On October 13, the last remaining tether between American social platforms and their Chinese counterparts broke when LinkedIn, a social networking app, said that it would cease offering its services in China. In its place, Microsoft, the owner of LinkedIn, announced that a new app specifically for Chinese customers will be released shortly. However, the Chinese alternative will omit many key networking components, such as post sharing, that have been central to LinkedIn’s global success.
This announcement comes after months of intensifying Chinese regulations and crackdowns on technology companies. In March, LinkedIn was chastised by the authoritarian government for not controlling political material carefully enough. As one of the only high-profile American internet firms still operating in China, LinkedIn’s departure represents the end of limited corporate cooperation between the two countries. In 2010, Google similarly announced that its search engines would no longer operate in China in protest over tightening censorship regulations and alleged surveillance by the government. This move also serves to represent the deepening decoupling between the two nations both politically and economically.
When LinkedIn decided to enter China in 2014, it offered a temporary model to take advantage of the lucrative but highly isolated market. It also agreed to censor the posts of its millions of users in compliance with Chinese law. What resulted was a skeleton of the original service that struggled to take off in a country with a population skeptical of releasing important business contacts online. It also did not fare well against other local competitors more adjusted to the climate of the Chinese economy. Last year, according to Microsoft President Brad Smith, LinkedIn’s business ventures in China accounted for a measly two percent of the company’s total revenue.
The recent departures of major information companies contribute to a wider theme of increased restrictions on information sharing in China. Since Xi Jinping took control of the Chinese Communist Party in 2012, the government has gotten an increasingly tighter hold on what can be shared online. In the past year alone, the central government has handed down a series of investigations and bans on some of the biggest private technology firms and imposed tighter anti-trust regulations on Chinese companies. In April of this year, Ant Financial was fined 2.8 billion dollars for violating rules regarding its e-commerce sector. Onlookers have speculated, however, that this fine was at least partially the result of political subversion—Jack Ma, Ant Group’s top executive, had spoken out against the country’s archaic and opaque financial regulatory system weeks before the fine. Dan Ives, an analyst at Wedbush Securities, said that the “scale and scope of the crackdown in Beijing have been so jaw-dropping that not just domestic companies within China but even U.S. companies have now had to pull back.” He also noted that the last thing that Microsoft wanted was to get into a strained political relationship with the Chinese. These impossibly restrictive policies are putting companies on very thin ice, making them liable to suffer economic loss at the whim of the Chinese government.
The future of American ventures in China is uncertain. Bing, the only major American search engine continuing its operations in the country, is also owned by Microsoft and is likely to face hostile action from the CCP. As for LinkedIn, the fate of its 54 million Chinese accounts is up in the air.
By: Daniel Seong