IP in the Cloud: the China Perspective
Oct24

IP in the Cloud: the China Perspective

China is in the middle of a rapid shift towards cloud technologies. Execution of the 13th Five Year Plan will deliver substantial investment into cloud computing and the sector is undergoing unprecedented growth. Meanwhile, organisations operating in this digital economy face an increasingly complex intellectual property (IP) environment, as China becomes a global IP centre and scales up IP protection, enforcement and penalties for infringement. Indeed, the number of cloud-related IP lawsuits in China grew 158% between 2011 and 2016. Against this backdrop, organisations face an important question: how can they take advantage of the enormous opportunities presented by the cloud in a way that manages this complex IP landscape? In this post, Matt Pollins and Nick Beckett from CMS look at the practical steps organisations can take to protect themselves and succeed in the cloud. China’s “Internet Plus” economy and the role of cloud computing China is undergoing a rapid digital transformation. The “Fourth Industrial Revolution” is well underway, as the Government’s “Internet Plus” initiative sees the integration of digital technologies into organisations in every industry across the nation. The 13th Five Year Plan, which prioritises digital technologies and innovations, is the driving force of this digital transformation. As part of the Plan, China’s broadband coverage will reach 70% of households by 2020. Mobile internet will reach around 85% of the population, adding a staggering 400 million additional internet users. Against these seismic shifts in technology development and adoption, the opportunity for organisations to leverage digital technologies to drive growth and improve services is clear – whether it is the shift towards cashless payments, the growth of tele-health or the explosion in e-commerce sales. And, not content with maximising the opportunities arising from growth in the domestic market, Chinese companies are going global, launching international enterprises, from e-commerce to digital media. At the core of China’s digital transformation is cloud computing. The sector has grown an average of 40% year-on-year since 2011 and there is no sign of the pace of cloud adoption slowing. China’s digital economy is being built on cloud services, often provided by third party cloud service providers. The cloud offers the opportunity to expand into new businesses and markets faster than ever before. However, this new opportunity comes with new challenges and, like every transaction with a supplier, customers need to assess any associated legal considerations. Like our previous posts on the position in Europe and South-East Asia, this post focuses on an often-overlooked legal consideration in moving to the cloud: IP. “Infringers will pay a heavy price”: China ramps up IP protection and enforcement China is fast becoming a global centre of innovation....

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Guest Column: Regulating video in the internet age: Pressing challenges, slow movement
Jan09

Guest Column: Regulating video in the internet age: Pressing challenges, slow movement

Video markets in Asia, as in other parts of the world, are being swept by a wave of commercial and technological adjustment to the rise of internet-delivered video, frequently referred to as “OTT” television.  Unfortunately, in most countries adjustment of regulatory policies by governments is way behind. Asia’s cities, in particular, are rapidly being wired for broadband connectivity.  In developing countries like Thailand, the Philippines, Indonesia and India a broad digital divide has opened, with major urban areas enjoying improving connectivity and the countryside still reliant on more traditional modes of video delivery to consumers. That divide is a problem needing attention, but in the meantime urban populations, at least, are enjoying a “sweet spot” of improving broadband and adequate disposable income to pay for services consumers want.  As a result, they have become the object of a “race to serve” on the part of video providers on every scale: • Traditional pay-TV operators are upgrading their VOD offerings and broadening device access to include smartphones and tablets. • At the same time, new entrants are seeking to construct the right content offerings at the right price to win over consumers.  Major global providers (Netflix and Amazon Prime) entered Asia during 2016, and immediately were confronted with the need to adapt a global approach to Asian realities (including lower price points). • A raft of regional Asian OTT platforms have expanded their offerings (including Viu TV, Hooq, IFlix, and Catchplay), alongside a plethora of locally-oriented offerings (like Hotstar, Dittotv and Voot in India, plus Toggle, Monomaxx, Doonee, USeeTV, MyK+, etc., in Southeast Asia.) These market developments have significantly ratcheted up the pressure on governments, who are seeing more and more consumers migrate to lightly-regulated (or totally unregulated) online content supply, and away from the heavily-regulated traditional TV sectors.   Governments are in a quandary – most do not wish to impede their citizens’ access to global information sources, but at the same time they see evident challenges to long-established policies for content acceptability, broadcaster licensing, taxation, advertising etc.   At the extreme, “pirate” OTT services happily locate offshore, respect no rules and meet no obligations of any kind (not limited to copyright authorization), all the while reaping millions in subscription and/or advertising revenues.  Local content industries are crying foul. This very unbalanced competitive landscape causes deep damage to network operators, content creators at home and abroad, and investors in local economies.  In general, it isn’t possible to subject online content supply to outdated “legacy” broadcasting rules, so alternative solutions have to be considered, including self-regulatory approaches (which can gain acceptance from legitimate OTT suppliers, if not the pirate scofflaws)...

