Microsoft To Shut Down LinkedIn In China

For Chinese regulators, even a censored US-based social network was too much.

Microsoft is shutting down its main LinkedIn service in China later this year as Beijing tightens its internet rules.

Microsoft Corp (MSFT.O) is pulling the plug on LinkedIn in China nearly seven years after its launch, marking the retreat of the last major U.S.-owned social network in China as authorities there further tighten their control over the internet sector.

The company said in a blog post Thursday it has faced a “significantly more challenging operating environment and greater compliance requirements in China.”

• LinkedIn to replace China platform with jobs site
• Says facing greater compliance requirements in China
• Move comes as Beijing tightens controls on internet sector

Microsoft ​said Thursday it would cease operating its work-oriented social network LinkedIn within China by the end of the year. In a statement, the company cited a “significantly more challenging operating environment and greater compliance requirements in China.”

Microsoft is the latest American tech giant to lessen its ties to the country after years of trying to tailor its services to the demands of government censors.

LinkedIn said it will replace its localized platform in China with a new app called InJobs that has some of LinkedIn’s career-networking features but will not include a social feed or the ability to share posts or articles.

Chinese regulators have been escalating a broad crackdown on the internet sector, seeking to exercise greater control over the algorithms used by tech firms to personalize and recommend content. They have also strengthened data privacy restrictions and expanded control over the flow of information and public opinion.

The announcement is a symbolic moment for US-China tech relations, and for China’s new hard-line approach to regulating its tech industry. Microsoft’s withdrawal is the most high-profile departure since Google left the country in 2010 in protest over censorship and alleged espionage.

LinkedIn entered China in 2014 after agreeing to censor content on its site for misinformation and politically sensitive subjects, such as Taiwan. Microsoft, which had its own long and relatively strong relationship with Chinese authorities, acquired LinkedIn in 2016. In recent years, it has been the only major US internet company offering content within China. LinkedIn says it will operate a China-only jobs board within the country, effectively removing the social networking and content sharing functionality of the site.

The exit highlights the pressure on American companies as US-China relations worsen and the Chinese government deepens its influence over the economy. “China’s tightening control is becoming less and less reconcilable for Western companies,” says Nina Xiang, a financial analyst and the author of US-China Tech War, a book on high-tech competition and collaboration between the world’s two biggest economies.

“LinkedIn is about the last remaining big American tech firm operating in China that involves content,” Xiang says. “With it gone, the decoupling between China and the rest of the world will only deepen.”

The LinkedIn announcement follows months of intensifying Chinese government pressure on its technology industry, with sweeping crackdowns and harsh new rules. Significantly, this includes a plan to come into force later this year to examine and regulate recommendation algorithms. This would cover the algorithms that LinkedIn uses to suggest content as well as new potential business connections to users.

“China’s tightening control is becoming less and less reconcilable for Western companies.”

Nina Xiang, author, US-China Tech War

Microsoft has a long history of operating successfully within China’s tech industry. The company established a significant research lab, Microsoft Research Asia, in Beijing in 1998. Researchers trained there can be found across China’s tech world.

In 2012, members of the lab collaborated with Geoff Hinton, a pioneer of modern artificial intelligence, using a technique known as deep learning for speech recognition. The lab would go on to demonstrate a system that translates between English and Mandarin in real time using the technology. Its adoption of AI helped seed a number of Chinese AI companies.

Microsoft will continue to operate its censored search engine, Bing, in China, although it accounts for less than 4 percent of the country’s search market, according to MarketMeChina.

Pressure has been mounting on LinkedIn for months. In March, company executives in China were reportedly reprimanded by the government for failing to control political content shared on the platform, despite the censorship. It’s unclear what prompted the action, but the company was reportedly required to carry out a “self-evaluation,” stop signing up new users, and report to the Cyberspace Administration of China within 30 days.

In August the company again said that it was pausing new member sign-ups via the LinkedIn app “to ensure we remain in compliance with local law,” without elaborating. And in September the company broadened its censorship by telling some foreign journalists that their profiles would be blocked with China

Even the announcement of LinkedIn’s departure from China was apparently censored, with references to “freedom of information” and “requirements of the Chinese government” being removed from the version posted within China.

Chinese internet companies, too, face new challenges as the government enforces tighter antitrust rules and regulations on the use of data and algorithms.

Under government pressure, Ant Group, a financial services spin-off of Alibaba behind the widely used Alipay app, scrapped plans for a multibillion-dollar IPO in Hong Kong and Shanghai last November. The company has since been ordered to break up its business and make its mobile app compatible with that of its fiercest competitor, Tencent.

