the app’s “take a break” reminders and parental controls for screen time management.

Lummis clarified that she wanted to know if “length of engagement” was a metric the company used in order to define success.

Again, Beckerman skirted the question, noting “there’s multiple definitions of success” and that “it’s not just based on how much time somebody’s spending [on the app],”

Lummis then restated the question a couple more times as Beckerman continued to dodge answering directly, saying only that “overall engagement is more important than the amount of time that’s being spent.”

“But is it one of the metrics?,” Lummis pushed.

“It’s a metric that I think many platforms check on how much time people are spending on the app,” Beckerman said.

In my previous essay on TechCrunch, I examined the profound challenges which confronted the computer engineers trying to fit tens of thousands of Chinese characters in a memory system designed to handle a much smaller alphanumeric symbolic system.

Now, I turn to the question of Chinese character output—monitors, printers, and related peripherals—where still more challenges confronted engineers seeking to render Western-manufactured personal computers and computer peripherals compatible with Chinese character text.

While we call them “peripherals,” suggesting a sort of supporting role, they are in fact at the very center of computing in Chinese, from the extreme limitations that Chinese computing faced in the 1970s and 80s to the immense strides and successes it has experienced from the 1990s onward.

During the early rise of consumer PCs in the 1980s, no Western-manufactured personal computer, printer, monitor, operating system, or other peripheral was capable of handling Chinese character input or output—not “out of the box,” at least. To the contrary, all of these devices exhibited the same kind of English-language and Latin alphabetic bias found in, for example, the early history of telegraphic codes and mechanical typewriters, as I’ve explored in my other research.

During the 1980s, what ensued in China and the Chinese-speaking world was a period of intense hacking and modding. Element by element, engineers in China and elsewhere rendered Western-manufactured computing hardware and software compatible with Chinese. It was a messy, decentralized, and often brilliant period of experimentation and innovation.

When we turn our attention to this broader ecology of computing—on printers, monitors, and all of the other “stuff” needed to make computing work—part two of this series on Chinese computing spotlights two conclusions.

First, the dominance of alphabet-based computing—“alphabetic order,” as I call it—went far beyond the question of keyboards and computer memory. Like the typewriter before them, computing devices, languages, and protocols were by and large invented first in English-language contexts, and only later “extended” to other languages and to writing systems other than the Latin alphabet. To achieve even basic functionality, Chinese engineers needed to constantly push against the boundaries of off-the-shelf computing peripherals, hardware, and software.

Second, I’ll dismantle the oversimplified idea of Chinese “copycatting” and “piracy” that has dominated, then as now, Western accounts of Chinese computing during this pivotal period in the late 1970s and 1980s. When encountering programs such as “Chinese DOS,” the knee-jerk reaction in the Western world has been to treat them as just more “Chinese knock-offs.” What this simplistic narrative fails to understand is that without the kinds of “forgeries” we will examine in this article, none of these Western-designed software suites would have worked at all in the context of Chinese character computing.

Dot-matrix printing and the metallurgical depths of alphabetic order

The first peripheral we need to examine is the printer—specifically, dot-matrix printers. From the standpoint of Chinese computing, the politics of dot-matrix printing began with the then-dominant configurations of industry standard printer heads—the 9-pin printer heads found in practically all mass-manufactured dot-matrix printers during the 1970s.

These commercial dot-matrix printers were able to produce low-resolution Latin alphabet bitmaps with just one pass of the printer head. This was not by accident, of course. Rather, the choice of nine pins was “tuned” to the needs of low-resolution Latin alphabetic printing.

The same printer heads, however, were incapable of printing low-resolution Chinese character bitmaps in anything less than two full passes of the printer head. Two-pass printing dramatically increased the time needed to print Chinese as compared to English and also introduced graphical inaccuracies, whether due to inconsistencies in the advancement of the platen, uneven ink registration, paper jams, or otherwise.

Aesthetically, two-pass printing could also result in characters with differing ink densities on their upper versus their lower halves. Worse, in the absence of any mod, all Chinese characters would be at least twice the height of English words, no matter the font size being used. This created comically distorted printouts in which English words appeared austere and economical, while Chinese characters appeared grotesquely oversized. Such print-outs also wasted large amounts of paper, with every document looking something like a large-print children’s book.

