Yahoo has retreated from China after Beijing introduced laws to limit foreign companies from accessing data on millions of citizens.
The US tech giant said it had made the decision in “recognition of the increasingly challenging business and legal environment” it faced. Experts, however, suggested the move reflected US firms’ reluctance to risk retribution from Beijing amid growing crackdowns on limited freedoms they had previously enjoyed in China.
Yahoo’s departure coincided with the implementation of President Xi’s Personal Information Protection Law, which limits the information companies can gather and sets standards for how it must be stored. While it is modelled on EU regulations around data privacy, analysts suggest it hands further control over personal information to the state. Chinese laws also stipulate that companies operating in the country must hand over data if requested by the authorities. It comes amid Beijing’s sweeping crackdown on tech firms which has seen the Chinese company Alibaba fined a record $2.8 billion this year.
Access to many of Yahoo’s features have disappeared in China since 2013, including email and news. In 2015 Yahoo closed its Beijing office and axed about 300 jobs.
Microsoft recently announced that it was shutting down LinkedIn , its professional networking platform, in China but that it planned to launch a jobs site later this year in the Chinese language specifically for the market.
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LinkedIn cited a “more challenging operating environment and greater compliance requirements in China”. It was criticised for censoring the profiles of some US journalists in China to comply with Beijing’s internet rules.
Xi’s stringent privacy protection law is expected to add to the costs of operating in China.
Mainland Chinese users can no longer access Yahoo products and services, including the tech news site Engadget. Apps such as Yahoo Weather have been discontinued in China.
Yahoo’s web portal, along with other global tech brands such as Facebook, Twitter and Google, have long had their sites banned in China, owing to Beijing’s tight control over the internet. But western companies have also struggled to adapt to the local business environment.
Amazon and eBay, for example, have both been eclipsed by Chinese competitors that started out as copycats.
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Yahoo was one of the first US tech companies to establish a foothold in the country in 1999. It put together a local team and was an influential player in the tech sector in its early days. Chinese portals such as sina.com and sohu.com imitated Yahoo in their early years.
However, in providing US-based services in the Chinese language, it failed to woo Chinese users, who preferred content on local portals.
In 2004 Yahoo China acquired 3721, a Chinese search engine service, in another attempt to penetrate the Chinese market but Zhou Hongyi, who founded 3721 and led Yahoo China’s operations after the acquisition, clashed with Yahoo’s home office. He left Yahoo, which sold its China operations to Alibaba in 2005. The new management failed to revive Yahoo China, and analysts blamed the lack of a long-term strategy for its failure.
