After more than 20 years in China, Yahoo officially withdrew from the Chinese market on November 1, citing the “increasingly challenging business and legal conditions.”
The American web service provider is one of the latest foreign companies to decide to leave China. Less than a month ago, Microsoft’s LinkedIn also shut down its social service in China.
Yahoo’s withdrawal is yet another example that foreign tech companies are struggling in China, even though the country offers such a lucrative market.
Screengrab via Yahoo
Yahoo’s announcement also coincided with China’s new Personal Information Protection Law (中华人民共和国个人信息保护法). According to The Wall Street Journal, the privacy law went into effect on November 1 and is one of the world’s strictest data privacy laws.
The new law limits companies’ ability to collect and use personal information and requires firms to hand over data to authorities when necessary. The newly enacted law may be one of the reasons why Yahoo left, as the company could potentially face backlash at home for obeying Beijing’s regulations.
However, Yahoo’s departure was arguably symbolic: The company shut down its mail and community services in China in 2013. Its remaining peripheral services, such as Yahoo Weather, were unpopular among Chinese users, and Yahoo Weather was no longer available on Chinese app stores from mid-October this year.
Chinese state media outlet Global Times attributed Yahoo’s exit to the company’s poor business practices, citing Chinese internet and legal experts who suggested that “Yahoo’s influence and market share had been reduced to ‘negligible levels’ even five years ago.”
#Yahoo shuts down services in the Chinese mainland after two decades of existence, experts say business failure is the reason. https://t.co/FuHQWChR5c pic.twitter.com/gUXH7vJoXd
— Global Times (@globaltimesnews) November 2, 2021
Nonetheless, it is undeniable that foreign tech companies are having a hard time operating in China.
Facebook and Google left China more than a decade ago. They were soon replaced by the Chinese search engine Baidu and the massively popular social media platforms WeChat and Weibo.
Yahoo’s withdrawal signals that for foreign companies to survive, they not only have to comply with government regulations but also compete with local tech companies that are already well-established among Chinese users.
Moreover, the challenge faced by tech companies also applies to other industries. The California-based retail company Everlane left China last month. And, on the same day Yahoo announced their exit, US game developer Epic Games paused its plan to release the global hit game Fortnite in China.
Cover image via Pixabay
