ECA

Letting Off Steam: Ignore Government At Your Peril

15.09.2017 Barath Harithas

On 8 September 2017, the Malaysian Communication and Multimedia Commission ordered Internet Service Providers (ISPs) to block web traffic to the entirety of ‘Steam’ for including in its catalog ‘Fight of Gods,’ a fighting game where players can choose from a stable of combatants drawn from various religions, such as Jesus and Buddha, to be pitted against one another in one-on-one brawls.

For those unacquainted with ‘Steam,’ it is the largest digital distribution platform for PC gaming. It has a near monopoly on the market, with anywhere from 50% to upwards of 70% of all PC game downloads, taking place on Steam.

Essentially this means that:

  1. if you are a game developer, your chef-d'œuvre has next to no chance of finding a large enough audience without first getting onboard Steam; and 
  2. if you a player, Steam is a must-install for you to be even able to access and then play the most popular games.
So Steam is no mere fledgling company--it is the Google/Amazon of PC gaming, a multi-billion dollar industry. Yet, when a single game they carried on their storefront pricked the religious sensibilities of authorities in Malaysia, they were pulled out by the ear and made to stand outside the class for an entire day.

Fight of Gods certainly is not the first game to so wantonly court controversy. Faith Fighter, which enables you to "choose your belief and kick the s**t out of your enemies," caused a stir nearly a decade ago—but it may be the first to so obviously capitalize on the easy and inevitable controversy caused by such an up-front inclusion of religion.

It worked, although perhaps not in quite the way the developers intended.

It caught the notice of religious leaders in Malaysia, one of whom, Mohd Asri Zainul Abidin, said that the Malaysian government "should immediately ban the game or block the download link to avoid the potential of religious tension in the country."

Others echoed that sentiment, sharing dire warnings of the game's damaging effects, and the outcry was enough that the Malaysian Communications and Multimedia Commission gave the "platform provider"—that being Steam—24 hours to disable Fight of Gods downloads in the country.

But Steam did not comply. And so the government retaliated. Steam was completely shut down for 24 hours to all users and all other games listed on the site were also blocked.

While the ban on Steam was subsequently lifted, several ISPs in Malaysia continued blocking access to the Steam Store, and Fight of Gods remained unavailable for some time after.

What does this episode mean? What lessons lie in it? Over the past decades, there has been a shift in public perception on the relative powers of governments and corporations. With the rise of the tech/corporate behemoths of today, governments are increasingly thought of as mere facilitators, their role is to simply enable and smooth the way for the relentless march of technology.

Far gone are the ol’ days when governments towered over all and companies had to toady up to governments to court their favor and win contracts. Now, governments are thought to have to sidle up to corporations and retain their good favour lest they uproot and leave the country.

But some have forgotten that while governments have had to become more entrepreneurial to attract inbound investments, governments still retain the same powers that they have always had. What many see in this as regulatory over-reach or the long arm of government, is simply what governments can do, and will do if they deem it necessary.

It is not so much that governments have seen their powers erode, it is just that they have become more circumspect in their exercise of it. This is why when we see strong-armed actions like what happened to Steam in Malaysia or when certain Executive Orders signed by Trump actually go through against what some would consider to be common sense, we are taken aback, aghast at the over-extension of the government.

We have become so accustomed to seeing the mailed fist of power exercised through the velvet glove of supposed morality/public good, that when we see it so brazenly wielded, we feel affronted.

If there is one lesson we take it away from this, it is that governments remain powerful, and when we stir and rouse the Leviathan, it can and will lash out, at times disproportionately, and no boat, no matter how big, is safe.

Governments, like businesses, have stakeholders and constituents, whose expectations they must respond to, and if need be, move to protect. Hence, it is not surprising that in a country like Malaysia where the ruling government has drawn itself the role of policing and maintaining religious harmony, felt like they had no choice but to act when there were public outcries that its religious harmony was being threatened.

And why should this matter for businesses? With the proliferation of start-ups and their "ship-first-iterate-later" approach, government relations is a far afterthought.

For example, let us imagine you have a fantastic product with the most talented salespeople building a solid pipeline. You are finally ready to take the big leap, to lock horns with the best, perhaps even to displace them by penetrating or creating a new market.

But then you failed to account for the government’s response, as was the case above, and not just your game, but the entire digital storefront your product was listed on gets shut down, causing severe disruptions.

Government regulations make winners and losers. That has always been the nature of business and will continue to be so.

An even more instructive example is that of Napster. Napster, the music-sharing site, went viral in the late 1990s and early 2000s, but experienced a traumatic drop-off after copyright infringement court cases and was essentially shut down by the federal government.

The early versions of their financial credit card management software were also shut down in mere days, due to lack of simple security features in their products. The founders were blindsided by simple regulatory requirements of the industry.

Hence, even if your product has all the bells and whistles, your company can face regulatory and other hurdles, along with newer policies that may block you from entering new or existing markets, and you may see your “disruptive” product fizzle out quickly.

The days of sitting and waiting until something transpired and then smoothing ruffled feathers afterward are gone.

Businesses must proactively and regularly engage with government, even though some may find that dealing with government is at times frustrating and consider government officials to be uninformed about the economics of their industries.

Effective business planning has to include the government relations perspective. Business leaders need to understand how the government will likely interpret a company’s product, market conduct and communications.

They must also engage with government decision-makers on a regular basis to create a buffer during times of crisis. There must be pre-defined channels for communications so that governments feel compelled to first discuss the matter instead of leading with an iron fist.

This is particularly important in many parts of Asia, where many governments continue to sit atop the business landscape.

Much has been written about ‘disruption’ and how it will bypass governments. What happens when governments that are used to being in control, start to feel their grip slipping? They respond the only way such governments know how: they lash out, with both arms swinging.

Spending on government relations is a little like insurance: until the point it is necessary, it never quite feels necessary. But then the bill for millions in damage comes in the mail, and you start to regret your decision to not spend on government relations to save mere pennies.

 

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