From block to blue ticks: How China became big business for Twitter

Four sources told Reuters operations in China became a source of internal clashes between teams keen to maximise the sales opportunity and others concerned at the optics of doing business with state-affiliated entities at a time of growing tension between Beijing and Washington.

Twitter's dealings in China may come to the fore on Tuesday when the U.S. Senate Judiciary committee holds a hearing to consider a whistleblower complaint filed by Twitter's former security chief Peiter Zatko.

Among other claims, the 84-page complaint alleges "Twitter executives knew that accepting Chinese money risked endangering users in China," and that "Mr Zatko was told that Twitter was too dependent upon the revenue stream at this point to do anything other than attempt to increase it." Reuters could not independently verify the claims.

Twitter denies the accusations.? Zatko, through an attorney, declined to comment.

Two people with knowledge of the matter said Twitter's China sales team actively courted local governments in the country as part of its global strategy to compete for ad business with tech rivals like Alphabet's Google and Meta's Facebook.

Gaming, e-commerce, and tech firms in China are also key Twitter customers, according to two sources. Twitter's sales of overseas ads to Chinese clients are estimated to be in the "hundreds of millions of dollars a year", the people said, the majority coming from these companies.

The people with knowledge of the matter declined to be identified citing confidentiality agreements.

Twitter declined to comment on internal discussions and its sales performance in China. A spokesperson said the company has never hidden the fact that it does business with Chinese commercial entities.

'INFORMATION IMBALANCE'

The company ?banned political and state-media advertising in 2019, though an August blog announcement that year allowed a carveout for ads "from (state-media) accounts solely dedicated to entertainment, sports and travel content". In March this year, though, that exemption was rescinded, effectively banning state-media firms from advertising on Twitter altogether.

In a March Twitter blog post, the company's vice-president of global public policy, Sinéad McSweeney, said that "a severe information imbalance" is created when governments that block access to Twitter within their state continue to use it for their own communications.

Still, Reuters found dozens of ads for Chinese local governments, as well as for state media themselves, published on Twitter since March. Twitter, like other platforms, also derives revenue when advertisers submit ads via a self-service online platform.

Twitter said it is improving auto-detection technology aimed at activities that violate the platform's policies. "This work is challenging and we know we have more to do," the company said in a statement.

The Chinese Communist Party's top propaganda organ and the central government's ministry of culture and tourism, both based in Beijing, did not respond to a request for comment.

'LIFE IS BRILLIANT'

Twitter's China region has seen an 800-fold improvement in revenue since 2014, the fastest-growing globally, according to the now-deleted LinkedIn bio of Twitter Greater China Managing Director Alan Lan. The bio was reviewed by Reuters late in August before it was taken down.

Twitter declined to comment on the number in the bio nor make Lan, who leads the Singapore-based China sales team, available for comment.

Chinese local authorities continued buying foreign social media ads and content even after the COVID-19 pandemic triggered the closure of the country's borders, according to a review of 36 publicly available local government tenders, budget documents from 2020-2022, and social media accounts. It wasn't immediately clear why such ads were placed with China effectively closed.

"Life is always unusually brilliant because we are in Wuhan," one promoted tweet from the @Visit_Wuhan account in July 2021 read, part of a 2 million yuan ($289,000) government tender.

Another promoted tweet from September 2022, a verified account for the province of Shaanxi, famous for its Terracotta Warriors, urged users to "Hurry up and follow me to Shaanxi to feel its charm!"?

AD POLICY TESTED

Some Washington-based senior Twitter executives, worried the expansion of its China business could backfire on the company, pushed for sales to Chinese government-affiliated accounts to be curbed altogether during the administration of former U.S. President Donald Trump as tensions with Beijing worsened in 2020, according to two sources.

Twitter declined to comment on internal discussions.

An attempt to set up what would have been the company's first mainland China-based sales office was shut down in 2019 on data security concerns, sources said, as tensions swirled internally over the company's operations in China.

Twitter didn't respond to questions on the mainland office talks.

Reuters' review of more than 300 accounts representing local governments found that as of the time of this story's publication less than a dozen were labelled by Twitter as state-affiliated media. Publicly available tender documents reviewed by Reuters show the vast majority of these accounts are outsourced to state media.

Those included the verified accounts @PDChinaLife and @PDChinaSports, run by the Communist Party's official People's Daily, and which continued to advertise on Twitter until as recently as last month, as well as @iChongqing, a state-run operation paid by the southwestern metropolis of Chongqing. Both the People's Daily and iChongqing did not respond to a request for comment.

BLUE TICKS

As the business grew, Chinese local government accounts ramped up their demands on the company, asking for blue-tick verifications just as accounts elsewhere do, or for help with negative activity targeting their accounts, two sources said.

"Some of the government accounts would earlier complain to their Twitter sales reps when there's negative stuff or bots," said one person familiar with China's Twitter sales operations, adding that Twitter only acted on complaints about spam accounts commenting on or engaging with Chinese local government accounts.?

The buying of ads on Twitter by state-affiliated entities has come as Chinese police have increased arrests of citizens who have found ways to use the platform to criticise authorities, according to Chinese news coverage of court cases.

Chinese courts have sentenced dozens of people in the past three years for using Twitter and other foreign platforms to criticise authorities, according to court records and media articles.

China rarely comments on such cases, but when it does it justifies the punishment by accusing the critics of trying to subvert the regime.