Yahoo makes final China exit amid tightened regulation in world’s biggest internet market

The US internet company discontinued access to its few remaining online services in mainland China on Monday
Yahoo, which launched its Chinese internet operations in 1999, closed its last remaining physical presence in the country in March 2015

Yahoo

Josh YeandRobert Delaney

Published: 6:00pm, 2 Nov 2021

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US internet company Yahoo stopped all its remaining online services in mainland China on Monday, marking its final retreat from the country, weeks after Microsoft Corp’s LinkedIn announced its exit from the world’s second-largest economy because of greater compliance requirements.

The Sunnyvale, California-based firm said its “suite of services will no longer be accessible” in the country, according to a statement posted on its website over the weekend. It added that “Yahoo products and services remain unaffected in all other global locations”, without elaborating on the reasons behind its latest exit from the mainland.

The withdrawal leaves the US presence in China’s online market largely limited to Apple, Microsoft, Google and Amazon in terms of operating systems and hardware within the country as well as marketing and cloud services needed by Chinese companies outside the country.

Yahoo, which launched its domestic internet operations in 1999, closed its last remaining physical presence in the country in March 2015, when its research and development operation in Beijing was shut down. Its news and community services in the country were terminated in September 2013, a month after its local email service was discontinued.

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Yahoo’s popularity in online search waned in the 2000s, as Google increased its global market share and Baidu became the dominant search engine provider in China. Yahoo is operated by namesake firm Yahoo!, which is 90 per cent owned by investment funds managed by Apollo Global Management and 10 per cent by Verizon Communications.

Still, some Yahoo services – including a range of news articles in foreign languages – remained accessible in mainland China as of the end of October. The number of remaining Yahoo users in the country is unknown, although it is generally considered to be small, compared with those on various Chinese online platforms that dominate the world’s biggest internet market.

As of Monday, Yahoo’s Weather app, news pages and the Chinese version of consumer tech blog Engadget were unavailable. The Chinese Engadget website only displays Yahoo’s announcement on no longer providing content in the country.

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Mainland users can still access Yahoo Mail, AOL Mail and privacy dashboard to download their data from three given web addresses, according to Yahoo’s announcement.

The timing of Yahoo’s shutdown of its few remaining online services in China on Monday coincided with the roll-out of the Personal Information Protection Law (PIPL), one of the world’s toughest on personal data security, which has been compared to the General Data Protection Regulation in the European Union.

Through the PIPL, the Cybersecurity Law, which took effect in May 2017, and the Data Security Law, which was implemented in September, China has a range of measures that restrict cross-border data flows and enforce data localisation.

James Lewis, head of the technology programme at the Centre for Strategic and International Studies, said the privacy law is in some ways the “final straw” for US social media and online content companies operating in China, “because it’s on top of the censorship burden; it adds another compliance level”.

The Cyberspace Administration of China said in an announcement published last month that online content providers must stick to government-approved sources when it comes to news or be “punished according to laws and regulations”.

“They’ve seen the writing on the wall for a while — they’re being squeezed out of China, and so it’s really a question of when do they jump,” Lewis said, adding that only a handful of US tech companies get revenue from Chinese firms.

“If you’re a Chinese carmaker, you’re going to want to do what any carmaker does, and that means you’re going to turn to a Google or Amazon, which has that global reach,” he said.

Within China’s domestic market, Google’s Android operating system and Apple’s iPhones still have significant share, but the time horizon for these US offerings may be limited because Beijing’s unofficial tech policy “is to get American companies out of China and to replace them with Chinese companies”, Lewis added.

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Some mainland users of Yahoo commented on the closure of its services, which allowed them to access foreign-language articles without need for a virtual private network.

“Yahoo’s foreign language site is now closed,” a Weibo user wrote on the Chinese microblogging service. “I can’t learn French from reading it any more.”

While Yahoo was known for broadly penetrating China’s internet market during its infancy, the company is also credited with making one of the most successful bets in the e-commerce industry.

In August 2005, Yahoo invested US$1 billion to acquire a 40 per cent stake in Alibaba Group Holding, owner of the South China Morning Post, and handed over control of its China operations to the Hangzhou-based e-commerce giant.

Years later, Alibaba founder Jack Ma described the “simple deal” with Yahoo as a milestone for his company. “The cooperation with Yahoo was very important in the growth of Alibaba,” Ma said in 2013. “If today I had an opportunity to rethink it, I would make the same decision.”

This article appeared in the South China Morning Post print edition as: Yahoo quits as China enforces new law

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