An example illustration of how these printer heads work is provided in this video, courtesy of the author:

Latin alphabet-centrism ran deeper than one might initially expect, moreover, as illustrated in the work of early Chinese computing pioneer Chan Yeh. Setting out to digitize Chinese characters and basing his system on a bitmap grid of 18-by-22, Yeh’s initial idea was an obvious one: to reduce the diameter of the pins so as to fit more of them on the printer head. As he discovered, however, the solution would not be so simple.

Interface of the IPX machine, invented by Chan Yeh and the Ideographix Corporation. Image Credits: Thomas S. Mullaney East Asian Information Technology History Collection, Stanford University

The Latin alphabetic bias of impact printing, he found, was encoded within the very metallurgical properties of printer components. Simply put, the metal alloys used to fabricate printer pins were themselves calibrated to 9-pin Latin alphabetic printing, such that reducing their diameters to the sizes needed for Chinese would result in pin deformation or breakage.

To compensate, engineers tricked Western-built printers into fitting as many as 18 dots in roughly the same amount of vertical space as nine normally spaced dots.

Their technique was ingenious and simple. Following standard, two-pass printing, an initial array of dots was laid down during the first pass of the printing head. Rather than laying down this second array of dots beneath the first, however, they tricked the printer into registering them in between the first set of nine dots, almost like the teeth of a zipper fastening together.

To achieve this effect, engineers rewrote printer drivers to hack the printer’s paper advance mechanism, refining it so that it rotated at an extremely small interval (as small as 1/216th of an inch).

Pin configurations weren’t the only challenge. Commercially produced dot-matrix printers were also tuned to the ASCII character encoding system, and thus unable to handle Chinese text as text. In English-language word processing, printing was not an act of transmitting a raster image to the printer. Rather, English-language text could be directly delivered via the printer driver as ASCII-encoded text, which resulted in much faster printer speeds.

In order for Western-built dot-matrix printers to print Chinese characters, however, there was no way to use these printers’ “text” mode. Instead, the printers once again had to be tricked, this time in order to print Chinese characters using the graphics mode typically reserved for printing raster images.

For students of the Chinese language, the irony here will be apparent: in order for Chinese characters to function on early Western-built dot-matrix printers, Chinese characters had to treated as pictures or pictographs. Pictographs were something that Westerners had long assumed Chinese characters to be, even though they are not (with few exceptions). But in the context of dot-matrix printing, “pictographs” were indeed what they had no choice but to become.

Eventually, a new family of impact printers began to be released on the commercial market: 24-pin dot-matrix printers, featuring pin diameters of 0.2 mm (as compared to 0.34mm on 9-pin printers). Unsurprisingly, the leading manufacturers of these new printers were largely Japanese companies such as Panasonic, NEC, Toshiba, Okidata, and more. Given the need to print characters required by the Japanese language, Japanese engineers needed to solve similar challenges as their Chinese counterparts.

Pop-up modernity: Chinese character monitors

Patent document image demonstrating the conversion of Chinese characters into bitmap rasters. Image Credits: Thomas S. Mullaney East Asian Information Technology History Collection, Stanford University

Yet another domain within the ecology of Chinese computing was that of mass-manufactured computer monitors. In certain respects, the politics of monitors were similar to those of printers, particularly with regards to the issue of character distortion. Unavoidably, even the lowest-resolution Chinese character bitmaps occupied upwards of twice the vertical and horizontal space of Latin alphabetic letters, making the Chinese in bilingual texts appear comically oversized (such as can be seen in this story’s featured image).

Standard, Western-manufactured computer monitors could also fit a far smaller number of Chinese characters on screen than Latin letters, both in terms of line length (the number of characters per line) and depth (the number of lines per screen). Chinese language users could thus see only small portions of their texts at any one time.

Then there were challenges unique to Chinese character display: the pop-up menu. Because of the inherently iterative process of Chinese input, in which users are constantly being presented with Chinese characters that fulfill the criteria provided by their keystrokes, an essential feature of Chinese computing is a “window”—whether software-based or hardware-based—that enables the user to review these Chinese character candidates.

Although the pop-up menu is a ubiquitous feature of Chinese computing from the 1980s onward, this feedback technique dates back to the 1940s. In a 1947 experimental Chinese typewriter designed by Lin Yutang, there was a key component of the machine the inventor called his “Magic Eye”: in effect, the first “pop-up menu” in history, albeit a mechanical one.

With the advent of personal computers, mechanical windows such as those found on the MingKwai, Sinotype, Sinowriter, or otherwise, were integrated into the computer’s main display. It became a software-governed “window” (or bar) on the screen, rather than a separate, physical device.

