Yahoo has withdrawn from China, making it the latest in a host of foreign companies that have abandoned the country. Yahoo attributed its decision to the “increasingly challenging business and legal environment” in China. The language of that statement mirrored one that LinkedIn issued to announce its partial withdrawal in October, which it blamed on “a significantly more challenging operating environment and greater compliance requirements.” At The Wall Street Journal, Liza Lin reported on Yahoo’s decision to end its businesses in China:
Yahoo’s China departure was largely symbolic, as the company had already begun shutting down its main services such as email, news and community services in China starting in 2013. Still, Yahoo’s exit is a reminder of the increasing challenges foreign companies face in operating in China, including tighter data security and privacy regulation, geopolitical tensions and tough Covid-19-related rules.
[…] On Tuesday, Chinese internet users browsing websites run by Yahoo such as AOL.com, and media outlets TechCrunch and Engadget, were told that Yahoo’s services will no longer be accessible from mainland China. Chinese users of apps such as Yahoo Weather also received prompts beginning in October that the apps would be discontinued from Monday.
In addition, Applecensorship.com, a website run by anonymous anticensorship activist group GreatFire, showed other Yahoo apps such as Yahoo Finance and Yahoo Mail had been unavailable on Apple’s China app store as early as Oct 14. The company’s platforms aren’t widely used by regular Chinese citizens. [Source]
2/ Such as Yahoo-owned media outlets https://t.co/FDLQcOpuJJ, https://t.co/NVQ44lwtA4, AOL. All the websites show this message when you try and access it from inside China pic.twitter.com/q4xXyJSgqw
— Liza Lin (@lizalinwsj) November 2, 2021
4/ Adding on. Chinese users that try to log onto Yahoo pages are offered redirection to pages where they can log on to their existing AOL and Yahoo Mail accounts ( but only if you are an existing user) – you cant create or sign up for new accounts.
— Liza Lin (@lizalinwsj) November 2, 2021
State media outlet Global Times interviewed Chinese experts, who universally attributed the company’s withdrawal to its poor performance in the Chinese market:
Liu Dingding, a Beijing-based independent tech analyst, told the Global Times on Tuesday that Yahoo’s influence and market share had been reduced to “negligible levels” even five years ago.
“Now, what happened to the internet services provider is no longer important,” Liu said.
[…] Li Junhui, a professor at the China University of Political Science and Law, told the Global Times on Tuesday the more complete legal framework in China governing internet services will mean more stringent requirements for internet services providers, but Yahoo’s demise in China “is more likely the natural consequence of its business failure.” [Source]
Left unspoken in the above commentary is the possibility that China’s stringent censorship requirements may have rendered Yahoo’s search engine’s comparative advantages moot.
A further consideration might have been a new data protection law which came into force on Monday, reports The Guardian’s Vincent Ni:
The timing of the pullout coincided with the implementation of China’s new data protection law, which came into effect on Monday. The legislation, which was years in the making, was likened by some to the Chinese equivalent to the stringent GDPR in Europe.
The law limits the conditions under which companies can gather personal information and sets rules for how it is used. Chinese laws also stipulate that companies operating in the country must hand over data if requested by authorities, making it difficult for international firms to operate in China as they may face pressure at home over giving in to Beijing’s demands. [Source]
the law applies to the processing of personal information of Chinese persons outside China under one of the following:
1. to provide products/services to natural persons of China;
2. to analyze/evaluate behavior of such persons;
3. Other circumstances stipulated by laws & regs
— Henry Gao (@henrysgao) November 1, 2021
Yahoo’s time in China was loaded with controversy. In 2005, Chinese journalist Shi Tao was sentenced to 10 years in prison for “sharing state secrets” after Yahoo divulged his personal data to Beijing police. Approximately 60 others were similarly prosecuted after Yahoo shared their personal information with Chinese police. In 2007, it came to light that Yahoo knew the police were investigating users for supposedly revealing “state secrets,” even though Yahoo executives had testified before the United States Congress that they were unaware of the nature of the investigation. After criticism from Congress, Yahoo set up a fund to support the dissidents it had endangered—only to later be sued by said dissidents for mismanaging the funds.
Despite its irrelevance and missteps, Yahoo’s departure is indicative of the increasingly adverse environment for foreign businesses in China. The massively popular video game Fortnite announced its withdrawal from China on the same day Yahoo did. The game’s local test version was pulled on the heels of severe new restrictions put on minors’ video game hours and the introduction of potential legal repercussions for the parents of video game-addicted children. In 2014, Tencent invested $330 million into Epic Games, the maker of Fortnite. Disney has also had recent trouble releasing movies in China. “Eternals” and “Shang-Chi and the Legend of the Ten Rings,” both Marvel films directed by or starring prominent people of Chinese ethnicity, have not yet been approved for release in China. Even expat businessmen, once assiduously cultivated by the Party, are finding it difficult to remain in the country. Over 70% of the Shanghai chapter of the American Chamber of Commerce’s constituent businesses report difficulties “attracting and retaining” overseas talent.