China disrupts WhatsApp, upping online crackdown
Beijing’s internet grip tightens before Communist event.
The last of Facebook’s major products that still worked in China was disrupted by the government Tuesday, as Beijing broadly tightened its controls over the internet.
The product, WhatsApp, a messaging app used across the globe, was partly blocked by Chinese filters, leaving many unable to send videos and photos and some also unable to send text-based messages.
The disruption of WhatsApp was the latest in a long line of big digital services running up against China’s “Great Firewall,” the country’s system of internet filters and controls. In recent weeks, the government has appeared to increase its grip, an online crackdown fed by a perfect storm of politically sensitive news, important events and a new cybersecurity law that went into effect last month.
Sites hosting popular foreign television shows have had videos taken down, and tools used to skirt the censors have faced more frequent disruptions. In an article, the mouthpiece of the country’s Communist Party scolded the Chinese internet company Tencent over a popular video game, calling it too addictive.
The news environment has intensified the government’s online scrutiny. In recent weeks, the Chinese dissident Liu Xiaobo died in detention. A Chinese billionaire in the United States accused senior leaders of graft, using his platform on Twitter. And Hong Kong commemorated the 20th anniversary of its handover to China.
To complicate matters, the 19th Party Congress — where top leadership positions are determined — is just months away. The government puts an increased emphasis on stability in the run-up to the event, which happens every five years, often leading to a tightening of internet controls.
WhatsApp, which had generally avoided major disruptions in China despite the full block of Facebook and Instagram, appears to have become a victim of those circumstances.
The blocks against WhatsApp originated with the government, according to a person familiar with the situation who declined to be named. Security experts also verified that the partial disruption in WhatsApp started with China’s internet filters.
“According to the analysis that we ran today on WhatsApp’s infrastructure, it seems that the Great Firewall is imposing censorship that selectively targets WhatsApp functionalities,” said Nadim Kobeissi, an applied cryptographer at Symbolic Software, a cryptography research startup.
The actions by the Chinese government are another setback for Facebook in a country that has been difficult for the world’s largest social network to crack. Its flagship site was blocked in 2009 after ethnic unrest in western China; Instagram followed in 2014 during protests that fall in Hong Kong.
Beginning in late 2014, Facebook began a campaign to woo the Chinese government and get its main social network back into the country. But Facebook’s efforts have slowed over the past year, and it has little to show for itself. Instead of getting a new product into China, the internet giant now faces the reality that its last app standing is under threat of being pushed outside the walls of Chinese censorship.
A spokeswoman for WhatsApp declined to comment.
WhatsApp is hugely popular around much of the globe, but the platform is not widely used in China. remains to be seen.
“I had a few readers tell me that they had no intention to do business with Goldman, but those comments were pretty limited,” said Ken Tumin with DepositAccounts.com, a review site for savings accounts and other bank products.
The consumer products Goldman is offering are pretty conventional. An online savings account with its GS Bank requires no minimum opening deposit and pays an interest rate of 1.20 percent. Looking for longer-term savings? Goldman offers CDs with terms from six months to six years, paying as much as 2.30 percent. And fixed-rate, no-fee personal loans are available through Marcus by Goldman Sachs.
Firm executives aren’t saying what future products they may offer. Analysts say it’s not unreasonable to think Goldman may consider checking accounts and student loans. Just don’t expect Goldman to be opening branches anytime soon, or ever.
“Whatever size it’s going to be, it’s going to be entirely a virtual business,” said Michael Wong, an analyst at Morningstar.
Goldman’s path to Main Street has its origins in the financial meltdown of 2008.
At the height of the crisis, Goldman and its rival Morgan Stanley — both trying to avoid the bankruptcy fate of Lehman Brothers — converted from investment banks to commercial banks. They did this largely to gain access to emergency tools the Federal Reserve created to support the failing financial system.
Goldman could then accept and hold deposits. But it did little with its commercial bank label for years.
That changed in 2015, when Goldman announced it wanted to buy the deposits of GE Capital, and later announced it had hired Harit Talwar from Discover Financial Services to explore creating a consumer lending business. The purchase of $16 billion in deposits from GE provided the firm a stable source of funding. Goldman opened GS Bank in mid2016 and started testing Marcus later that year.
Along with it opening up Goldman to new forms of business, the deposits are attractive for another reason: Unlike other forms of capital, deposits are less likely to fall in times of market stress.
“It’s providing us greater diversification for the firm, and that inherently is a good thing,” Scherr said.
Goldman has since added $5 billion in deposits to GS Bank on top of the $16 billion it bought. Marcus, which launched less than a year ago, has made $1 billion in loans to consumers. The firm expects to do another $1 billion in loans by the end of the year.
Online lending has exploded in the last few years — which has raised concerns about the industry getting too big too quickly. Also, many of these loans have been made by companies that haven’t been through a recession. Goldman is using its own money to make loans, unlike others who are selling the loans to investors. It says that means it can make more customizable loans with more flexible due dates.
“We’re very excited about crossing the $1 billion mark, but it’s been more important to do it as a responsible lender. We don’t want to cause more stress for our borrowers,” Talwar said.