This pop-up menu placed further constraints on the already precious real estate of the computer monitor, however. What we might term “pop-up menu design” became a critically important area of research and innovation within Chinese personal computing from its inception. Companies experimented with different menu styles, formats, and behaviors, attempting to strike a balance between the requirements of input, screen size, and the preferences of users.

There were trade-offs to each option. Menus that displayed a larger number of character candidates at once increased the likelihood of more rapidly finding one’s desired graph, but came at the cost of screen space. Smaller windows, while less intrusive, required the user to scroll through “pages” of character candidates, if the user’s desired graph was not found amongst the top recommendations.

As a consequence of these strict limitations, Chinese engineers and firms were constantly seeking next-generation monitors. While this was perhaps true for the global market at large—since higher resolution monitors represent something of an “inherent good” for consumers—nevertheless, the motivating reasons for this hunger for high-resolution was dramatically different for the Chinese-language market.

Conclusion: No ESC

Inaugural issue of the magazine “Chinese Computing”. Image Credits: Thomas S. Mullaney East Asian Information Technology History Collection, Stanford University

As brilliant as each of these mods might have been, at the end of the day they remained just that: modifications. The autonomy and authority to create original systems—that is, the systems that subsequently needed to be modified—was ultimately where power was concentrated.

While the practice of modding tended to lead to a wide array of systems, it often came at the expense of interoperability. Modding required constant vigilance, moreover—no one-time “set it and forget it” solution was possible.

With every new computer program released on the market—and every new version of every computer program—programmers in China had to “debug” them line by line, insofar as programs themselves contained code which could set, or reset, parameters for the computer monitor, for example.

For most English-language word processing programs, for example, the baseline assumption baked into such programs was a 25-by-80 character display format (zifu fangshi xianshi). Since this format was incompatible with Chinese character display, engineers had to manually change every place in the program code where this 25-by-80 format was set. They did so, tellingly enough, using standard-issue “DEBUG” software. Through accumulated experience, engineers steadily learned their way around the assembly code bowels of leading programs.

Once modded, moreover, underlying operating systems and programs could always change. Shortly after the development of CCDOS and other systems, for example, IBM announced its move to a new operating system: the PS/2. “China and Chinese-language have been thrown into turmoil,” one article from 1987 wrote, noting that no existing Chinese-language systems—whether in Taiwan or on the mainland—had yet to be adapted to it. “The race is on for developers to come up with the best match for IBM’s MS/DOS platform.”

From an historical perspective, modders are vulnerable to misrecognition and erasure. In their time and place, their work was often misrecognized as mere theft or piracy, rather than as necessary acts of re-engineering to render incompatible machines compatible with the Chinese language. In a January 1987 issue of PC Magazine, for example, one cartoonist lampooned Sinicized operating systems. “It Runs on MSG-DOS,” the cartoon’s caption read.

As Western manufacturers slowly incorporated many of these Chinese mods into the core architectures of their systems (as well as Japanese and other non-Western ones), it is all too easy to forget that such changes were inspired by the work of engineers in China and the non-Western world. In sum, it is all too easy to retroactively imagine that the Western-built computer has always been language-agnostic, neutral, and welcoming.

This critical period of computing history has gone completely unwritten, and for a very simple reason. In the United States, and the Western world more broadly, none of these mods have been understood in terms of “experimentation,” let alone “innovation.” Instead, another set of words was—and continues to be—reserved for them: “copycatting,” “mimickry,” “piracy.” As Chinese engineers reverse-engineered Western-built dot-matrix printers, enabling them to print Chinese characters; or retrofitted Western-designed operating systems to make possible the use of Chinese input method editors, all that most Western observers could see was “theft.”

As wave after wave of regulatory crackdowns have dominated China tech news in 2021, one can be excused for losing track of what is being regulated, who is doing the regulating, and what exactly the regulations are. From fintech to data management to education, the rules of the game are being re-written by a range of agencies, often at a rate faster than all but the keenest observers can follow.

For antitrust, a newly-empowered bureaucratic entity appears to be sending the signal that we are only at the beginning of a large-scale reorganization of how Chinese internet firms interact with consumers, vendors, and the state. Formed only three years ago as a merger of already-existing agencies, the State Administration of Market Regulation (SAMR) has quickly become a force to be reckoned with, reshaping how companies view risk and opportunity in the market with the world’s most internet users.

Having already levied hefty fines on the likes of Alibaba and Meituan, recent developments suggest that SAMR is only getting started. On October 13, Reuters reported that China is considering upgrading the antitrust bureau within SAMR to deputy-ministerial status, under the name of the National Antimonopoly Bureau.

