Even though 1.4 billion Chinese people aren’t allowed to use Twitter (NYSE:TWTR), the Chinese government is spending a lot of money on global advertising on the site. This is making China the platform’s fastest-growing overseas ad market and one of its largest non-U.S. markets. revenue sources.
A review by Reuters of government tenders, budget documents, and promoted tweets from 2020 to 2022 shows that local governments and Chinese Communist Party propaganda offices from cities, provinces, and even districts all over the country have bought ads on Twitter.
These promotions, which were often done by state media on behalf of local governments, told people around the world about local attractions and cultural and economic achievements. They were allowed because Twitter has an exception to its rule against advertising from state media.
The review shows for the first time how important China has become to Twitter. Investors are putting pressure on Twitter to meet growth goals as its business in the U.S. slows down. It comes as the company is in a legal battle with Tesla (NASDAQ:TSLA) CEO Elon Musk, who is trying to get out of his $44 billion offer to buy Twitter without being asked.
Related: Twitter answers Musk’s letter and says it did not break the terms of the deal.
Four sources told Reuters that operations in China led to fights within the company. Some teams wanted to make the most of the sales opportunity, while others worried about how it would look to do business with state-affiliated entities as tensions between Beijing and Washington grew.
The U.S.-China trade talks on Tuesday may bring up Twitter’s business in China. The Senate Judiciary Committee holds a hearing to talk about a whistleblower complaint from Peiter Zatko, who used to be in charge of security at Twitter.
The 84-page complaint says, among other things, that “Twitter executives knew that taking money from China could put users in China in danger,” and that “Mr. Zatko was told that Twitter was too dependent on the revenue stream at this point to do anything but try to increase it.” Reuters could not independently verify the claims.
Twitter says that the claims are false. Through his lawyer, Zatko refused to say anything.
Two people who know about the situation said that Twitter’s sales team in China actively courted local governments as part of a global plan to compete for ad business with tech rivals like Alphabet’s (NASDAQ:GOOGL) Google and Meta’s (NASDAQ:FB) Facebook (NASDAQ:META).
Two different sources say that gaming, e-commerce, and tech companies in China are also big Twitter users. People say that Twitter’s sales of overseas ads to Chinese clients are in the “hundreds of millions of dollars a year” range, with most of the money coming from these companies.
People who knew about it didn’t want to be named because they were bound by confidentiality agreements.
Twitter didn’t say anything about internal talks or how its sales were going in China. A company representative said that the fact that the company does business with Chinese companies has never been a secret.
‘INFORMATION IMBALANCE’
In 2019, the company prohibited political and state-media advertising, though an August blog announcement https://blog.twitter.com/en-us/topics/company/2019/advertising policies on state media that year allowed for an exception for ads “from state-media accounts solely dedicated to entertainment, sports, and travel content.”But this exemption was taken away in March of this year, making it impossible for state-media companies to advertise on Twitter at all.
Sinéad McSweeney, vice president of global public policy at Twitter, said in a March blog post that it creates “a severe information imbalance” when governments that block access to Twitter in their state still use it to talk to each other.
Related: Twitter will finally give paid users the long-awaited Edit button.
Still, Reuters found that since March, dozens of ads for Chinese local governments and state media had been posted on Twitter. Like other platforms, Twitter makes money when advertisers use a self-service online platform to post ads.
Twitter said it is improving technology that can find activities that break the rules of the platform. In a statement, the company said, “This work is hard, and we know we have more to do.”
The top propaganda organ of the Chinese Communist Party and the Ministry of Culture and Tourism of the central government, both of which are based in Beijing, did not respond to a request for comment.
“Life is Wonderful”
Since 2014, Twitter’s revenue in China has grown by a factor of 800. This is the fastest growth rate in the world, according to the now-deleted LinkedIn profile of Twitter Greater China Managing Director Alan Lan. Late in August, Reuters looked at the bio before it was taken down.
Twitter wouldn’t say anything about the number in the bio, and Lan, who leads the China sales team from Singapore, wasn’t available to say anything either.
According to a review of 36 publicly available local government tenders, budget documents from 2020-2022, and social media accounts, Chinese local governments kept buying foreign ads and content for social media even after the COVID-19 pandemic forced the country to close its borders. It wasn’t clear at first why these ads were put up when China was pretty much closed.
In July 2021, one promoted tweet from the @Visit Wuhan account said, “Life is always unusually great because we are in Wuhan.” This tweet was part of a government tender worth 2 million yuan ($289,000).
Related: Musk sells $6.9 billion in Tesla shares, citing a Twitter deal.
In September 2022, a verified account for the province of Shaanxi, which is known for its Terracotta Warriors, sent out a promoted tweet that said, “Hurry up and follow me to Shaanxi to feel its charm!”
Test of Ad Policy
During that time, former U.S. As President Barack Obama was in office, some of Twitter’s top executives in Washington, D.C., worried that the company’s plans to grow its business in China could backfire and called for all sales to Chinese government-affiliated accounts to be stopped. According to two sources, tensions between Beijing and President Trump worsened in 2020.
Twitter didn’t want to say anything about internal conversations.
Sources say that an attempt to open what would have been the company’s first sales office in mainland China was stopped in 2019 because of data security concerns. At the time, there were tensions within the company about how it did business in China.
When asked about the mainland office talks, Twitter didn’t answer.
At the time this story was published, Reuters looked at more than 300 local government Twitter accounts and found that less than a dozen were marked by Twitter as state-affiliated media. Reuters looked at public tender documents and found that most of these accounts are contracted out to state media.
Among them were the verified accounts @PDChinaLife and @PDChinaSports, which were run by the official newspaper of the Communist Party and still advertised on Twitter as recently as last month. Another was @iChongqing, which was a state-run operation paid for by the city of Chongqing in the southwest. When asked for a comment, The People’s Daily and iChongqing did not answer.
BLUE TICKS
As the business grew, two sources said that Chinese local government accounts made more requests of the company. For example, they asked for blue-tick verifications like accounts elsewhere do, or they asked for help with negative activity that was happening to their accounts.
One person familiar with China’s Twitter sales operations said, “Some of the government accounts used to complain to their Twitter sales reps when there was negative content or bots.” Twitter only took action when spam accounts commented on or interacted with Chinese local government accounts.
State-backed groups have been buying ads on Twitter at the same time that Chinese police have been arresting more people who have found ways to use Twitter to criticise the government, according to news reports of court cases in China.
Related: Elon Musk sells Tesla stock worth $6.9 billion as a legal battle with Twitter looms.
According to court records and news articles, dozens of people have been sentenced by Chinese courts in the past three years for criticising the government on Twitter and other foreign sites.
China rarely says anything about these kinds of cases, but when it does, it says that the punishment is fair because the critics were trying to overthrow the government.
(1 US dollar = 6.9222 Chinese yuan renminbi)
