Editorial: Censorship Discount

Mar 19 2014, 03:01 IST
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SummarySina Weibo setting a low IPO target is a fallout of Chinas censorship regime

Why is Sina Weibo, the Chinese micro-blogging site, targeting just $500 million off its US IPO while Twitter made a cool $2.1 billion from its? Granted, Weibo has just 129 million active users while Twitter has 241 million, but Weibo has seen 77% growth in the last two years despite remaining largely unknown outside China. In fact, the IPO, according to the company, is intended to push the brand as much as raise money. But, why the conservative target?

The reason, the company has hinted, is Chinas oppressive censorship regime. Laws in effect from last September could see Weibo users behind bars for up to three years if the content they post is deemed inflammatory. And given the ruling Communist Party of Chinas history in dealing with dissent, especially online dissent, inflammatory could be an over-used charge. The company seems aware of how the countrys regulation of the internet would limit its prospects. While Weibo has fears the newly promulgated judicial interpretation could choke user-generated content, it is also expected that the company itself would be required to police content. No wonder, Weibo sees its user-base growth slowing down in the near-term, thus affecting any plans to use the same in a revenue model. Apart from Beijing bearing down, there are other headaches to consider: the companys ad revenue strategy is unclear while rival Twitters is shaping up. Also, Weibo could soon have to compete with Twitter, which has stayed out of the country for so long, for Chinas 600 million internet-usersmany read Twitter CEO Dick Costellos impending visit to the country as testing the waters before entering.

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