The elevated ranking would reportedly help antitrust investigators gain resources when examining mergers and acquisitions and would also help to strengthen SAMR’s in-house capability to conduct research that it has previously had to outsource. This would be aligned with previous reporting that the agency had been planning to considerably expand its workforce.

That portends further choppy waters for China’s tech giants and others competing for market share. It’s also rapidly changing the investor calculus of how to value some of the fastest-growing companies in the world.

Trusts and the antitrust blowback

This sort of regulatory blowback is hardly unprecedented. Known for its opulence and extreme inequality, the “Gilded Age” of the decades that followed the American Civil War saw the rise of the U.S. as an industrial and economic superpower. The period was marked by a weak central government and the rise of the country’s hyper-wealthy corporate interests and industrialists with names like Rockefeller, Carnegie, and Morgan, whose monopolies dominated economics, politics, and society.

While a time of great innovation and dynamism, its excesses also brought about the corrective measures of Theodore Roosevelt’s Progressive Era at the turn of the century, in which regulatory measures were taken to conserve natural resources, protect consumers and break up corporate monopolies.

As several observers have noted, present-day China has more than a few parallels with America as it transitioned from the Gilded to the Progressive Era: with a country stricken by social inequality, environmental degradation and behemoth corporate interests, Xi Jinping has consolidated control over the reins of the state and is attempting to curb the excesses that have resulted from decades of transformative growth.

Like Roosevelt, Xi appears to view his country’s most valuable corporations as oversized giants whose dominance threatens the long-term health of its economy and society. Yet while Roosevelt busted oil and railroad monopolies, Xi seems to have his sights set squarely on China’s world-leading internet companies.

Redefining “monopoly” for the platform economy

As China’s leaders seek to turn the page on the country’s Gilded Age through digital-era trust-busting, it is also looking to re-examine how monopolies are defined. For China and the rest of the world alike, this means crafting regulations that address the unique characteristics of market power in the digital economy. “As many of the large internet platforms are two-sided marketplaces, regulation needs to consider both consumer and merchant protections,” explains Michael Norris, a Shanghai-based analyst for market research firm AgencyChina. “Effective regulation needs to walk a tightrope between consumer protections, merchant interests, and platform economics.”

This stands in contrast to the longstanding established norm in the U.S. of the Consumer Welfare Standard, which directs courts and regulators to focus on the effects that challenged business practices have on consumers, rather than on alleged harms to specific competitors. For a digital economy in which the largest players such as Alibaba or Amazon function largely as intermediaries between vendors and consumers, and which use their massive scale to outmatch their competition, increasing numbers of policymakers have argued that the Consumer Welfare Standard is insufficiently comprehensive.

SAMR appears to be taking that position as well, given the targets of its investigations and the penalties it has levied thus far. Alibaba and Meituan have each been slapped with fines of 3-4 percent of annual revenue for their longstanding “choose one from two (er xuan yi 二选一)” practices, in which merchants were pressured to use the platform exclusively. While this practice was at times explicit, it often was exercised through more subtle or deceptive means, exploiting the data and recommendation algorithms that play such a prominent role in determining a merchant’s success. Some such tactics were listed in the recent SAMR announcement as it concluded its Meituan investigation.

Along such lines of forced exclusivity, China’s Ministry of Industry and Information Technology (MIIT) has also directed internet firms to tear down their “walled gardens,” and cease their formerly common practice of blocking competitors’ links on their platforms. Though adding complications for some firms, the banning of such behavior seems to be welcomed among Chinese consumers, as the inability to share Alibaba’s links on Tencent’s WeChat platform was a common annoyance.

SAMR has also ordered Tencent Music Entertainment to cease its exclusive deals with record labels, levying a minor fine of 500,000RMB (roughly $77,000), but also calling into question the business models of other content platforms whose business models rely heavily on exclusive deals with sought-after content producers.

A challenging time for investors

For investment firms, a greater concern may be in the heightened scrutiny over mergers and acquisitions. In July, a $5.3 billion merger between China’s leading game-streaming platforms Huya and Douyu was terminated two days after a SAMR decision to prohibit it, the first “adverse” merger control decision adopted by SAMR and its predecessor against a transaction without foreign participation.

