Microsoft folds LinkedIn social network in China
By Kathi on Oct 15, 2021 | 04:35 AM IST
LinkedIn faced risks to its
reputation and global business model if it continued censoring on behalf of
Chinese authorities
Microsoft Corp.’s
MSFT 2.17% LinkedIn said it would shut the version of its
professional-networking site that operates in China, marking the end of the
last major American social-media network operating openly in the country.
LinkedIn, in a statement
Thursday, said that it made the decision after "facing a significantly
more challenging operating environment and greater compliance requirements in
China."
Microsoft’s move comes at a
time when China’s Communist Party is ratcheting up its control over its largest
tech companies, private enterprises and online commentary, as it continues a
campaign to assert itself more forcefully across the economy and Chinese
society.
In March, LinkedIn said it
would be temporarily pausing new member sign ups in China as it ensured it was
in compliance with local law. Around the same time, China’s internet regulator
told LinkedIn officials to better regulate its content and gave them 30 days to
do so, according to people familiar with the matter. In recent months, LinkedIn
notified several China-focused human-right activists, academics and journalists
that their profiles were being blocked in China, saying they contained
prohibited content.
LinkedIn said it would replace
its Chinese service, which restricts some content to comply with local
government demands, with a job-board service lacking social-media features,
such as the ability to share opinions and news stories.
Beijing once touted the
LinkedIn model, which involves a contractual relationship between its
headquarters and Chinese nationals who actually own the platform in the
country, as a way for global Internet businesses to access its market. But as
such a model provided the overseas headquarters little control over the China
operation, it was never popular in Silicon Valley.
The social-media site’s exit
is the latest chapter in the struggle Western internet companies have faced
operating in China, which has some of the world’s most stringent censorship
rules. Twitter Inc. and Facebook Inc.’s platforms have been blocked since 2009.
Alphabet Inc.’s Google left in 2010 after declining to censor results on its
search engine. The chat messenger app Signal and audio discussion app Clubhouse
were also blocked this year.
Savvy internet users in China
can still access these Western services using workarounds such as virtual
private networks, or VPNs, but many people don’t use them.
LinkedIn entered China in 2014
after making rare concessions to abide by local censorship rules. Microsoft
agreed to buy the platform two years later. In 2014, then-LinkedIn boss Jeff
Weiner said that while the company supported freedom of expression, offering a
localized version of its service in China meant adhering to local censorship
requirements—a view the company has since repeated.
In China, LinkedIn has often
been used by Chinese exporters and businessmen to connect with foreign buyers,
hoping to drum up interest and sales overseas. Many Chinese internet users,
particularly those working in the technology sector, tend to use a local
professional networking app called Maimai, which is run by Beijing Taou Tianxia
Technology Development Co. Ltd.
LinkedIn also faces intense
competition in the Chinese job-seeking app market, with large rivals such as
Zhaopin Ltd.
In the Thursday statement,
LinkedIn said that after seven years of operating in China it had "not
found the same level of success in the more social aspects of sharing and
staying informed."
LinkedIn faced risks to its
reputation and global business model if it continued censoring on behalf of
Chinese authorities, said Evan Medeiros, a Georgetown University professor who
advises multinational companies on operating in China. Those actions undercut
the idea that LinkedIn offers a platform for free and open sharing of
viewpoints, he said.
A White House official said
the administration welcomed the move. The Chinese embassy in Washington didn’t
immediately respond to a request for comment.
Microsoft has had a difficult
relationship with China, where it battled for years against software piracy,
even as it courted the Chinese government.
Microsoft CEO Satya Nadella
hosted President Xi Jinping of China at its headquarters in Redmond, Wash., in
2015. A year later, the CEO visited Beijing and met political leaders there. In
2017, Microsoft introduced a version of its Windows 10 software specifically
for Chinese government use. The customized version included a different type of
encryption and other changes.
Last year, Microsoft also got
drawn into tensions between Beijing and the Trump administration over the popular
short-video app TikTok, owned by Chinese parent ByteDance Ltd. The U.S.
government pushed TikTok to sell its U.S. operations. Microsoft offered to buy
the business, which went down badly in China. The deal eventually fell apart.
Earlier this year, the
software giant said a Chinese hacking group thought to have government backing
was targeting previously unknown security flaws in an email product used by
businesses. Microsoft’s Bing search engine, which is also available in China, drew
controversy earlier this year after it blocked the iconic "Tank Man"
image linked to the 1989 Tiananmen Square massacre not just in China, but also
for its U.S. users. The company blamed "accidental human error" and
restored the image.
LinkedIn was one of the few
bright spots Microsoft had in China, with more than 50 million users in the
country.
Even so, the platform had come
under greater scrutiny from regulators this year. In May, Microsoft was the
only foreign firm among 105 apps called out by China’s internet regulator for
"improper data collection," with both LinkedIn and Bing named on the
list. LinkedIn also received 42 requests from Chinese authorities last year to
take down content, the most the company received from any country, according to
its semiannual transparency reports. It acted on 38 of the 42 requests.
An attempt to localize
LinkedIn’s services in China with Chitu, a Chinese language app that was
introduced in 2015, ended two years ago amid lackluster success.
LinkedIn generated $10.3
billion in revenue in Microsoft’s last financial year, or about 6% of the
company’s total turnover. The unit doesn’t break out its China revenue, but
Microsoft President Brad Smith said in September that China accounted for less
than 2% of the technology company’s total revenue, and that percentage has been
declining for the past few years.
Microsoft has continued to
pursue business in China. During the Covid-19 pandemic, the company touted
growth in China of Teams, its new product for videoconferencing and
collaboration that Microsoft views as its next blockbuster.
U.S. tech companies more
broadly have become wary about operating in China as the country seeks to
assert greater control over data. Facebook, Twitter and Google last year
privately warned the Hong Kong government that they could stop offering their
services in the city amid planned changes there in data-protection laws that
could make them liable for the malicious sharing of individuals’ information
online.