Why is Dropbox Soaring, Not Its Chinese Competitors?

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Chinese Version

Dropbox is a U.S. cloud synchronization company that helps users to sync data between different terminals. When using the same user name to log onto multiple terminals, you can specify a document from any one of these terminals to be downloaded automatically onto another terminal. In this way, you can work on the same document from multiple terminals. To put it simply, Dropbox is the terminator of flash disks.

Since 2008, when Dropbox graduated from Y Combinator funding, the best known startup incubator in Silicon Valley, the company has surged ahead. In 2014, the number of its users surpassed 300 million; the company was valued at nearly US $10 billion and was preparing to be listed. By the end of 2014, Dropbox even reached an agreement with Microsoft to provide cloud storage, which was aimed to strengthen the integrated capacity of Microsoft Office across PC terminals, mobile terminals, and cloud applications. Knowing that Microsoft has its own cloud syncing service Skydrive, we can safely say that within the span of only eight years, Dropbox has become a tech company which giants like Google, Microsoft and Apple dare not to underestimate.

While it goes without saying why users within China are not able to “legally” use Dropbox, many versions of "Copy 2 China" products, such as Baidu Cloud, Kingsoft Disk, Qiniu Cloud Storage, and Jianguo Cloud, are providing similar services but have never really caught on in China. Even the once renowned EverBox was quickly shut down.

Were these companies suffering from operational failures? Or is this type of service simply not needed in China? Why haven’t Dropbox’s Chinese counterparts been able to gain a foothold in China? The following are some of my observations and conclusions:

It's hard to get Chinese netizens use sync softwares

If you want to use cloud syncing services, you first need to have access to multiple terminals and then install the software on each. After registration, you need to specify the files to synchronize, and then also need to specify the users you want to synchronize with. While using the software, you sometimes need to make sure that the syncing is complete, and if you turn off the console without the upload being completed, the download cannot be achieved. There are also times when a file is locked in open state when the user forgets to close it, and thus is unable to sync properly. These issues can be problems for users.

I did not intend to compare the learning ability of Chinese and American netizens; after all, Dropbox CEO might have had these same problems in the early days of the cloud. But Chinese netizens might be a little more delicate than American Internet users, perhaps because Chinese Internet companies think too much for the users. The complexity of these processes can easily confine synchronization softwares to the minority and make it difficult to popularize them. 

Just as Chinese netizens have high expectations for operational convenience, they also are terrified of Internet security. Thanks to the “matter of course” that has long been spread by free anti-virus softwares, Chinese netizens commonly believe that their data is in constant danger of being attacked if stored online and that it is most secure to store one’s data on a hard drive--especially since, after all, there is free anti-virus software to protect it that way. But adding to Internet users’ caution is the fact that privacy is not respected online. When pornographic photo scandals happen in the United States, all media stand up to condemn them. But when such scandals occur in China, websites step right into the melee. Chinese netizens are very aware of Internet security, and this makes it difficult for synchronization softwares to gain trust.

Of course, Chinese netizens will also make concessions to these concerns under the right set of circumstances, that is, as long as the services are free. But cloud syncing software has some particular characteristics: as a data storage service provider, cloud syncing servers need a large amount of hard data storage and back-up. The frequently used hard disk is also consumable, so although cloud syncing companies appear to be asset-free, their operation and maintenance costs are actually very high. If they want to provide users with free cloud syncing services, they will need to rely on other businesses for income or to rely on a large user base and advertisements. After trying out both of these options in China, companies didn’t achieve much success, regardless of their size.

Cloud synchronization operates in a poor Internet environment

Any company that provides users with online services needs to set up its own server in an Internet Service Provider (ISP). All network connections go in and out of multiple ISPs, before being sent to user terminals, bringing about interoperability. One can say that in this way the ISP is a data highway. 

At present, Internet infrastructure is increasingly important, on par with national infrastructure of highways, railways, and aviation. ISPs are often required to provide a high-level of security environment that is fireproof, waterproof, earthquake-proof, windproof, and mine-proof. Some ISPs can even survive missile attacks, and thus ISP construction and operation costs are high. Internationally, most ISPs are operated by a few large companies, such as AT&T and Sprint. Google has recently been trying to become an ISP, but is still not eligible. However in China, it is known to all that all ISPs are government-run.