Indeed, China’s antitrust push, coupled with its broader wave of regulations, have investors rethinking their strategy in the country. One anonymous employee of a prominent VC firm complained of greatly increased complications in gaining approval for a recent merger proposal, citing a far more invasive screening from SAMR than was previously expected, with questions ranging from business models and practices to issues of national security. In the end, the firm decided not to move forward with the deal.

Questions also loom large for the superstar firms that once headlined equity investors’ China portfolios. For many large, platform-based firms, consistent profitability has remained elusive. The prospect of continued growth and the profits that can be extracted from future market dominance was central to their once-soaring share prices and valuations. The e-commerce and food delivery fields in which Alibaba and Meituan operate, for example, are famously high volume/low margin areas. The fines, which amounted to 3-4% of top-line sales volume, do serious damage to already thin bottom lines.

Perhaps most worrisome to investors are the limited windows when they can achieve exits for their China-based investments. In addition to increased deal scrutiny that make mergers and acquisitions more difficult, regulatory roadblocks to IPOs are popping up where they have not been seen before. Though the dramatic eleventh-hour halting of Ant Group’s late-2020 listing sent shockwaves through the financial community, it was also seen as an anomaly: had it gone through, it would have been the biggest public offering in history. The intervention to block it was also conducted by China’s powerful central bank, and reportedly ordered by Xi Jinping himself.

What we are now seeing is a growing number of regulatory agencies further down the bureaucratic hierarchy who have both the power and the mandate to interfere with IPOs if they deem it necessary.

There is, of course, China Securities Regulatory Commission (CSRC), China’s counterpart to the Securities and Exchange Commission, which has announced a new cross-agency task force to crack down on illegal activities in the country’s capital markets as a number of the regulator’s former leaders are charged with corruption.

After ride-hailing platform Didi Chuxing ignored warnings not to go through with their U.S. offering until after conducting a thorough examination of its network security, the Cyberspace Administration of China (the country’s chief cybersecurity watchdog) appears to be dedicated to making an example out of the company, removing it from app stores and placing the future of both the firm and its leaders in question.

Finally, as SAMR is given elevated status, it is highly likely that it will also have the power to determine if and how a company is allowed to go public.

For investors hoping for IPOs, the road to their exit is lined with a growing number of checkpoints whose standards seem to be getting progressively tighter.

How far will China’s antitrust mandate go?

With an elevated regulator coupled to a sweeping mandate, China’s antitrust campaign can now potentially reach areas where very little precedent has been set. Compounded with the authoritarian nature of China’s political system, there is very little that firms can do to fight back. In many cases, the best they can try for is to comply, and maintain a positive working relationship with authorities, as the alternative is far worse.

“Chinese authorities are very adept at using reputational sanctions,” explained University of Hong Kong law professor Angela Huyue Zhang while appearing on my podcast to discuss her book Chinese Antitrust Exceptionalism. “They are very adept at leaking information to (state media) and there are different ways that they can announce an investigation, leading to different levels of media publicity.” Zhang went on to cite Alibaba’s $90 billion drop in market capitalization after the mere announcement of an antitrust investigation on Christmas Eve of 2020. As Didi is also now experiencing, the reputational taint of being outside of Beijing’s good graces can be as damaging as any formal punishment.

With investigations into Alibaba and Meituan now concluded, it may be the case that the scrutiny into “choose one from two” practices are wrapping up. However, fear and speculation outweighs the certainty at the moment, as a newly-empowered and staffed-up SAMR likely has plenty on its to-do list.

One popular theory is that the beefed-up SAMR will spend more of its muscle targeting subsidized group-buying practices that helped propel the rise of social e-commerce firms like Pinduoduo, but which also can place strong downward pressure on prices, hurting small vendors. In March, SAMR slapped minor fines on five firms for illegal behavior around group-buying practices. As such practices have been known to be quite common among China’s internet platforms, there could be considerably more to be found if regulators continue to dig, as well as harsher penalties, perhaps, to follow.

“Previous SAMR-issued fines and commentary show they take a harsh view of subsidies used to sell goods and services below cost,” says Norris. “A stronger penalty regime is what SAMR needs if it’s to create an effective deterrent to subsidy-driven growth.”

What is also worth noting is the extraterritorial nature with which antitrust can be used, particularly as a countermeasure to U.S. sanctions. “In 2018, there was an onslaught of sanctions on Huawei and ZTE and other Chinese tech companies, and this was really a wakeup call for the Chinese government, which realized that the U.S. has such strong extraterritorial sanctioning power,” said Zhang. “One of the tools that [the Chinese government] came up with was antitrust, as it allows them to exert extraterritorial jurisdiction over foreign business.”

