US tech giant Microsoft announced today that it will be pulling its professional social network LinkedIn from the Chinese market later this year.
Microsoft bought LinkedIn for more than $ 26 billion in 2016.
The news comes amid a wave of regulatory changes in the Asian nation, as well as growing tensions between the company and the country. Two weeks ago, Microsoft was under scrutiny for its decision to block the profiles of certain American journalists in China.
The company isn’t the only American company struggling to balance the Chinese government’s authoritarian demands with its own business goals. Here, Microsoft has taken a sharp approach to a problem that would probably only get worse over time; the software giant could choose to comply with Chinese government demands to limit access to individual profiles it deemed unacceptable – that journalists suffer from lockdowns is no surprise, given the media environment in China – or to walk.
He chose the latter.
In a blog post discussing the news, LinkedIn wrote that the company described its 2014 decision to enter the Chinese market, which meant “meeting Chinese government requirements on Internet platforms” despite the fact that she “strongly supports[ing] freedom of expression.”
But LinkedIn wrote that it now “faces a much more difficult operating environment and stricter compliance requirements in China.” This change in market landscape led the company to make the “decision to remove the current localized version of LinkedIn, which allows Chinese people to access LinkedIn’s global social media platform, later this year.”
Microsoft shares rose about 1.6% in morning trading, about as much as the tech-focused Nasdaq Composite Index. In other words, investors ignore the news.
What the decision will mean for Microsoft’s relationship with the market and the Chinese state is unclear at this point. The Chinese Communist Party, for example, has made changes to its domestic cloud market, which could limit its business future for foreign companies. Microsoft’s Chinese decision on LinkedIn could be viewed through the lens of a possible longer-term decoupling of the tech store and the nation.