Can You Trust IDC and Their Now China Based Owners?

Executive Summary

  • IDC is the largest enterprise software market research firms.
  • This article explains a problematic and mostly hidden issue with IDC’s ownership.

Introduction

There are not many market research firms in enterprise software. IDC or International Data Corporation is one of these.

IDC has roughly five thousand of employees, and goes back to 1964.

The history of IDC is interesting as the following quote highlights.

By its third year, the company had an income of $154,996. A modest net profit of $2,961. McGovern was considering liquidating the company when he hit on the idea of launching Computerworld in 1967, which was a continuation of the monthly newsletter, published weekly instead of monthly, in a different format. With advertising, which became a cornerstone of IDG’s subsequent publishing arm– Wikipedia

This means that ComputerWorld is what allowed IDC to prosper and to eventually get into performing IT research.

Brightwork has routinely critiqued IDG, which is the sister firm to IDC for their articles published in the major IT media outlets, where IDG owns around 8 of the top 20 IT media outlets.

While I have not read many IDC reports, the ones I have read have been very corporate speak with any edges rounded off. However, something happened in 2017 which made the situation for IDC considerably worse and we think should give the customers of IDC concern.

The Acquisition of IDC by Oceanwide Holdings Group

In 2017, IDC was acquired by a China-based company named Oceanwide Holdings Group, a company that has no real media or research experience and is best known for being heavy into construction. The website for OHG is quite strange.

It is difficult to consider how ridiculous this company’s web page is and the text on this webpage.

“China Oceanwide Holdings Group was founded in 1985 by Mr. Lu Zhiqiang, the founder, legal representative, Communist Party secretary, and chairman of the group, as well as a member of the standing committee of the 12th Chinese People’s Political Consultative Conference, vice president of the China Non-governmental Chamber of Commerce, deputy chairman of the Oceanwide Foundation,deputy chairman of the China Minsheng Banking, and a member of the board of trustees of Fudan University, etc.”

So let’s get this straight. A major IT research and publication firm based in the US is owned by a company connected to the Chinese Communist Party? Does that sound like an acquisition that should have been approved? And the fact that China Oceanwide Holdings Group is concentrated in Chinese construction is another problem as the industry is known as extremely corrupt. Chinese buildings fall over on the regular in China taking the inhabitants with them…..but due to the China government’s tight control over the Chinese media, these construction failures are censored. 

Let us see where China rates on press freedom.

China Press Freedom

So, according to Reporters Without Borders, China ranks as the fifth least press free country in the world.

Here is the detail.

“More than 50 journalists and bloggers are currently detained in conditions that pose a threat to their lives. Liu Xiaobo, a Nobel peace laureate and winner of the RSF Press Freedom Prize, and Yang Tongyan, a dissident blogger, both died in 2017 from cancers that were left untreated while they were detained. Under tougher Internet regulations, members of the public can now be jailed for the comments on a news item that they post on a social network or messaging service or even just for sharing content. ” – Reporters Without Borders

Does that sound like the type of place that I want controlling an entity that performs research or published articles?

China….A Whole 4 Spots Higher Than North Korea!

All of this brings up an interesting question. North Korea is widely derided for their state controlled media, and how Kim Jong Un’s regime has total media control. The following quote is instructive.

“All North Korean journalists are members of the Workers’ Party. Candidates for journalism school must not only prove themselves ideologically clean but also come from politically reliable families. Journalists who do not follow the strict laws face punishment in the form of hard labour or imprisonment, even for the smallest typing errors.

Approximately 90% of airtime on international news broadcasts in North Korea is propaganda spent describing the publication of works by Kim Jong-il and showing various study groups in foreign countries, in an effort to allegedly mislead the North Korean public as to the outside world’s perceptions of the country. When Kim Jong-il visited Russia in August 2001, official DPRK media reported Russians as being “awestruck” by the encounter, revering Kim Jong-il’s ability to “stop the rain and make the sun come out”.” – Wikipedia

So North Korea is a farce and their media can’t be trusted. However, China scores only 4 slots above them out of 180 countries.