This came into play significantly in mid-2018, when Qualcomm abandoned a proposed $44 billion acquisition of Dutch chipmaker NXP Semiconductors after struggling to get SAMR approval for the deal. Though U.S.-China relations appear to be somewhat brought back from the brink of the Trump years, it is clear that China considers extraterritorial antitrust measures to be an arrow in its quiver.

What we do know is that for both foreign and domestic firms alike, the free-wheeling days of China’s Gilded Age are quickly becoming a thing of the past, and that antitrust is a powerful tool in forcing that transition to happen.

For a technology sector that would much prefer to focus on growth over geopolitics, the push for U.S.-China “decoupling” poses an inescapable threat. The fuzziness of the concept only increases the danger.

U.S. distrust of China, particularly in technology, is nothing new. Indeed, Congress took action to keep Huawei and ZTE out of U.S. telecommunications almost a decade ago, during the Obama administration.

But during the administrations of both George W. Bush and Barack Obama, there was a broad push to engage in dialogue and find common ground between the world’s two biggest economies. As China emerged as a leading global economy and became an increasingly important trading partner to the U.S., (accounting for 2.5% of U.S. imports in 1989 and rising to a peak of 21.6% in 2017), there were moves to incorporate it into the U.S.-led global trading system. In 2005, Deputy Secretary of State Robert Zoellick put forward the idea of China as a “Responsible Stakeholder,” under the assumption that embracing China’s entry into the global trading system would ensure that it helped that system continue to function.

Not long before that, the U.S. had agreed to China’s 2001 accession to the World Trade Organization. But while it was seen by many as a turning point, it was really just a waypoint. That year, China’s share of U.S. imports was already 9.0%. Growth in Chinese imports, moreover, reflected a rebalancing of Asian trade more than anything else; from 1989 to 2017, Asia’s share (including China) of U.S. imports grew from 42.3% to just 45.2%. China’s relative growth instead ate into the share of countries like Japan and Malaysia, reflecting a reordering within Asia. The standard system of trade accounting overplayed this shift, as a good that was finished in China and had 10% Chinese value added would count as 100% Chinese for trade statistics.

Regardless of what was labeled as produced where, the bottom line was that a well-developed Asian supply chain incorporated China as a major player. With increased engagement, however, and very different economic systems, the points of economic disagreement between China and the United States accumulated. During the Trump administration, dialogue took a back seat to new trade barriers. The United States applied tariffs on hundreds of billions of dollars of Chinese imports and China responded with barriers of its own. Although the Trump tariffs were initially cast as temporary measures meant to achieve finite policy objectives, some key policymakers within the Trump administration saw value in diminished interaction between the two countries.

Matthew Pottinger, who served as Deputy National Security Adviser under President Trump, subsequently wrote that “important U.S. institutions, especially in finance and technology, cling to self-destructive habits acquired through decades of ‘engagement,’ an approach to China that led Washington to prioritize economic cooperation and trade above all else.” His solution calls for bold steps “to frustrate Beijing’s aspiration for leadership in … high-tech industries.” The Biden administration recently announced, after a prolonged review, that it was maintaining the Trump tariffs and Congress has pushed to fund initiatives that would subsidize technological independence. These moves for lessening dependence, particularly in technology, have fallen under the broader rubric of “decoupling.”

Amidst all the newfound enthusiasm for U.S. decoupling from China, one might imagine that the term is well-defined. Yet it takes relatively little probing to discover a lack of clarity. Of course, the above-mentioned tariffs have served to discourage trade between the two countries, but how far is this policy meant to go?

Does decoupling mean the U.S. will turn away from inbound and outbound foreign direct investment? What about portfolio investment, such as the purchase of U.S. Treasuries? Does it mean that the U.S. should avoid importing final goods produced by Chinese firms? What about European firms producing in China? What about U.S. firms producing in China? Or European or U.S. firms producing outside China but incorporating Chinese parts? Or companies selling into the Chinese market and thus, presumably, subject to Chinese influence?

The sheer breadth of economic interactions between the two giant economies illustrates the implausibility of a clean divide between them. Instead, the most likely result of an attempt at exclusion would be another reordering, not China’s disappearance as a supply chain power. This is particularly true when other global economic powers, such as the European Union, do not share even the vague objective of decoupling.

