LinkedIn’s unsustainable compromise in China
There is something inevitable about LinkedIn’s decision to “shut down” its global site in China. As the last of the major Western social media sites to operate there, tension would still exist for an American tech company that championed free speech and yet censored content from journalists and critical activists of the Chinese Communist Party. Despite that inevitability – and the dismal corporate mouth and mixed messages LinkedIn used to describe it – the professional networking site’s departure from the Chinese market, in its current form at least, is a milestone.
LinkedIn is not alone in trying to deal with this tension, as relations between the United States and China falter and the CCP becomes more authoritarian. Apple is removing iPhone apps in China that could harm the party, blocking a popular Quran app last week. HSBC has been caught between the US Department of Justice and the Chinese state over Huawei. For some, compromises to continue operating in China will be financially necessary; for LinkedIn, they have become unsustainable.
Those compromises focused on China’s censorship rules, which LinkedIn agreed to abide by when it entered the market in 2014, despite the company’s commitment to free speech. At first glance, such ethical flexibility was worth it: the site has racked up 54 million users in China, making it LinkedIn’s third-largest market in the world. Its relative success in China – Twitter and Facebook have long been blocked, and Google pulled out of China in 2010 – may have been the reason Microsoft felt that $ 26 billion was worth paying for. LinkedIn in 2016.
But the censorship has become heavier, as the CCP exercises control over domestic technology companies and content, eliminating any signs of dissent. LinkedIn broke the rules earlier this year and had to step up its blocking of content, including that of American journalists. It has rightly aroused the opprobrium of American politicians, with one Republican senator calling it “crass appeasement and an act of submission to Communist China.” Such reviews would only multiply if LinkedIn decided to stay.
Its parent company is embarking on an equally perilous path. Microsoft didn’t make friends in Beijing when it offered to buy the U.S. operations of TikTok, a Chinese-owned short video app that the Trump administration has threatened. Microsoft’s recent partnership with a Taiwanese iPhone supplier to gain a foothold in private 5G networks and directly challenge Huawei will also not be welcomed by Beijing.
LinkedIn’s withdrawal from China is only partial; he will continue to operate a stripped-down job site. This market is already well covered by local competitors like Maimai or Zhaopin. But LinkedIn’s reduced supply is depriving Western companies of a useful avenue for recruiting Chinese executives. The impact on LinkedIn’s revenue, which it generates through the sale of premium ads and subscriptions, is less clear because it does not reveal regional breakdowns. However, the Chinese market only accounts for 2% of Microsoft’s overall revenue.
China, for its part, loses little. Its spies can continue to use LinkedIn, just as social media is more widely militarized by regimes seeking to spread disinformation. LinkedIn’s pullout reflects an increasingly isolationist stance of China, made worse by the fact that pandemic-era restrictions continue to make travel more difficult. Signs of economic slowdown will only increase the state’s desire to pull the levers of control. The choice for Western companies between promoting human rights and making profits in China will become all the more difficult.