For the past six months, the Chinese authorities have intensified their aim to control data, which includes dictating how internet companies use private information stored in their platforms.
For this reason, a few American companies that have been operating in China under the strict censorship rules, that keep being updated, have two choices; quit or accept the rules. Choosing the former, LinkedIn announced last week is shuttering its professional network, citing “more challenging operating environment and greater compliance requirements in China.”
On Tuesday, Yahoo Inc. announced it has pulled out of China, citing an “increasingly challenging business and legal environment,” becoming the second major American company to quit China in recent weeks.
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“In recognition of the increasingly challenging business and legal environment in China, Yahoo’s suite of services will no longer be accessible from mainland China as of November 1,” the company said in a statement.
Like LinkedIn, Yahoo said it “remains committed to the rights of our users and a free and open internet.”
China, in order to maintain a firm grip on internet censorship in the country, has implemented Personal Information Protection Law, which limits what information companies can gather, and sets standards for how it must be stored. Under this new law, companies operating in China are required to censor content and keywords deemed politically sensitive or inappropriate.
Chinese laws also stipulate that companies operating in the country must hand over data if requested by authorities, a major concern for the US government which has fueled the scrutiny of Chinese companies operating in the US recently.
It has remained a constant battle for US tech companies, who have to choose between the huge Chinese market and freedom of expression. Some of them had irked the government back home as they tried to cooperate with Chinese authorities.
Yahoo was lambasted by lawmakers in the U.S. in 2007 after it handed over data on two Chinese dissidents to Beijing, eventually leading to their imprisonment.
Likewise, LinkedIn was heavily criticized after it updated the profile of many journalists and publishers in accordance with the new Chinese censorship laws. The Microsoft-owned company was accused of “choosing profit over truth.”
China spends billions of dollars to maintain its firewall, an internet blockade it has created to protect the Chinese people from unauthorized information. Through the firewall, most international tech companies including Google, Facebook and Twitter have been blocked. Yahoo’s services, including its web portal, have also been blocked.
Yahoo also previously operated a music and email service in China, but both services were also stopped in the early 2010s. In 2015, Yahoo shuttered its office in Beijing, and had increasingly downsized its operations in China since then.
Verizon Communications Inc. acquired Yahoo in 2017 and merged it with AOL, but later sold the entity off to private equity firm Apollo Global Management in a $5 billion deal. Apollo announced in September that its acquisition of Yahoo was complete.
The new Chinese censorship laws are seen as part of major reforms taking place under President Xi Jinping’s leadership, which has touched all sectors of the country’s economy, including edtech.
However, the world’s second-largest economy appears to have chosen to protect its security apparatus at the expense of the economy, which has seen billions of dollars wiped off it as a result of the new rules.