TechCrunch Global Affairs Project

The nebulous nature of the decoupling push poses a particular threat to the tech sector. Over decades, the push to take advantage of scale economies and to drive down production costs has resulted in highly-integrated global tech production. Further, in subsectors that have recently emerged as particularly contentious, such as the production of semiconductors, investments have to be made at large scale and well in advance. That leaves the sector especially vulnerable to rapidly-shifting rule changes, as policymakers struggle to give substance to a problematic concept at a time of difficult supply chain disruptions. Policy responses that shower the sector with subsidies, as some bills in Congress have proposed, seem appealing, but lose their effectiveness when countries such as Japan move to match them.

A world in which the United States provides an extreme answer to the above questions and is absolutist in its separation from China is likely to be one in which the United States cripples itself technologically, denying itself access to globally-competitive sourcing and empowering competitors elsewhere. The only politically viable alternative at the moment, a world in which the United States takes a more moderate stance and struggles to find a middle ground, is likely to be an unpredictable one in which rules are constantly evolving.

In either case, proponents of U.S.-China decoupling will find such a move counterproductive. Far from resolving strategic policy concerns, its primary impact may be to challenge U.S. technology leadership instead.

In a wide-ranging interview at the WSJ Tech Live conference that touched on topics like the future of remote work, A.I. innovation, employee activism, and even misinformation on YouTube, Alphabet CEO Sundar Pichai also shared his thoughts on the state of tech innovation in the U.S. and the need for new regulations. Specifically, Pichai argued for the creation of a federal privacy standard in the U.S., similar to the GDPR in Europe. He also suggested it was important for the U.S. to stay ahead in areas like A.I., quantum computing, and cybersecurity, particularly as China’s tech ecosystem further separates itself from Western markets.

In recent months, China has been undergoing a tech crackdown which has included a number of new regulations designed to combat tech monopolies, limit customer data collection, and create new rules around data security, among other things. Although many major U.S. tech companies, Google included, don’t provide their core services in China, some who did are now exiting — like Microsoft, which just this month announced its plan to pull LinkedIn from the Chinese market.

Pichai said this sort of decoupling of Western tech from China may become more common.

He also said it would be important to stay ahead in areas where the U.S. and China compete, like A.I., quantum computing, and cybersecurity, noting that Google’s investments in these areas comes at a time when governments were slightly pulling back on “basic R&D funding.”

“The government has limited resources and it needs to focus,” noted Pichai, “but all of us are benefiting from foundational investments from 20 to 30 years ago — which is what a lot of the modern tech innovation is based on, and we take it for granted a bit,” he said. “So when I look at beat semiconductor supply chain [and] quantum…the government can play a key role, both in terms of policies and allowing us to bring in the best talent from anywhere in the world, or participating with universities and creating some of the longer-term research areas,” Pichai added. These are areas that private companies may not focus on from day one, but play out of 10 to 20 years, he said.

In the wake of increased cyberattacks across borders, Pichai said that the time had come for a sort of “Geneva Convention equivalent” for the cyber world, adding that governments should put security and regulation higher on their agendas.

He more directly argued in favor of new federal privacy regulations in the U.S. — something Google has pushed for many times in the past — suggesting that something like the GDPR in Europe is warranted.

“I think the GDPR has been a great foundation,” said Pichai. “I would really like to see a federal privacy standard in the U.S. and worried about a patchwork of regulations in states. That adds a lot of complexity,” he continued, noting that “larger companies can cope with more regulations and entrench themselves, whereas for a smaller company to start,  it can be a real tax.”

That’s a point that’s been consistently brought up when Facebook’s CEO Mark Zuckerberg calls for regulation, too. A more regulated U.S. tech industry could work in favor of larger companies like Facebook and Google which have the resources to address the regulatory hurdles. But a single federal standard could also give big tech only one law to battle against, instead of many scattered across the U.S. states.

Pichai additionally tied consumer privacy to security, even noting that “one of the biggest risks to privacy is the data getting compromised” — an interesting statement coming only days after Amazon, a top Google rival, saw its game streaming site Twitch hacked.

As for where to draw the line in regulating tech, Pichai said the law shouldn’t encroach on the open internet.

“I think the internet works well because it’s interoperable, it’s open, it works across borders, promotes trade across borders…and so, as we evolve and regulate the internet, I think it’s important to preserve those attributes,” he noted.

The exec also responded to many other questions about ongoing issues Alphabet and Google are facing, like the pandemic impacts to corporate culture, employee activism, misinformation on YouTube, and more.

