Yahoo Shuts Down Operations in China
Increased Regulations Cause Companies to Rethink Business in China
As of November 1, Yahoo is no longer offering service in China. The company says the decision is the result of business conditions and the legal environment in China becoming increasingly restrictive. Yahoo has been reducing its email and news services in China since 2013.
Other foreign tech companies have also scaled back operations in China recently. For example, Microsoft (MSFT) recently shut down LinkedIn in the country. Other US tech giants including Apple (AAPL) and Tesla (TSLA) are working on finding ways to navigate the new restrictions.
China’s Personal Information Protection Law
Yahoo’s decision follows the passage of a law in China called the Personal Information Protection Law, put in place to restrict data collection by tech companies. The law is the first of its kind in China.
The regulations, which went into effect on Monday, are modeled after the General Data Protection Regulation in the EU. The difference is that in Europe, privacy laws also apply to governments. In China, Beijing will still have access to citizens’ data, even as private companies are to minimize collecting it and obtain user consent first.
Compliance Costs and Added Business Risks
Tech companies navigating the new regulations in China will likely need to ramp up their compliance practices as they did when Europe’s GDR framework went into effect. They will also face added risks, such as fines if they break the new laws. However, the increased regulations may also open up opportunities for firms which will be able to help tech companies manage their data in ways which will comply with Beijing’s rules.
As tech companies navigate the new rules in China it will be interesting to see which ones choose to adapt and which ones choose to scale back, or even cease operations in the country the way Yahoo has.
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