Tech giants at sharp end of East-West split
Not so long ago every Western technology group wanted to be in China. The prospect of signing up the nation’s 1-billion-plus citizens was too lucrative to ignore. For many, Hong Kong offered a perfect base: close enough to China but not subject to Beijing’s more stringent laws.
All that has changed in the space of the past week.
Facebook, Google, Twitter and Microsoft quickly indicated they were “pausing” cooperation with requests for user information while they assess a sweeping new security law.
TikTok, the Chinese videosharing platform, on Tuesday said it was withdrawing from the city over concerns the law will affect the control of user data. TikTok, owned by tech group ByteDance, cannot afford to lose access to the US market by being seen to submit to a legal crackdown in a city that has shared Western standards on free speech and the law.
US secretary of state Mike Pompeo has already threatened to close TikTok in the US.
The group’s business in Hong Kong is not big; last year it had just 150,000 users in the city. ByteDance could simply decide to roll out its mainland brand, Douyin, which is monitored by Beijing.
For others, however, notably social media networks such as Facebook and Twitter, whose business models rely on dealing in information and freedom of expression, there is no easy way out. The consequences of withdrawing from Hong Kong are significant, but so too is the price of accepting the restrictions, not least in terms of credibility with Western users.
Apple has so far said only that it is “assessing” the situation. As a supplier of kit more than information, it is less in the crosshairs. But it also has a lot to lose: it does more business than any of the tech giants in the country, generating $44bn of revenue in Greater China last year.
Tech companies are used to being challenged over their handling of user data: Western governments have focused on data privacy. The issue has again come to the fore amid concerns about how the companies police hate speech and political content. The increased influence of Big Tech amid the pandemic has only made the issue more pertinent.
But China’s demands under the new security law brought in last week go far beyond Western efforts to promote transparency. Carrie Lam, Hong Kong’s CEO, claimed last week that the new law — which introduces harsh penalties, including life imprisonment for offences such as terrorism and subversion — was targeted only at an extreme minority. But it has now become clear that Beijing will no longer respect Hong Kong’s rule of law.
What is playing out in Hong Kong is a microcosm of a global trend. The world looks set on a path towards two systems that are assertively different in outlook. Technology is at the frontier of this decoupling between the West, led by the US, and China — both because of its central role in intelligence and surveillance and because it is the industry of the future that both sides want to dominate.
The East-West tussle is not new. Over the past decade China has blocked Google, Facebook, Twitter and Instagram. That has helped China to develop its own tech giants in a market that was largely closed, and to develop its own export capability.
The path for Hong Kong looks set: it will be pulled closer to Beijing. Western tech groups, already fearing tighter rules at home, will need to manage this transition and balance the consequences of withdrawal against the risks of co-operating with Beijing — not least the possibility that their customers will punish them for it.
It is an unenviable choice but also one that now looks inevitable. /©