Tuesday Tech Briefing: NetEase Music, ‘Chaotic’ Social Media, Phone Startup

1. Beijing Takes Action on ‘Chaotic’ Social Media Landscape

Chinese authorities have deleted nearly 10,000 social media accounts and held meetings with social platforms like WeChat and Weibo, in an effort to tackle a "chaotic" social media landscape, authorities announced Monday.

The Office of the Central Cyberspace Affairs Commission – the entity charged with regulating online discourse – said problematic behavior includes spreading rumors, distorting images of heroes, blackmailing businesses, plagiarism, exaggerating web traffic numbers and more. (Official announcement, link in Chinese)

2. Foxconn's Wisconsin Plant Faces Headwinds After US Elections

Taiwanese multinational electronics manufacturer Foxconn's $10 billion plant in the U.S. state of Wisconsin faces uncertainty after the American politician responsible for the deal lost a re-election bid against a fierce critic in the recent midterm elections.

Incoming governor Tony Evers indicated earlier the state might renegotiate terms of Foxconn’s investment. Incumbent governor Scott Walker had secured nearly $4 billion in tax breaks and other incentives for the project, seen as one of the largest foreign investment in the U.S. and billed by Trump as a milestone to restoring manufacturing jobs.

Foxconn, also known as Hon Hai Precision Industry, is a key supplier for Apple, HP, Dell, Amazon and others. Groundbreaking took place in June. (Nikkei)

3. Cryptocurrency-Mining Principal Fired After Adding $2,440 to School’s Power Bill

Two high-school officials were fired last month after it was discovered they had racked up an electricity bill of over 17,000 yuan ($2,440) from mining cryptocurrencies at work.

The school principal initially mined ethereum at home but then moved his machine to school, after discovering the electricity cost from mining was too high.

China has tightened regulation on cryptocurrency since September 2017, when authorities banned virtual currency exchanges. It also nudged enterprise miners to withdraw from mining, but civilian miners remain active. (Caixin)

4. Major Music Streamer Completes Funding of Over $600 Million

NetEase Cloud Music, the music streaming unit of the Nasdaq-listed NetEase, has completed a funding round of over $600 million. Tech giant Baidu was a strategic investor.

The 4-year old platform is a major player in China's streaming music scene, with over 600 million registered users and 70,000 independent musicians.

NetEase Cloud Music competes head-to-head with Xiami and Tencent's QQ Music, all of which have rolled out paid subscription services. Individual user spending in China is projected to quadruple between 2017 and 2023. (Company announcement)

5. Facebook Launches Music Video App to Challenge ByteDance

Facebook has launched Lasso, a music video app designed to compete with Musical.ly and ByteDance’s Tik Tok for the attention of teens.

Youth are fleeing Facebook in droves, with only 5% of the group rating the platform as their favorite social platform. Meanwhile, two ByteDance products now dominate the global music video landscape and have garnered immense interest among teens.

ByteDance is one of a handful Chinese tech companies that enjoyed success in outbound expansion. Douyin, for instance, ranked fourth in total number of downloads worldwide in the latest quarter. (Caixin, link in Chinese, TechCrunch)

6. Phone Startup Faces Pressure in Lackluster Market

The phone-making subsidiary of online security service provider 360 Group has decided to close down its office in Xi'an, people close to the matter told Caixin.

360 Phone achieved rapid growth in the first two years after its inception in 2014, with annual sales of 5 million units in 2017. But growth has stalled as the phone market began slowing in 2017.

The Chinese phone market declined nearly 20% in number of orders in 2018. Small players like 360 Phone are left with little room, as dominant players such as Huawei, Apple, and Xiaomi continue to eat up shares. (Caixin, link in Chinese)

Compiled by He Shujing