China Power | Economy | East Asia
The latest scandal regarding WPS Office highlights the bind Chinese tech companies face.
When using a word processing software, users look for reliability and privacy protections. Users of China-based Kingsoft’s WPS Office have reasons to be concerned on both fronts after the latest public relations turmoil.
Earlier last month, a Chinese novelist raised a privacy breach concern about WPS Office, a word processing software that stores files on the cloud. The author accused the China-based company of “spying” and removing locally saved content, reporting that she was locked out of a draft of her novel over supposedly illegal content. After initially denying the allegations, Kingsoft later issued another awkward statement citing the Chinese Cybersecurity Law and defending the company’s decision to censor content within the document.
From its latest communications, Kingsoft admitted it has the ability to access documents and remove sensitive content, but refused to provide any details on any censorship activities. On the same day as it released the statement, Kingsoft also announced a plan to permanently remove advertisements from the free version of is WPS suite by the end of 2023. The experts see the bold move as a critical step for Kingsoft to win back the users’ trust amid the public relations crisis.
The company’s strange crisis management strategy revealed the predicament that Kingsoft faces, caught between its public relations and its government relations.
Founded in 1989, WPS Office has become an alternative to the Microsoft Office Suite in China. Navigating the political risks and large userbase in China, WPS has achieved significant results with its office suite software. In 2021, Kingsoft made a profit of 1.04 billion Chinese renminbi from its WPS suite. From the company’s perspective, the latest censorship concerns could decimate its billions of potential profits.
But Kingsoft has limited options in doing damage control. The company’s latest statement mentioned the Chinese Cybersecurity Law, implying that Kingsoft has no option but to follow the Chinese government to conduct censorship. At the same time, it is detrimental for Kingsoft to raise this critical requirement publicly, as talking about the elephant in the room will cause significant damage to the business’ operation in China. Users are up in arms about the prospect that their private documents are being read and potentially censored.
Privacy invasions against users are disturbingly common among Chinese tech companies. Popular internet products such as WeChat and TikTok (known as Douyin in China) have been previously flagged by researchers and media outlets over surveillance and privacy concerns. And these data and privacy breach issues are taking place both within and outside the Chinese borders. In jurisdictions like the United States and Canada, questions about those applications are being raised by public institutions and the military.
Founded in China, applications and software like WeChat, TikTok, and WPS Office often face direct orders from Chinese authorities to engage in political censorship and information disclosure. Yet those political and governmental influences do not stop when companies like Tencent, Bytedance, or Kingsoft expand their businesses abroad. Despite having business entities outside China and engaging in non-political interactions with new stakeholders in other jurisdictions, the Chinese tech companies continue to face pressure from the Chinese government, making their products subject to Chinese laws and local jurisdiction regulations.
For Chinese companies having the vision to dominate the global market, the struggle to comply with Chinese laws, regardless of where they operate, becomes a problem that will threatens to cause irreversible damages. TikTok, one of the most successful global mobile applications owned by a Chinese company, continues to face questions about its suspicious data and privacy practices, intensified by the geopolitical struggle between China and democratic countries. TikTok previously survived a Trump-era executive order ban in 2020, but the app now faces questions from the Senate Intelligence Committee and the U.S. Federal Communications Commission on spying concerns.
While the company has strongly denied any wrongdoing, evidence from Bytedance and other similar tech companies does not show positive signs for its business prospects in the U.S. All Chinese companies caught between political and compliance struggles have limited tools to address those issues.
