LinkedIn learns if you want to operate in China, you must play by their rules

Cantillon: Network to launch stripped-down version for Chinese market focused on jobs

LinkedIn said it was facing more regulatory and compliance challenges in China. Photograph: Greg Baker/AFP via Getty Images

LinkedIn said it was facing more regulatory and compliance challenges in China. Photograph: Greg Baker/AFP via Getty Images

 

Microsoft became the latest US-owned tech company to admit defeat in the Chinese market this week when it announced it would pull the plug on LinkedIn in China nearly seven years after its launch.

The company blamed a lack of success with the more social elements of the professional networking site, but also conceded it was facing a “significantly more challenging operating environment and greater compliance requirements” in China.

Microsoft will instead launch a stripped-down version, called inJobs, ditching the social feed and sharing options and focusing only on recruitment. It will be available later this year.

Some may think it was inevitable that LinkedIn would have to concede and withdraw. When LinkedIn expanded in China in 2014, it acknowledged the reality that it would need to censor content in the country if it wanted to keep operating there. As it was, some prominent US journalists and academics were apparently blocked from LinkedIn’s platform there due to “prohibited content”.

If you want to operate in China, you have to play by their rules, even if that means making concessions that would be unthinkable elsewhere.

Twitter, Facebook and YouTube are all banned in China, which left LinkedIn as the only major US-owned social network operating inside the country. The writing was on the wall though; a few months ago, LinkedIn was among more than 100 apps accused by an internet regulator in China of illegally collecting and using personal information.

That China has tightened its grip on the sector should come as no surprise to the tech companies – certainly not in the light of the authorities’ pressure on home-grown companies in recent months. Tencent, Bytedance and Ant are just some that have felt the pressure as increased regulatory scrutiny threatens the future growth of their businesses.

The question is, who will be next to call time? And who can afford to, given the size of China’s market?