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China blocks iTunes and iBooks
Apr29

China blocks iTunes and iBooks

Apple is facing new challenges in China. Its iTunes Movies and iBooks Store were blocked earlier this month in what was a surprise move, given that it had only been six months since these services were made available to consumers in China. So why the apparent change in China’s attitude to Apple’s online services, and what does it mean for foreign companies in the content industry? What we can say is that this appears to be part of a broader move by the Chinese authorities to control the content accessed by Chinese consumers – and particularly foreign content. China’s new online publishing regulations, which came into effect in March 2016, have caused widespread concern among foreign companies because, in addition to greater conditions for foreign involvement in online content distribution and joint ventures, they appeared to require all online content to be stored in servers located in China. Under the new regulations, internet content publishers are also required to ensure that their content “promotes core socialist values”. China’s internet regulations are known to provide substantial room for regulator interpretation and the bigger question has always been enforcement. With this move, it looks like the authorities are laying down a marker to indicate that they will be ramping up enforcement against foreign companies. The stakes, of course, are high. China is Apple’s second largest market after the US and Apple has, until now, largely managed to escape the Chinese regulatory scrutiny that has hindered its international competitors in China. So what does this mean for international companies in the content distribution industry? It means that they need to think even more carefully about their broader China strategy and the structure of their local partnership arrangements. As part of this, those foreign companies should be looking to their local partners for guidance on navigating what is becoming an increasingly complex and unpredictable regulatory framework. But above all, it confirms that even the largest and most influential of international companies will not escape China’s growing focus on internet regulation. Indeed, it was almost certainly because of Apple’s size and influence that it was...

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How China is tightening its grip on messaging apps
Aug08

How China is tightening its grip on messaging apps

The Chinese government seems to be further tightening its grip on messaging apps like WeChat. This week, the State Internet Information Office announced a new regulation that imposes restrictions on users of the services. Popularity of messaging apps in China Messaging apps are a huge deal in China. TenCent’s WeChat service is the dominant player, with somewhere in the region of 400 million users, although there are competitors, both Chinese (with Alibaba pushing its Laiwang service) and international (such as Line and KakaoTalk – more on those later). What are the new rules? On Thursday, the State Internet Information Office announced its latest regulation, which it announced would “help build a clean cyberspace”. The regulation applies to “public” and “official” accounts on messaging platforms – that is, accounts to which other users can subscribe. Users of these public or official accounts are subject to new requirements. In particular, they must: register with their real name – it goes without saying that the absence of anonymity will have a fairly serious impact on the kind of content that users will share via these accounts; commit to complying with law and regulation (including the somewhat broad requirement to comply with “the socialist system”); and ensure the accuracy of the information provided. Putting the new regulation in context Why this account type in particular? The answer, of course, is that these public or official accounts enable a kind of “multicasting” of information, from one user to many, in a way that unicasting (one to one) accounts do not. It is this level of publishing or broadcast that the Chinese government seems to be most concerned about. This development also has to be considered in light of the news that China has blocked the services of two of the world’s biggest messaging app services: Japan’s Line and Korea’s Kakaotalk. Although that move was focused specifically on those foreign services, as part of “efforts to fight terrorism”, it is now very clear that messaging apps are, and will continue to be, in the firing line for the regulators tasked with maintaining China’s control of internet communications. This story is also a snapshot of how regulation is wrestling with these relatively new but enormously popular forms of communication – and not just in China but across the region, where we have already seen countries like Vietnam step up their control of the...

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An opportunity for the Airbnb of Asia?
Jun15

An opportunity for the Airbnb of Asia?

