Zuckerberg’s Quest to Re-Enter China Faces Challenge: His Own Words – Crypto News

The question, posed over a video call, led to a push by Meta to restart its China business by selling its Quest headsets in the country, according to a person familiar with the matter, more than a decade after Facebook was blocked there.

The company held discussions with several Chinese tech companies and has made progress with videogame powerhouse Tencent Holdings, people familiar with the matter said. But the effort faces challenges, in part because Chinese executives worry that Zuckerberg isn’t seen as friendly to China, according to people familiar with the matter.

In recent years the Meta founder has accused China of stealing technology and taken aim at ByteDance, the Chinese owner of video-sharing platform TikTok. That has undermined a charm offensive Zuckerberg undertook in Beijing in 2016 and bolstered negative views of the entrepreneur in Beijing, the people said.

Officials’ perceptions of Zuckerberg could add uncertainty should Meta and its partners seek licenses and approvals for their products and services in China, some of the people said.

Meta’s refusal to comply with Beijing’s censorship rules led to its being blocked in 2009, officials have said. Both Facebook and Twitter were cut off that year after unrest in China’s Xinjiang region, with state media saying social media was used to stir riots.

China has since tightened control of online content. Prospective partners in talks with Meta have also discussed concerns internally about how Meta might react to possible future restrictions on VR content, a segment Beijing plans to regulate, the people said.

A Meta spokesperson declined to comment. Tencent didn’t respond to a request for comment.

A tie-up could benefit both Tencent, the world’s biggest videogame publisher, and Meta. China’s enormous consumer market could help Meta recoup some of the billions of dollars it has spent developing headsets, software and apps for the metaverse.

Tesla and Apple depend on the country for significant portions of overall manufacturing and sales. Earlier this year, Tesla Chief Executive Elon Musk and Apple Chief Executive Tim Cook met senior Chinese officials during trips to Beijing.

Still, as Meta tries to push into China, many American companies are re-evaluating their ties to the country. Apple is shifting some production outside China, which has long dominated its supply chain.

Tencent executives heatedly debated whether to join with Meta as they discussed strategies late last year, people familiar with the matter said. Tencent Chairman Pony Ma decided to proceed with the negotiations first and see what deals they could reach, one of the people said.

One challenge is how Meta would roll out content in China, the people said. Users there would likely be presented with content siloed from Meta’s global offerings, while Tencent has also sought to integrate its own products into the headset, they said.

Additional complications to any deal are China’s damped consumer spending and operational issues such as the handling of user data, they said. China has increasingly restricted the sending of data outside the country.

This is the latest of several attempts by Meta to re-enter China. Facebook remains blocked in the country of 1.4 billion, as do Meta’s WhatsApp and Instagram, though the company makes revenue from Chinese companies that advertise on Facebook.

The company has courted Chinese officials and hired a well-connected China-policy chief. Zuckerberg gave some speeches in Chinese and made a 2016 jog through smoggy Beijing without a face mask, causing an online stir.

But in 2019, Zuckerberg told students at Georgetown University in Washington, DC, that TikTok doesn’t share Facebook’s commitment to freedom of expression, and represents a risk to American values ​​and technological supremacy.

He emphasized that message behind the scenes in meetings with US officials and lawmakers in Washington that year, including at a private dinner with then-President Trump, the Journal reported. A Meta spokesperson said at the time that Zuckerberg had no recollection of discussing TikTok at the dinner.

In a 2020 House hearing with leaders from Amazon.com, Apple and Google, Zuckerberg went further than other executives in commenting on the US-China tech tensions, condemning intellectual-property theft by China.

“I think it’s well-documented that the Chinese government steals technology from American companies,” he said.

The Cyberspace Administration of China, the country’s top internet regulator, did not respond to a request for comment.

Following Zuckerberg’s 2021 video call about headset strategy, Meta late last year began talks with several Chinese tech companies, including Tencent, PC giant Lenovo Group and some smartphone makers, people familiar with the matter said.

Any deal with Tencent would make the Chinese company the country’s exclusive seller of Meta’s headsets, including the upcoming Quest 3, the people said. Tencent would gain a new source of revenue and an opportunity to leverage off the VR hardware business. Some of its in-house teams and studios it has invested in have been developing VR games, but it hasn’t had a device for playing them.

If successful, Meta would also likely compete with homegrown rivals that dominate the Chinese market. They include ByteDance, whose Pico device led the market with 43% of shipments last year, according to research firm Counterpoint.

Competition between Meta and Pico has been intensifying globally. Pico’s headset is available in Europe and Asia. A ByteDance spokeswoman didn’t respond to a question about whether it plans to launch Pico in the US.

Additional competitors would include Sony Group, whose PlayStation VR2 launched in China in February, and Apple. Apple’s Vision Pro headset, unveiled in June, will go on sale in the US early next year, with more countries to follow shortly. Analysts expect it will be released in China, with Apple sourcing components from Chinese suppliers and assembling it there.

User adoption of Meta’s headsets has been lukewarm. In June it announced the Quest 3, expected to go on sale this fall starting at $499. That’s a fraction of the price of Apple’s device, which starts at $3,499, and less than Sony’s, which costs $549.