The news: Last week, Microsoft announced it would shut down its LinkedIn professional networking site in China this year, making it the last major American social media network to pull out of the market, per the Wall Street Journal.
- LinkedIn said in a statement that it had come to the difficult decision after “facing a significantly more challenging operating environment and greater compliance requirements in China.”
What happened: This development comes as the Chinese Communist Party sets out to gain more control over its largest tech companies—and western companies are no exception.
- In March, Chinese regulators reprimanded LinkedIn for allegedly failing to control political content, per The New York Times.
- LinkedIn also received 42 requests from Chinese authorities last year to take down content, and was forced to suspend new sign-ups of users inside China for 30 days.
- New data security laws in China require firms like LinkedIn to store data on local users within China’s borders and provide access to authorities.
Good to know: China is LinkedIn’s third largest market, with 54 million users, but makes up less than 2% of Microsoft’s revenues, according to Microsoft president Brad Smith.
- LinkedIn said that after seven years of China operations, it had “not found the same level of success in the more social aspects of sharing and staying informed.”
The bigger picture: Content censorship is only part of the story, however.
- LinkedIn was facing intense competition in the Chinese job-seeking app market with homegrown competitors like Zhaopin, MaiMai, Chinahr, and 51job.com.
More on this: LinkedIn joins a long line of Western internet companies that have either stopped doing business in China, or were blocked outright.
- Alphabet’s Google left China in 2010 after declining to censor results in its search engine and YouTube video service.
Twitter and Facebook have been blocked in China since 2009. Similarly, Western messaging apps WhatsApp, Messenger, Telegram, and TikTok are also blocked.
- Chat messaging apps Signal and audio discussion app Clubhouse were also censored and blocked in China earlier this year.
What’s next? China’s censorship regulations undermine the way free and open internet companies like to operate and grow their businesses.
- LinkedIn’s departure from China severs another East-West connection, underscoring the risk of pursuing the potentially profitable Chinese market amid tightening government regulations.