Yahoo! halted its services in mainland China on Monday, according to Reuters. The company cited an “increasingly challenging business and legal environment” and is the second major American platform to shutter its Chinese operations over the last month.
America’s tech presence has evaporated in China. In October, Microsoft announced that it would shut down its localized version of LinkedIn in China, similarly citing “a significantly more challenging operating environment.” The Chinese government has also made numerous other platforms, including Facebook, Google, Instagram, Twitch, Twitter, Pinterest, Reddit and YouTube, unavailable to its domestic users. Bing seems to be the only major platform for search marketers that is still accessible to Chinese users.
Why operating in China may be unfeasible for American companies. Under Chinese law, companies must submit their data to local authorities if requested to do so. The data could be used to identify and persecute dissidents, as it was in 2007 when Yahoo! turned over sensitive e-mails to Chinese authorities. Thus, companies operating in China may face pressure from the local government there but also back in America for helping Chinese authorities suppress free speech.
Although not specifically cited in Yahoo!’s statement, the withdrawal coincides with China’s new Personal Information Protection Law, which also went into effect on November 1, 2021. The law limits what data companies can collect and establishes requirements for how it must be stored. In Microsoft’s announcement that it was closing the localized version of LinkedIn, the company cited “greater compliance requirements” as a cause for its departure.
Why we care. China has 854 million internet users, the most in the world and more than twice the amount of users in the U.S. (313 million). As the platforms that marketers can use to potentially reach the Chinese audience withdraw from the country, so too do opportunities to tap into that user base. The opposite is not necessarily true, however, as TikTok, which is owned by Chinese company ByteDance, is one of the most popular social media platforms in America at the moment.