In a week where taxi drivers around the world went on strike against Uber, and Airbnb announced an anticipated 120,000 visitor stays for the World Cup in Brazil, this post looks at the growing number of “collaborative consumption” startups in Asia and the legal and commercial challenges they will have to overcome to succeed in the region. What is “collaborative consumption”? Collaborative consumption (aka “the sharing economy” or “peer to peer”) is a broad term used to describe the shared creation, supply and consumption of goods and services. Typically it involves the use of technology platforms (usually the internet) to link supply and demand, enabling supply-side and demand-side to share resources and capacity in an efficient way. That’s the concept but it is perhaps best explained by way of example, with reference to arguably the two most disruptive collaborative consumption companies today: Uber and Airbnb. As most readers will be aware, Uber connects passengers with drivers in most major global cities, whilst Airbnb links people with temporary accommodation. If you’ve used either of those services, or any like them, then you’re already part of a new generation of collaborative consumers. “Hi, we’re ‘The Airbnb of…’” If you go to a startups event or incubator anywhere in the world, chances are you’ll have to wait all of five minutes before someone pitches their new startup idea to you as “the Airbnb of [insert industry that they think is about to be disrupted by their new idea]”. It looks like some people are getting tired of this pitch but there’s no doubt that we are still in the relatively early stages of internet-driven collaborative consumption. Although services like Uber and Airbnb are no longer used solely by tech-savvy early adopters as they were a couple of years ago, we’re still some way from the tech laggards booking their next holiday accommodation on Airbnb. Collaborative consumption startups in Asia Although the big US companies are making most of the headlines, Asia itself is in the middle of its own collaborative consumption revolution. Here are just a handful of the collaborative consumption startups making a splash in the region at the time of writing (hat tip to VulcanPost and TechinAsia for some of these): Food KitchHike is a Japanese startup that aims to let travellers experience food cooked by local people (usually in the cook’s own home); and Indian startup MealTango, and Malaysian startup PlateCulture, have a similar model.  P2P Accommodation Roomorama is an Airbnb competitor with its HQ in Singapore and global ambitions (albeit largely targeting the Asian traveller); and TravelMob is another Airbnb competitor based in Singapore – but it is specifically...

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Mapping the Social Commerce Revolution in Asia
Feb24

Mapping the Social Commerce Revolution in Asia

The convergence of social and e-commerce continues apace in Asia. More established e-commerce businesses, led by the likes of Alibaba and Rakuten, are investing heavily in social to maintain growth momentum and give them direct access to millions of users via social networks and messaging apps. One only needs to look at Rakuten’s $900 million acquisition of chat app Viber just last week, and Alibaba’s $586 million investment in the Sina Weibo microblogging platform last year, to see that e-commerce businesses are betting big on social. Across the way, social platforms are finally starting to monetise the retail opportunities that their platforms create. Alibaba’s Sina Weibo investment was seen as an effort to see off competition from its big rival, TenCent, and its messaging app WeChat, which is increasingly active in e-commerce and has a staggering 300 million users. In other parts of the region, fast-growing messaging apps like KakaoTalk and Line are partnering with retailers by offering official shopping channels, discounts and flash sales. Meanwhile, “social first” e-commerce startups are building their businesses right in the area of convergence between social and retail, whilst payment providers like Doku and service providers like aCommerce and Shopify are cashing in on all of this activity. Let’s look at some of the investments, acquisitions, partnerships and startups that are leading the social commerce revolution in Asia. Who? What? Social grabbing a piece of retail TenCent It’s no wonder that Alibaba is investing in social. A clear challenge is coming from its big Chinese rival, TenCent, and its WeChat messaging app, which has around 300 million users. In November 2013, device manufacturer Xiaomi managed to sell 150,000 units of its Mi-3 device in less than 10 minutes – exclusively via WeChat. And much more established businesses are also working closely with WeChat in the social commerce space. Chinese McDonalds fans can now pay for their meals via WeChat. Facebook, Instagram, WhatsApp Facebook is having a good deal of success with so-called “F-Commerce” in the region, taking advantage of the absence of global players like eBay and Amazon. Thailand is a good example. There are 24 million Facebook users in the country. Small and medium sized operators are using the platform to sell an ever-increasing range of products and merchants are now starting to invest in advertising on the platform. The company’s incredible $19 billion acquisition of WhatsApp will see it move into messaging apps and, one imagines, a broader range of social commerce opportunities. The acquisition also hit the share prices of the platform’s Asian competitors, like Line and WeChat. Line Japan’s Line messaging app, with its estimated 300 million users, is...

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