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Can China stop people from gaming?

August 30, 2021, 10:53 PM UTC

Chinese children will soon be restricted from playing video games more than three hours weekly, the country’s regulators said Monday. National playtime, the Communist Party kids you not, is scheduled for Friday, Saturday, and Sunday between 8 p.m. and 9 p.m. local time.

Weekday gaming? Banned, for youths, starting Wednesday.

China is framing its heavy-handed nannying as being for its people’s own good—an antidote to “spiritual opium,” the since-stricken label a state media outlet used to criticize video games some weeks ago. In an article announcing and justifying the government’s rationale, the Chinese state-sponsored media outlet Xinhuacited by Reuters, quoted a spokesperson as saying that “protecting the physical and mental health of minors is related to the people’s vital interests, and relates to the cultivation of the younger generation in the era of national rejuvenation.”

If China is seeking national rejuvenation, it has chosen a peculiar path. The strict, new policy—which has detractors and defenders slugging it out on Weibo, China’s Twitter-like social media service—is the latest action in a wider tech industry crackdown. The government’s onslaught has in recent months wiped billions of dollars off the valuations of former hometown heroes, like Alibaba and Tencent. Surely, they aren’t yet feeling rejuvenated. 

How much will China’s edict damage Tencent, China’s biggest gaming giant? The WeChat-maker and Fortnite-investor was already attempting to assuage investors’ concerns in its most recent quarterly earnings report. Players under the age of 16 accounted for only 2.6% of the company’s gross revenue in China, Tencent noted, while declining to reveal the exact monetary sum. The figure likely amounts to hundreds of millions of dollars—nowhere close to the more than $21 billion the company collected in total revenue during those three months, but a significant amount, nonetheless.

China’s playtime prohibition, while seemingly extreme, has precedent. In 2019, the country restricted under-18-year-olds to 1.5 hours of video game play daily, or three hours on holidays. Earlier this month, Tencent, anticipating harsher regulations, further limited caps for minors to one-hour of gaming per day, or two-hours on holidays, for certain games, like Honour of Kings, a popular title in China that critics claim to be addicting youth.

Tencent’s attempt at self-regulation didn’t satisfy the state, however. Weeks later, on Tencent’s Aug. 18 earnings call, the company’s president, Martin Lau, noted that the government was still looking to curb the time and money minors spend on video games, the Wall Street Journal reported.

How will China cope with the new rules? In the past, enterprising, Chinese hackers created do-it-yourself consumer electronics that cheaply imitated well-known brands’ products. The market’s reputation for copycatting led people to describe the knockoffs as shanzai, or “mountain stronghold”— a millennia-old term that hearkens back to the days of rebel bandits marauding on the outskirts of the empire. The term, once perceived as an insult, has since found new life as a celebration of grass-roots ingenuity.

China’s anti-gaming decree could spur a proliferation of shanzai gaming in the years ahead. This could take the form of children using false account information, like family members’, parents’, and friends’ logins, to keep up their game-playing habits.

People using false identities can thwart facial recognition requirements—which Tencent put in place this summer to comply with the earlier restrictions for minors—with help from legitimate account holders who offer up their biometrics. Perhaps that’s why state media outlets noted that parents and teachers would be key in helping to enforce the new rules.

The other way kids can route around the prohibition is by turning to offline gaming alternatives. People can presumably circumvent the government’s so-called “anti-addiction” system by playing games that don’t require an Internet connection. Maybe we’ll see more unplugged, single-player digital game options take off in the years ahead.

As a reformed gamer, I feel for the kids. I used to spend many hours binging video games in my youth. There was almost nothing I liked more than switching on my Nintendo 64 and questing about a map in The Legend of Zelda, or powering up my Xbox and whooping friends’ butts in Halo. (For a Home Economics project in middle school, when our class was tasked with selecting and completing a difficult goal over the course of a month, I tape-recorded myself beating the original Halo: Combat Evolved title on experts-only “legendary mode,” much to the amusement of my classmates and the chagrin of the school administration.)

People often unfairly discount the benefits of video games. Personally, I subscribe to the thesis put forward by Steven Johnson in his 2005 book, Everything Bad Is Good For You, that the complexity of video games—the best ones emphasize strategic-thinking, problem-solving, and collaboration—can boost people’s cognitive abilities. Speaking of which, Halo: Infinite, the latest game in the Microsoft-owned alien battle series, is due out on Dec. 8. I’m excited to give it a try.

