Roles reverse as Silicon Valley now looks to East for big ideas
China is shaking off its copycat image to take on tech giants such as Facebook, writes in San Francisco
THE idea that ‘China can’t innovate’ is pervasive and persistent in America. Google offers about 12,500 direct hits for the phrase in articles in the Harvard Business Review and forums on Reddit. Most authors buy into the idea that the strict Chinese political system cannot foster the free-thinking creativity they believe drives Silicon Valley.
Yet trends in technology now tell a different story. Where once Chinese tech firms slavishly copied American originals, today Silicon Valley is merrily plundering innovations from the People’s Republic.
Facebook, arguably tech’s most successful magpie, has just introduced a feature named Reels, allowing users to create 15-second videos within Instagram and overlay them with music or filters. Aside from the font and colour scheme, Reels is almost indistinguishable from rival Chinese video app TikTok.
China has also done its fair share of stealing ideas. Shenzhen, China’s version of Silicon Valley, is home to Huawei, more commonly known as ‘China’s Apple’, and Baidu, also known as ‘China’s Google’.
But the days when Chinese innovation was about what used to be called ‘C2C’ — ‘copy to China’ — are long gone.
In everything from artificial intelligence to transport, Western companies are racing to develop technology to match Chinese counterparts.
One area where this is clear is in the development of ‘super apps’. In China’s major cities, super apps such as Tencent’s WeChat and Alibaba’s Alipay allow users to message friends, check their credit score and pay for items using a QR code on their phone.
In June, Snapchat gave the clearest sign yet it wanted to become a WeChat-like super app by inviting developers to build simplified versions of their own apps into its platform. Facebook has also long tried to become a Chinese-style super app, providing a whole empire of services within a ‘walled garden’.
In 2015, David Marcus, Facebook’s then head of Messenger, openly admitted that WeChat was an inspiration.
Messenger had just graduated from a feature of Facebook’s home feed to a standalone unit, and Marcus had lofty plans for it to become the West’s port of call for payments, customer service and online shopping. This would give Facebook an additional revenue stream to advertising when user growth stagnated.
But Marcus, who now runs Calibra, Facebook’s blockchain project, told Congress last year: “I believe if America does not lead innovation in the digital currency and payments area, others will.”
Rather than leading, however, it seems US firms are endlessly imitating — and they are holding no prisoners. The timing of Instagram’s Reels launch, for instance, could not be more Machiavellian. The debut arrived at a fraught moment for TikTok, which has come under threat of a ban by the White House, prompting China’s ByteDance to weigh a sale of the app’s US operations to Microsoft. TikTok, with its 800 million users globally, poses a real threat to Facebook.
In 2019, TikTok increased its US users by 97.5pc. Audience growth is projected to remain in double digits until 2021, before slowing down.
Meanwhile, Facebook’s growth in the US was plateauing before it bought Instagram and WhatsApp, although its family of apps saw a bump thanks to the pandemic.
Kevin Mayer, TikTok’s new American CEO, last week urged “copycat” Facebook to “bring it on” in a letter he sent to Washington. “It is unfortunate for creators, brands and the broader community that it has been years since a company came along and reimagined what a social entertainment platform could be,” Mayer said. “But TikTok did just that.”
Instagram denied the rollout of Reels was an attempt to take advantage of TikTok’s recent troubles.
Vishal Shah, Instagram’s vice president of product, said the app had been working on the tool “for over a year”, and platforms often took inspiration from each other when creating new features. “I think the consumer product ecosystem is one that’s constantly being inspired by things that people are doing around them, whether that’s internally in your own organisation or more broadly,” he said.
However, Facebook is not the only one with skin in the game. Google is reported to be snapping up a short video sharing app named Firework, which is similar to TikTok.
Amazon, which has failed to make it in China, also draws inspiration from the East. It has 26 cashier-less shops around the world. But Amazon is not the first to use QR codes or build unmanned shops — several popped up in China a year before Amazon Go opened to the public.
It launched a live shopping service in 2019 that hasn’t taken off, largely due to its lack of social media element.
Meanwhile, China has long been crazy about live shopping and has the largest live streaming market in the world, reaching $4.4bn (€3.74bn) in 2018, according to Deloitte. Facebook bought live shopping app Packagd last year and Google launched its video shopping app Shoploop in July.
Not all imitation works. China’s “hyper adoption” of new technology is “unique”, says Xiaofeng Wang, an analyst at Forrester who previously worked at Sina Weibo, China’s Twitter. Customers in China are more likely to upload photos than those in the West, who have privacy concerns. They are more comfortable with their credit being tracked through Alipay.
“It is not like in the TV show Black Mirror,” she says. “They see it as a financial management tool.”
Some differences are too ingrained, like China’s love for squeezing huge amounts of content in one place. There, web pages might include hundreds of links all in tiny font, whereas Western companies like their content to breathe.
“Chinese consumers just want everything in one place and won’t download an additional app — they just wanted to open WeChat,” says Wang.
Despite Big Tech’s best efforts, many of the services borrowed from China may fail to thrive.
“After five years, we haven’t seen much from Facebook’s super app plans for WhatsApp,” says Karsten Weide, program vice president, digital media and entertainment, at IDC. “That tells me the idea was not a good cultural match.”
This weekend at least, Facebook’s copycat appears not to have paid off. Within hours of its launch, Reels was populated with blurry clones of already published memes and videos. Where did the videos come from? TikTok.