“There goes another point of contact, another window for ordinary Chinese people to another world.”

Kaiser Kuo, cohost, Sinica Podcast

In April, Ant’s parent company Alibaba was fined a record $2.8 billion by regulators for antitrust violations related to its ecommerce business.

In August, the ride-hailing company DiDi was reprimanded for going ahead with its own IPO despite concern from China’s internet regulator over data privacy. The company’s app was removed from Chinese app stores, and it has been subjected to new scrutiny over its data practices.

Online education companies and gaming firms have also faced tighter rules over what products they can offer to those under 18.

LinkedIn’s departure is unlikely to have a big impact on Chinese internet users. The company has around 50 million users in the country, according to Apollo Technical, a relatively small portion of the country’s billion internet users. Other job-hunting sites such as 51job.com and Lie Pin are more popular with Chinese users. One Chinese AI researcher familiar with the job market in China says LinkedIn is popular with engineers but faces intense competition from local sites.

LinkedIn is also popular among those with ties to both the US and China. For some, the news is another sign of connections being lost.

“This is tragic,” says Kaiser Kuo, cohost of The Sinica Podcast, which covers Chinese culture, economy, and politics. “I do understand why Microsoft is doing this, but there goes another point of contact, another window for ordinary Chinese people to another world.”

LinkedIn in March said it would pause new member sign-ups on LinkedIn China because of unspecified regulatory issues. China’s internet watchdog in May said it had found LinkedIn as well as Microsoft’s Bing search engine and about 100 other apps were engaged in improper collection and use of data and ordered them to fix the problem.

Several scholars this summer reported getting warning letters from LinkedIn that they were sharing “prohibited content” that would not be made viewable in China but could still be seen by LinkedIn users elsewhere.

Tony Lee, a scholar at Berlin’s Free University, told The Associated Press in June that LinkedIn didn’t tell him which content was prohibited but said it was tied to the section of his profile where he listed his publications. Among his listed articles was one about the 1989 crackdown on pro-democracy protesters in Beijing’s Tiananmen Square and another comparing Chinese leader Xi Jinping with former leader Mao Zedong.

Lee said Thursday it is “wishful thinking for LinkedIn to maintain its presence in a different form” without social media elements, its distinctive selling point against other online job boards. He said LinkedIn is better off pulling out of the country entirely than “practicing censorship dictated by China” that damages the company’s worldwide credibility.

It’s been more than seven years since LinkedIn launched a site in simplified Chinese, the written characters used on the mainland, to expand its reach in the country. It said at the time of the launch in early 2014 that expanding in China raised “difficult questions” because it required censoring content, but that it would be clear about how it conducts business in China and undertake “extensive measures” to protect members’ rights and data.

Microsoft, which is based in Redmond, Washington, bought LinkedIn in 2016. LinkedIn doesn’t disclose how much of its revenue comes from China, but it reports having more than 54 million members in mainland China, its third-largest user base after the U.S. and India.

“LinkedIn once served a crucial role, as the only social media network on which Chinese and Western colleagues could communicate away from (Chinese Communist Party) censorship and prying eyes,” said Eyck Freymann, another scholar who received a censorship notice letter this year, in a text message Thursday.

Freymann, a doctoral student in China studies at Oxford University, said it is “shameful that Microsoft spent months censoring its own users — and, worse, pressuring them to self-censor” but that the company ultimately made the right choice to pull the plug.

Google pulled its search engine out of mainland China in 2010 after the government began censoring search results and videos on YouTube. It later considered starting a censored Chinese search engine nicknamed Project Dragonfly but dropped the idea following internal protest in 2018.

Other U.S.-based social media platforms such as Facebook and Twitter are blocked within China.

Microsoft’s own search engine, Bing, was temporarily blocked in China in early 2019, leading the company’s president, Brad Smith, to reveal that executives sometimes have difficult negotiations with the Chinese government over censorship and other demands.

“We understand we don’t have the same legal freedom that we do in other countries, but at the same time, we stick to our guns,” Smith told Fox Business News in January 2019. “There are certain principles that we think it’s important to stand up for, and we’ll go at times into the negotiating room and the negotiations are sometimes pretty darn direct.”

Adding to the sensitivities this year was a massive hack of Microsoft’s Exchange email server software that U.S. officials have blamed on criminal hackers associated with the Chinese government.