Microsoft Corporation’s (MSFT) professional networking service LinkedIn will cease operations in China later this year, according to a blog post published on its site.
Microsoft said it was closing LinkedIn “due to a more challenging operating environment and greater compliance requirements” in the country. “While we have found success in helping Chinese members find jobs and economic opportunities, we have not had the same level of success in the more social aspects of sharing and staying informed,” the company said. To this end, LinkedIn plans to replace its previous site with a new one that enables users to easily view and apply for jobs.
- LinkedIn is planning to shut down its China operations later this year.
- The professional network entered China in 2014 and grew from 4 million to 53 million members during its time there, but has recently been embroiled in controversies over content censorship.
- Microsoft is planning to replace LinkedIn with a job board site later this year.
The closure of LinkedIn means any major tech giants—a list that includes social media giant Facebook, Inc. (FB) and Twitter Inc (TWTR) as well as Alphabet Inc (GOOG, GOOGL) Google – operate in China.
LinkedIn’s China Tour
When it entered China in 2014, LinkedIn had 4 million members in the country. By July 2021, this figure had risen to 53 million. Its network mostly consisted of employees or businessmen of multinational firms who wanted to establish contacts with international companies. The company remained a notable and, to a lesser extent, successful holdout, even as other US tech companies pulled out of China because they could not agree to their government’s demands regarding data and speech.
On the other hand, the then CEO of LinkedIn, Jeff Weiner, said that his company would enforce Chinese restrictions on content “to the extent necessary.” It has made significant investments in the country, forging joint partnerships with local companies and basing its second-largest product team there.
The platform censored the content and accepted government requests to block LinkedIn profiles for controversial individuals. For example, it blocked the profile of a student activist involved in the 1989 pro-democracy protests, saying it “needs to comply with Chinese government requirements in order to work in China.”
Georgetown University professor Ivan Medeiros told The Wall Street Journal that the social network faced risks to its reputation and global business model if it continued to censor content because of the action taken against its platform being free and open. “reduces” the idea.
There were other problems as well. According to reports, LinkedIn was being used by Chinese agents to contact foreign nationals and recruit them as spies. The network faced fierce competition from local competitors, some of whom are increasingly successful.
Furthermore, LinkedIn owner Microsoft found itself in the crosshairs of the Chinese government after its proposal for a Chinese company-owned app, TikTok. Washington-based company Redmond was also included in a list of firms by the country’s internet regulator for the “improper data collection” of Chinese citizens.
However, LinkedIn’s exit from China shouldn’t affect its top line. Even though it accounts for a significant portion of the company’s total membership numbers, China may not have contributed much to its total revenue. The country accounts for 1.8% of Microsoft’s total revenue numbers, Microsoft President Brad Smith said in January 2020.LinkedIn reported revenue of $10.3 billion for the financial year 2020. It didn’t break down that figure by geography.