Of course, there are some advantages to government-operated ISPs: security, stability, and lack of business motives. However, when it comes to protecting users’ data security, cloud syncing softwares can easily fall prey to the government. In 2014, some Baidu Cloud users experienced a similar story: after signing up for Baidu Cloud, they found out that their porn stash disappeared and in turn received a notice informing them that Baidu was responding to a government call to combat online pornography by removing the content. For a time, the affected users expressed devastation on user forums. 

When signing up for Baidu Cloud, users should have agreed that that they will not upload anything that spreads obscenity, pornography, gambling, violence, murder, terrorism, or instigate crimes and that, if they violate this agreement, Baidu has the right to remove their content and even close their accounts. But this incident reflects some serious problems.

1. When users upload information to Baidu Cloud, to whom does that data belong? Does Baidu have the right to remove users’ data without even informing the them? Has Baidu taken any other measures apart from removing the data, such as backing up users’ deleted data?

2. How does Baidu retrieve the user’s illegal videos? Will data scans violate users’ privacy? Apart from videos, what other kinds of files are being scanned?

As always, the event quietly died down. Users who had their content deleted were simply out of luck, unable to do anything other than shake their fists and curse Baidu. Poor Baidu. Although it had at one time tried to attract user by promoting Bittorrent to help users download "illegal" videos, in the end it was not only cracked down, but also became infamous for deleting users’ data.

Without Internet freedom, there is no Internet security and privacy to talk about. And it is for the same reason that operating costs are rising for Internet companies. It has also somehow made Chinese netizens more closed-off and trust one another less, which is why promoting cloud syncing softwares in China is increasingly difficult.

Some people choose to die nobly for their ideals, while others choose to live humbly for theirs. Although cloud syncing softwares are struggling to survive in China’s current Internet environment, the future can never be predicted.

Targeting businesses instead of ordinary consumers

A complex software is best used as a tool, and the best consumers are professionals, who are much more willing to spend money on their tools.

In the entrepreneurial world, sychronizing files across terminals is obviously necessary, and companies often set up small private servers in order to sync files. They increasingly use the not very friendly tools like FTP and file sharing. Business-oriented cloud syncing softwares can not only help companies solve their synchronization problems, but can also be deployed on internal servers, eliminating the trouble of hiring an ISP and reporting.  Of course, if syncing softwares can set up a synchronization scheme on a public cloud platform like Ali Cloud, one-stop services can be provided to give businesses even more choices.

Being a service provider instead of an independent software

Service softwares often provoke a certain fear: if a system provides the same function as I do, then what should I do? In contrast, a system can also become a provider of a certain program.

Indeed, Dropbox has rejected Apple’s bid for acquisition, but not every entrepreneur can produce something as accomplished as Dropbox. If you take an independent stance toward becoming a service interface for some platform—like ERP—you might come across a win-win situation: the platform will appear more professional because it uses the software, and the software gains in recognition through association with the platform’s brand. The platform will help promote the use of the software, and that will facilitate future independent software development. Currently, Samsung’s Galaxy S6 comes with the system cleaning function Cheetah Clean Master, and on the S6 Cheetah is explicitly recognized as the provider of this function.

Providing data services, not data analysis

In the last couple years, “big data” has become a buzzword. It seems like everyone wants to get his hands on user data and use them to analyze user behavior. But this is built on the basis of violating users’ privacy, and can easily lead to opposition. Instead of using cloud syncing softwares to go wading into this swamp, it would be far better for cloud syncing to do the work it was made to do: providing data services.

Apart from the most basics of data services, every cloud syncing company also wants to promote its other programs. Baidu’s function allowing users to save seeders from one BT download to another is a good example. Online video playing software has also been met with applause. Jianguo Cloud makes it available to retrieve past versions of files that have been mishandled, even providing users with simple file management, and this has all added to its many highlights.

For various reasons, Chinese Internet companies have always grown among many difficult circumstances, but this has not affected their robust growth. Let us not sit around complaining of injustice and the harsh operating environment. Rather, we must do as Ma Huateng suggested: “Cats have always chased after mice. This has been true throughout history. They are ordered to stop; they reform, compromise, then try again and succeed at last. Ladies and Gentlemen, let us work hard, and never give up.

(The article is published and edited with authorization from the author @Bora.Don, please note source and hyperlink when reproduce.)

Translated by Jennifer Smith (Senior Translator at ECHO), working for TMTpost.