Yahoo is leaving China’s “challenging business” environment.
Yahoo Inc. said that it stopped offering its suite of services to Mainland China on Nov. 1 due to “the increasingly challenging business and legal environment” in the country. Yahoo products like AOL.com, TechCrunch, Engadget, and Yahoo Finance are included in the withdrawal.
Multiple media outlets say that Yahoo’s departure from China is largely symbolic because the company has been gradually reducing services to the country since 2013.
China’s new privacy law adds new restrictions.
On the same day that Yahoo announced its departure, China’s new Personal Information Protection privacy law went into effect. Modeled after Europe’s General Data Protection, the new Chinese privacy law requires any organization or individual handling Chinese citizens’ personal data to minimize data collection and obtain prior consent, according to The Wall Street Journal.
Microsoft pulled LinkedIn from China last month.
China’s “challenging operating environment and greater compliance requirements” were also the primary reason Microsoft decided to pull its popular professional networking application, LinkedIn, out of the country last month.
Before LinkedIn’s departure, it was one of very few social media services allowed to operate in China. Other social media sites like Twitter, Facebook, Instagram, YouTube, SnapChat, and Google are all blocked in the country.
China’s regulatory crackdown on technology firms and newly introduced regulations governing privacy and data security have increased the uncertainty and compliance costs of operating in the country, Shanghai-based management consultant Cameron Johnson of FAO Global told The Wall Street Journal.
Several companies have decided to move out of China in the past few years.
Government regulations, the 2020 trade war, human rights violations, and tightening restrictions to minimize the spread of COVID-19 are some of the top reasons U.S. companies have decided to move their operations and production facilities out of China. Many of them are relocating to Vietnam, Thailand, India, and other countries.
A study by the UBS Evidence Lab found that 76 percent of U.S. companies with factories in China were in the process of or considering moving operations to other countries in 2020, MSN reports.
Sports retailers Nike, Adidas, and Puma backed out of China after sales fell when the companies voiced opposition to the treatment of Muslim Uyghurs in China’s Xinjiang region.
Earlier this year, tech giant Apple reportedly moved some of its iPhone, iPad, and HomePod production from China to Vietnam and India. Apple’s key supplier, Foxconn, also built a production factory in Vietnam.
Last year, during the COVID-19 pandemic, Google and Microsoft announced that they were shifting production of their smartphones, personal computers, and other electronics from China to Southeast Asian countries including Vietnam and Thailand, the Nikkei Asian Review reported.
Video conferencing company Zoom also decided last year to halt direct sales of its product in Mainland China and only offer services through third-party providers. According to Business Insider, in the months before Zoom halted services in China, the company faced scrutiny for shutting down activist accounts at the request of Chinese authorities.