On the latter, Pichai expressed a commitment to freedom of experience but noted at the end of the day, the company was trying to balance content creators, users, and advertisers. He said many brand advertisers would not want their ads to appear next to some types of content. Essentially, he suggested that the nature of YouTube’s ads-based economy could help to solve the misinformation problem.

“You can look at it from a free-market basis and say, [advertisers] don’t want their ads next to content because they think it’s brand-negative. So, in some ways, the incentives of the ecosystem actually help get to the right decision over time.”

He sidestepped the interviewer’s question as to whether YouTube was basically acting as a publisher as it made its content decisions, however.

Pichai also talked about Alphabet’s corporate culture in the pandemic era and going back to the office, saying that a three-two model (meaning three days of in-person vs. two days remote) can offer better balance. The in-person days allow for collaboration and community, while the remote days help employees better manage the issues that traditionally came with in-person work, like longer commutes. However, in another part of the interview, he spoke of missing his own commute, now that he does it less, saying it was time where he had the space for “deeper thinking.”

As for employee activism — which is seeing more activity as of late as tech companies grapple with large and diverse staffs who often share contradictory opinions on the decisions made at the executive level — Pichai says this is the “new normal” for business. But it’s also nothing new for Google, he pointed out. (Years ago, Google employees were protesting the company’s work on a censored search engine for the Chinese market, for instance.)

“If anything, we’ve been used to it for a while,” said Pichai, noting that the best the company could do is to try to explain its decisions.

“I view it as a strength of the company, at a high level, having employees be so engaged they deeply care about what the company does,” he said.

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. Or, as in today’s episode, talk our way through some big breaking news from the technology world so that we can better understand just what is going on.

Danny and Alex got together late Friday on a Twitter Space to discuss Microsoft’s decision to pull LinkedIn from the Chinese market, a move that lit up headlines around the world. That LinkedIn was still in China in 2021 may feel more surprising than the news that it will exit that particular market, but the moment matters all the same as it marks the end of an experiment — could a mega-tech company have a US HQ and a first-party service live in China?

Er, no, it turns out. Not really.

Microsoft found itself jammed between its own ethics, and governmental censure. It was a lose-lose for the company, so pulling the plug was the smart move. The company isn’t going to miss the revenue.

For startups, the Microsoft decision is a good reminder that doing business in China is at a minimum very hard for non-Chinese companies, and perhaps impossible. Recall that Microsoft had to work with a Chinese company (21Vianet) to get Azure into the country at all, and that the Chinese government is using a few companies to build a new OS for the country so that it can replace Windows.

Precisely how good that OS will prove is not yet clear, at least from a consumer perspective.

And then we riffed on GitLab’s IPO. My favorite topic of the week. You’ll see why it came up when you hit play. Chat Monday!

Equity drops every Monday, Wednesday and Friday morning at 7:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

American technology giant Microsoft announced today that it will pull its professional social network LinkedIn from the Chinese market later this year.

Microsoft purchased LinkedIn for more than $26 billion back in 2016.

The news comes amidst a flurry of regulatory changes in the Asian nation, as well as rising tensions between the company and the country. Two weeks past, Microsoft came under heavy scrutiny for its decision to block the profiles of certain U.S. journalists in China.

The company is hardly the only American enterprise to find it hard to balance the authoritarian demands of the Chinese government and its own business goals. Here, Microsoft has taken a sharp approach to a problem that likely would have only become exacerbated over time; the software giant could choose to either bow to the demands of the Chinese government to limit access of individual profiles it found unacceptable — that journalists were suffering from blocks is not a surprise, given the media environment inside China — or walk.

It chose the latter.

In a blog post discussing the news, LinkedIn wrote that the company described its 2014 decision to enter the Chinese market, which meant “adherence to requirements of the Chinese government on Internet platforms” despite it also “strongly support[ing] freedom of expression.”

But LinkedIn wrote that it is now “facing a significantly more challenging operating environment and greater compliance requirements in China.” That changed market landscape led to the company making the “decision to sunset the current localized version of LinkedIn, which is how people in China access LinkedIn’s global social media platform, later this year.”

Shares of Microsoft are up around 1.6% in morning trading, up roughly as much as the technology-focused Nasdaq Composite index. Investors are shrugging off the news, in other words.

What the decision will mean for Microsoft’s relationship with the Chinese market and state is not clear as this juncture. The Chinese Communist Party has been making changes in its domestic cloud market, for example, that could limit its commercial future for foreign companies. Microsoft’s Chinese LinkedIn decision could be viewed through the lens of a possible longer-term decoupling of the tech shop and the nation.