Don’t worry—it’ll count as homework. 

Robert Hackett
@rhhackett
robert.hackett@fortune.com

NEWSWORTHY

Holmes heads to court. The beginning of the end is near for what has been one of the most widely followed and dramatic sagas in Silicon Valley history. On Tuesday, Elizabeth Holmes, the former head of Theranos, will stand trial for 12 counts of fraud and conspiracy to commit wire fraud. And if convicted, Holmes could face up to 20 years in prison—marking a stunning potential fall for the one-time tech wunderkind. 

BNPL hits Amazon. Shares of Max Levchin's buy-now-pay-later company Affirm spiked following the opening of trading Monday, rising more than 40%. The stock's climb, which returned it to prices not seen since February, came on the heels of its newly announced partnership with Amazon. Under the terms, Amazon shoppers will be able to pay off purchases from the e-commerce giant that are worth more than $50 in monthly installments. 

To be determined no more. In July, Square CEO Jack Dorsey revealed that the company was building a new platform designed to simplify "non-custodial, permission less, and decentralized financial services" that was to be focused on Bitcoin. Its name? TBD. Well, in the month since, Dorsey must have made up his mind on the Square division's path forward. On Friday, Dorsey, a Bitcoin bull who also is CEO of  Twitter, tweeted that TBD was to become a decentralized Bitcoin exchange.  

NFTs to the moon? In a Bloomberg interview, OpenSea CEO Devin Finzer said transaction volumes on the NFT marketplace had reached $2.3 billion so far in August. That's up from just $8 million in January. The spike in volume has coincided with a mad dash from investors to get in on the digital collectibles craze, with everything from Weird Whales to Bored Apes surging in value. In perhaps the most striking example of the market's exuberance, the "Invisible Dank Meme," which is a "one of a kind invisible meme," is now listed for 99ETH, or roughly $314,000. 

China's economic dissenters beware. The Cyberspace Administration of China is warning that it will come down on platforms and social-media accounts that are "maliciously" distributing negative information about its financial markets and economy. Some of the country's top social media platforms including Wechat, Douyin, and Sina Weibo promptly said they would address the concerns.

This edition of Data Sheet comes courtesy of Declan Harty.

FOOD FOR THOUGHT

#AppleToo. Workers at Apple want to shed some light on issues within the secretive tech giant's operations. In yet another example of growing activism among the tech industry's workers, a group of Apple employees called #AppleToo wants to publicly air concerns about everything from not being heard by human resources to workplace discrimination. Behind the effort is Cher Scarlett, an Apple security engineer who Protocol has dubbed the "de-facto face" of the movement. Since #AppleToo's revealing, Scarlett has been approached by "literally hundreds of people" with their problems, some of whom she told Protocol she is advising to file complaints with state and federal officials. 

From the article:

Yet, over the last few months, it has become apparent that not even Apple is exempt from the shifting dynamic, whether that's been caused by a generational change, the proliferation of workplace collaboration apps like Slack, a broader cultural zeitgeist, or some combination of the three. Different groups of employees have repeatedly broken that long history of workplace silence, first petitioning successfully to have controversial hire Antonio García Martínez removed from the company, then asking (unsuccessfully) for a looser remote work policy, and then trying to participate in informal surveys to measure pay inequities. One engineering program manager, Ashley Gjøvik, was put on indefinite administrative leave after reporting both internally and to the public numerous instances of sexism and a hostile work environment. 

These changes are not popular with the Apple workers who take pride in the company's secrecy. They see the petitions and reports, as well as the workers who lead them, as leakers ruining the company culture—and Scarlett is the most prominent face of them all. 

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BEFORE YOU GO

How to go public. It's a question that private companies' C-suites, boards, and bankers have been paying more attention to in recent years, with a whole crop of alternatives to the tried-and-true IPO popping up. Well, new research from the University of Florida's Jay Ritter indicates that companies using direct listings, an alternative that Spotify pioneered and has since been adopted by the likes of Coinbase, are outperforming the rest of the IPO market. The caveat? It's probably wise to only do one if your company is in a sound place, that is, financially speaking.  

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