More U.S. Tech Companies Leave China Amid Regulatory Crackdown

November 3, 2021

Yahoo has become the latest American tech company to shut down operations in China. In a statement explaining the move, the company attributed the decision to the “increasingly challenging business and legal environment” facing tech companies operating in China.

The announcement comes hot on the heels of Microsoft pulling the plug on their social media platform LinkedIn’s efforts in China. Microsoft cited “significantly more challenging operating environment and greater compliance requirements in China,” in a statement explaining the move.

Epic Games, the makers of the massively popular video game “Fortnite” also announced that they would not be moving forward with plans to release an official version of the game in China. A “beta test” version of the game was launched in China in 2018 in partnership with Chinese gaming giant Tencent, which owns a 40% stake in Epic.

Neither Epic nor Tencent have commented on the reason behind their decision, but the move comes after Chinese authorities implemented new restrictions that barred gamers under the age of 18 from playing on weekdays and limited their total playtime to just 3 hours on weekends. 

China’s crackdown on tech companies seems unlikely to end anytime soon. In August, Chinese leaders released a five-year plan that included promises to clamp down on tech companies and called for further regulation in areas of “vital interest” such as education and financial services. Though the plan was vague about precisely what actions the government expects regulators to take, the more restrictive stance worried businesses operating in the nation and investors around the world.

The crackdown is estimated to have wiped out more than $1 trillion in market value from some of the nation’s largest companies.

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