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For Chinese regulators, even the US-censored social network was too much.
Microsoft said Thursday it will suspend operations in China with the socially-oriented social network LinkedIn by the end of the year. In a statement, the company cited “a significantly more challenging operating environment and greater compliance requirements in China.”
The announcement is a symbolic moment for US-China technical relations and China’s new firm approach to regulating the technology industry. Microsoft’s withdrawal is the most notorious departure since Google left the country in 2010 to protest censorship and alleged espionage.
LinkedIn entered China in 2014 after agreeing to censor the content of its disinformation site and politically sensitive topics such as Taiwan. Microsoft, which had a long and relatively strong relationship with the Chinese authorities, acquired LinkedIn in 2016. In recent years, it has been the only major US Internet company offering content in China. LinkedIn says it will operate the board only in China in the country, effectively eliminating social networking and content sharing functionality on the site.
The exit underscores pressure on US companies as US-China relations deteriorate and the Chinese government deepens its influence over the economy. “China’s tight controls are becoming less compatible with Western companies,” said Nina Xiang, a financial analyst and author of Technological war between the United States and China, a book on high-tech competition and cooperation between the two largest economies in the world.
“LinkedIn is the last remaining major US technology company operating in China that includes content,” Xiang said. “Once that disappears, the separation between China and the rest of the world will only deepen.”
The LinkedIn message follows months of increasing pressure from the Chinese government on its technology industry, with widespread repression and strict new rules. Importantly, this includes a plan that will take effect later this year to study and regulate recommendation algorithms. This will cover the algorithms that LinkedIn uses to offer content, as well as new potential business connections to users.
Microsoft has a long history of success in the Chinese technology industry. The company established a significant research laboratory, Microsoft Research Asia, in Beijing in 1998. Trained researchers can be found throughout the technological world of China.
In 2012, members of the lab collaborated with Jeff Hinton, a pioneer of modern artificial intelligence, using a technique known as deep speech recognition training. The lab will continue to demonstrate a system that translates between English and Mandarin in real time using the technology. The adoption of AI has helped create a number of Chinese artificial intelligence companies.
Microsoft will continue to operate its censored search engine Bing in China, although it accounts for less than 4% of the country’s search market, according to MarketMeChina.
The pressure has been rising on LinkedIn for months. In March, Chinese company executives were reportedly accused by the government of not controlling the political content shared on the platform, despite censorship. It is not clear what prompted the action, but the company was reportedly required to conduct a “self-assessment”, stop registering new users and report to the Chinese cyberspace administration within 30 days.
In August, the company reiterated that it was suspending the registration of new members through the LinkedIn application, “to ensure that we comply with local laws,” without specifying. And in September, the company expanded its censorship with tells some foreign journalists that their accounts will be blocked by China
Chinese Internet companies are also facing new challenges as the government imposes stricter antitrust rules and regulations on the use of data and algorithms.
Under pressure from the government, the Ant Group, separating Alibaba’s financial services behind the widely used Alipay app, canceled billion-dollar IPO plans in Hong Kong and Shanghai last November. Since then, the company has been ordered to break up its business and make its mobile application compatible with that of its fiercest competitor, Tencent.
In April, Alibaba’s parent company, Alibaba, was fined a record $ 2.8 billion by regulators for antitrust violations related to its e-commerce business.
In August, the mobile company DiDi was reprimanded for continuing with its own IPO, despite Chinese Internet regulator’s concerns about data privacy. The company’s app was removed from Chinese app stores and was given new control over its data practices.
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