A natural question arises. If a North Korean company had made a bid for IDC, would it have been accepted? Are we happy having media and research that influences US and European audiences based in China or North Korea? How can this not eventually have a negative consequence for the entities that are purchased by China-based companies? Doesn’t this undermine the press freedoms in the US and Europe? 

This is the website for China Oceanwide Holdings. What kind of ridiculous company is this? It looks like it was put together by a high school, and this is the company owns IDC? Why doesn’t IDC promote the fact that they are owned by a firm based in a country with zero freedom of speech laws or history? That might be a selling point for their research and for proud publications like ComputerWorld.  

Do We Have Precedents for China Based Companies Owning Media Entities?

Yes, we do have a precedent. A very good one in fact. 

Forbes was purchased by Integrated Whale Media Investments in 2014. And while Forbes is probably more popular than ever, the quality of Forbes has declined now pays far fewer writers and allows Oracle employees to write unedited puff pieces and allows PR firms to Bob Evans to place articles, in addition to more paid placements from SAP, etc.. In our review of Forbes articles on enterprise software (such as this one), they routinely receive scores of from 1 to 2.5 out of 10 for accuracy. SAP and Oracle can get anything they like placed in Forbes, and Forbes couldn’t care less about whether anything they publish is actually true.

So how is Forbes doing so well? By maximizing the charges to industry sources, dropping standards and selling out the interests of its readers.

And there is simply no possible way that a media entity or research entity being acquired by a company in a country that has no press freedom leads to a good outcome. This shows how asleep at the wheel the FCC is that they would even contemplate much less allow these acquisitions.

How About Some Corruption?

There is not China-based company of any size that is not corrupt. This is the Chinese economic system. And it is little surprise to find that China Oceanwide Holdings is corrupt. And they are currently embroiled in a corruption scandal in Los Angeles along with three other Chinese construction firms.

“The delay in construction for Oceanwide Plaza was reported less than two weeks after news accounts revealed that Oceanwide had been linked to a corruption scandal involving Chinese developers and Los Angeles city officials.

China Oceanwide Holdings, along with Shanghai’s Greenland Group, Shenzhen Hazens, and Shenzhen New World Group were all named in a search warrant filed by the FBI and approved in US federal court last November, seeking access to email accounts belonging to Ray Chan, the former head of the Los Angeles Department of Building and Safety under Mayor Eric Garcetti.

The warrant asks Google to give the FBI access to Chan’s personal Gmail account to look for evidence of violations of federal law with regard to bribery and kickbacks, deprivation of honest services, extortion and money laundering, among other potential crimes..(emphasis added).”

It looks like China Oceanwide Holdings will be very comfortable in the IT media and research space, where kickbacks and bribes (ummmm, excuse me….undeclared paid placements) are quite common. However, extortion, money laundering isn’t yet very common — but who knows, maybe it will be in the future as the very best of corruption from a Chinese construction company is brought to IDC.

Conclusion

We stopped paying attention to IDG publications a while ago, and frequently critique their accuracy. IDC is part of the same acquisition and the acquisition by a China-based company is a kill shot to any media or research entity. If IDC were honest they would advertise that they are now owned by a China-based company and will be following the media and research standards of China, not the US.

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References

https://www.mingtiandi.com/real-estate/outbound-investment/china-oceanwide-halts-los-angeles-project/

https://rsf.org/en/ranking

https://www.mingtiandi.com/real-estate/outbound-investment/greenland-group-oceanwide-fbi/

https://laist.com/2019/01/14/fbi_city_hall_corruption_huizar.php

https://en.wikipedia.org/wiki/Media_of_North_Korea

https://www.recode.net/2014/7/18/11628980/forbes-sells-to-hong-kong-investment-group

https://www.forbes.com/sites/forbespr/2014/07/18/forbes-media-agrees-to-sell-majority-stake-to-a-group-of-international-investors-to-accelerate-the-companys-global-growth/#47ca27a6ce96