Yahoo Pulls Out Of China, Citing Challenging Restrictions

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Western tech exodus continues. Yahoo becomes latest American tech firm to pull its services from China, amid new restrictive laws

Yahoo has joined the growing list of US-based tech giants pulling its operations out of China, amid a worsening regulatory and censorship environment.

Yahoo on Tuesday announced it has pulled out of China, citing an “increasingly challenging business and legal environment.”

On the same day Epic Games revealed it was withdrawing the Chinese version of Fortnite, its popular battle-royale game, from mainland China.

America US China - Shutterstock © Aquir

China withdrawal

Epic Games did not go into exact details as to why it is shutting down Fortnite in China, but it comes amid a growing Chinese clampdown on gaming and other online activities.

In August the Chinese media watchdog imposed a new rule that online gamers under the age of 18 were banned from playing computer games on weekdays, and were limited to playing online to just three hours most weekends.

But now CNN reported Yahoo as giving a clear reason as to why it was finally pulling all of its services from China.

The firm reportedly pulled the plug “in recognition of the increasingly challenging business and legal environment,” a Yahoo spokesperson was quoted as saying in a statement.

“Yahoo remains committed to the rights of our users and a free and open internet. We thank our users for their support,” the spokesperson added.

Chinese restrictions

It is being reported that Yahoo’s withdrawal from China comes as Beijing implements a Personal Information Protection Law, which limits what information companies can gather.

It also reportedly sets standards for how data must be stored.

This presents Western firms operating in China with a problem, as Chinese law demands they hand over any data requested by Chinese authorities.

However tech giants will have to face tough questions in the US and elsewhere over complying with Chinese demands.

Western exodus

It should be remembered that Yahoo was heavily criticised in the US in 2007, when it handed over data on two Chinese dissidents to Beijing, which eventually led to their arrest.

As a result, Yahoo began scaling down its operations in China.

In April 2013 for example, many of Yahoo’s features in China were stopped, including email and news.

Then in 2015 Yahoo closed down its Beijing office and axed 300 jobs.

And others have also exited China.

Last month Microsoft announced it was shutting down its local version of LinkedIn in mainland China.

The software giant cited the increased censorship China is practising online, as the principle reason for the closure. It will replace the social network with a job search website.

LinkedIn was the last major US-operated social network still operating in China.

Social networks such as Twitter and Facebook have been blocked for more than a decade in China.

Google decided to shutter its China operations in 2010, after a notorious incident in 2009 and 2010.

A decade ago, Google accused Chinese-based hackers of carrying out the attacks on the Gmail accounts of dissidents.

Not the last

And at least one security expert believes Yahoo will not be the last Western company to announce its withdrawal from China.

“Yahoo is not the first to withdraw from China in response to increasing demands of the sector from the Chinese Communist Party,” said Dr Martin Thorley, of the University of Exeter. “It won’t be the last.”

“All those who enter the Chinese market must know that in doing so, they are making a deal,” said Dr Thorley. “In return for access, they play by the Party’s rules – a significant concession where the CCP operates a rule-by-law system, rather than rule-of-law.”

“Things will get more complicated when increasing demands are made in other sectors, of companies with massive investments on the ground,” said Dr Thorley. “Yahoo was already running reduced operations in China, but what if your company has motor vehicle assembly plants in the country, or theme parks?”

“ In the long run, we will find out just how far commercial entities are willing to go in order to maximise shareholder value, but we might not like the answer,” Dr Thorley concluded.

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Author: Tom Jowitt
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