The days of free bulk file storage in China are on the way out as of June 30, according to a report by Netease. Among the companies shutting down their free services are major IT players Sina, Huawei and Tencent.

Although the operators said the closure of their free personal cloud storage is due to a national crackdown on pornographic and pirate content, users have fiercely debated the real cause.

As of publication, there are still three online storage services offering free space in China: Baidu Yun, Tianyi Yun and 360 Yun.

What Happened?

China’s explosion of online storage options began in 2013, when Dropbox was taking off abroad. As is the case with many foreign services, access to Dropbox was quickly blocked, and China’s Internet giants vied to fill the void.

To attract more users, most of the companies began making offers of impossible storage space. Baidu Yun, for example, offered 2TB of free space to users who installed Baidu’s app on their mobile phone. For registered users, the number shot further to 5TB.

The cost of adding that space was an expensive marketing choice for storage providers. Moreover, any attempt to shrink or remove that free space would cause a mass exodus of users.

“Baidu invested thousands of yuan in its cloud storage service,” said Cheng Yuan, CEO of Fangcloud. “If you put one file on your personal online disk, the provider needs to store four copies of that file. It’s hard to image how long free online disks can last.”

That huge storage space also attracted users who were eager to spread pornographic and pirated content – actions which brought the industry to the attention of government regulators. Given such huge storage space, it’s hard to imagine how users would not use it for storing pirated movies.

But the biggest problem for online disk providers is Chinese users’ reluctance to pay for online services. Even though many online disk sites offered incentives to attract paid users, they remain the minority.

For most of China’s online storage providers, the major revenue source is still advertising.

Future Model

“It might be a good thing to close some free online disks. It could promote the whole industry’s commercial development,” Liu Aigui, founder of Dadao, told China Business Journal. “Frankly speaking, many providers have been considering closing their free online storage for years. The government attention gave them an excuse.”

Liu Jinling, founder of 36dsij, said the end of free storage era may will be a good opportunity to start over.

“The companies with a viable user base, adequate storage and high download speeds will win out. Others are expected to quit the market,” Liu said.

The future of online storage could also turn into a war of product differentiation. New start-ups with limited financial resources could specialize in feature data storage, such as animation data or exam prep materials, while tech giants like Lenovo and Huawei might perfect the synchronization between their devices and the cloud.

Tianyi Yun has been one of the fastest growing cloud storage providers, branding itself as safe, stable and reliable. The parent company of Tianyi Yun is China Telecom, a state-run mobile communications group.

It’s surprising that a national mobile company might win the war for online storage, but China’s paying customers appear to favor safety. The national mobile provider is also able to directly integrate its storage services into its Internet offerings, reducing many of the risks associated online backup by sweeping away all machines between the user and the cloud.

“With free online storage sites going down, the users who depend on it are searching for a stable and safe substitute. For both Baidu and Tianyi it is a vital opportunity,” said Wang Liyang, a commentator on Baidu Baijia.

Possible Paths

Liu Jinling, the founder of 36dsij, said the biggest weakness in online storage is the cloud’s lack of necessity in daily life. Cloud services only exist as a complement to the Internet eco-system, he said.

“That makes it hard for online disk providers to promote their premium services,” Liu said.

The future of online storage is expected to be an all-in-one filesystem that can be accessed from any device. It’s an important step in transforming storage space into a real cloud center. But that design also poses new challenges for cloud security – especially with everyone using this space to store photos and personal videos.

Another possible future for cloud service lies in corporate cloud space. Google and Microsoft have released similar products, titled Google Drive and Microsoft 365. But in China, few companies have seen the necessity of these services.

Optimistically speaking, it’s good to see an increasing number of Chinese users willing to pay for Internet services. In the years ahead, more Chinese users might embrace the paid mode of cloud service.

“I can’t see much future in sharing-oriented online disks. But I do see a future in cloud services. I’m sure the cloud will play an increasingly important role to assist other Internet service in the near future,” said Wang Ying (pseudonym), a former product manager at Sina Weipan.

Karena Hu

About Karena Hu

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Karena was born with the English name Karen but decided to add an “a.” She dreamed of a career in astronomy, but bad scores in physics kept her out of the science department. She seeks other worlds in reading and writing and is a super fan of the Hunger Games trilogy.

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