Dec 31, 2012 · 4 minutes

China’s government has issued strict new rules for Internet regulation, but that hasn’t deterred Silicon Valley startup Flipboard from attempting to win over the world’s biggest Internet market.

On Friday, China introduced new rules that required Internet users to register their real names for social services such as Sina Weibo, which is like a hybrid of Facebook and Twitter, and put more pressure on Internet companies to delete forbidden articles and report them to authorities.

At the same time, the government has been stepping up its targeting of virtual private networks (VPNs), which allow users to access parts of the Web – including Facebook, Twitter, and now the New York Times and Bloomberg – that would otherwise be blocked behind the “Great Firewall” of China.

Alvin Tse, Flipboard’s product director for Greater China, says the company -- which launched the Chinese version of its iPad app in December 2011 and has been touted by China Internet watchers and the tech press as one of the few American startups that has a shot at succeeding in China because of its partnerships with Sina and Renren and a reset of opportunities in the mobile era -- is working with its lawyers and keeping a close eye on proceedings with regards to the new regulations. It is not yet clear to what extent they will apply to Flipboard, but in May 2011 the global version of the app was temporarily blocked, months before its high-profile launch in the country. (Update: An earlier version of this story incorrectly said that Flipboard was blocked in China after the launch of its localized product. That wasn't the case; the global version of the app was blocked before the local launch.)

“We have to be on our toes,” Tse said of the new regulations, adding that the company will be cautious but that for now it is not overly concerned.

Flipboard adheres to the Chinese government's media regulations by taking down content flagged as inappropriate, but its “fundamental rule” is to not self-censor, Tse said. He said the company is aware that some Chinese users turn to Flipboard to access Twitter and Facebook, both of which are blocked by the Great Firewall. It also doesn’t make judgement calls on publishers’ content. If a story wasn’t blocked by the publisher, he said, it won’t be blocked by Flipboard. However, the startup tries to adhere to China’s rules. Those rules can be difficult to grasp, but they sometimes result in the blocking of sites that breach sensitive subjects or facilitate speech that fits into any of nine categories of “harmful information."

In recent weeks, authorities have been particularly twitchy about those guidelines, especially in the wake of a sex scandal exposed on Sina Weibo that brought down a local official, and in a series of reports in Bloomberg and the New York Times that reveals the immense wealth accumulated by the families of members of the ruling Communist Party (CCP) under shady circumstances.

The issuance of the new rules has dampened the spirits of some people who saw reformist hope in incoming CCP leader Xi Jinping. For many in China, Jinping has made a favorable early impression by vowing to crack down on corruption, strip back some of the trappings of power (such as motorcades for officials), and reform the financial system. However, the authorities’ line on Internet regulations suggest the new government will be perhaps even more conservative about such controls than the outgoing government.

“People are thinking [Jinping's government] might be more open than the previous one, but so far, at least from what we’ve heard, they are looking for tighter Internet control,” said Tse.

Tse said Flipboard tries its best to “play safe within the environment,” but no-one is really sure what the future will hold for the company in the country. “Who knows? If indeed the day comes that the Chinese government thinks we’re too risky, we’ll have to re-evaluate.”

Beijing-based Internet analyst Bill Bishop says that a crackdown on the Internet is going to be “extremely disheartening” to the people who held high hopes for reform from Jinping. His administration will continue and refine the Internet policies that were put in place by the previous administration, said Bishop, who also authors the Sinocism China newsletter. That’s a glum development in spite of Internet watchers such as former US ambassador Jon Huntsman and Google chairman Eric Schmidt suggesting that China would have to loosen its restrictions one day soon.

“The majority of people are finally realizing that the Internet isn’t necessarily a force for liberalization,” said Bishop, who himself told PandoDaily last August that he believed that China’s strict regulation of the Internet couldn’t continue for many years.

Certainly, the government’s intentions with the new regulations are clear. Martin Johnson, founder of online censorship monitoring site, says the government wants to send a message that “the Internet is dangerous, that it needs to be controlled, that the Party can control it, [and] that they are and will be controlling it for the good of the people.”

Despite the regulatory challenges, however, Flipboard is holding its course. China recently surpassed the US to become the world’s largest smartphone market, and it still presents an irresistible opportunity for mobile-first companies such as Flipboard to claim a huge userbase. Tse concedes that is certainly not easy to enter China and operate successfully, but the potential rewards are still rich. “At the end of the day,” Tse said, “it’s still too attractive a market to pass up on.”

[Image courtesy eviltomthai]