Facebook, Twitter, Google on collision course with China over Hong Kong's National Security law

09 Jul 2020 1:58 am by Ben Lucas, Xu Yuan

chinese digital tech

Global tech and social media companies are in for a bumpy ride over the coming months, after many of them suspended their cooperation with data requests from Hong Kong authorities following passage of the National Security Law.

While it remains unclear how aggressively Hong Kong authorities will use their new powers to regulate online content against social media companies, it looks unlikely that these companies will be able to find a compromise that will keep both Western states and the Chinese government happy.

Short-video app TikTok fired the starting gun on the question of whether global tech and social media companies should stay in Hong Kong or leave the city, after the Chinese legislature passed the controversial National Security law on June 30.

The law, which was only made public after it was passed, outlaws acts such as sedition and secession. For example, the government has come out after the law was passed to say that the phrase “Liberate Hong Kong,” which has often been used by pro-democracy protesters over the past year, was secessionist.

The law, which came into effect immediately, gives the Hong Kong police force the power to ask companies to remove content that it deems to be in breach of the law. Companies risk fines for non-compliance and staff could face up to six months in prison. The law is also extra-territorial in nature.

TikTok said it would pull out of the market “in light of recent events.” While it did not give a clear reason for leaving, the company, which is owned by Chinese company ByteDance, has said in the past that it doesn’t store users’ data in China.

The app, however, wasn’t popular in Hong Kong and the cost of leaving is likely to be relatively low, making the choice simpler.

Meanwhile, many other global tech and social media companies have suspended their cooperation with Hong Kong authorities’ data requests following the passage of the National Security Law.

Facebook, including its subsidiaries such as WhatsApp and Instagram, Google, Twitter, Zoom, Telegram, Microsoft, and its companies LinkedIn and Skype, must all now grapple with the issue of how they are going to handle the new law, and contemplate whether they should exit the market altogether.

5.8 million people access Facebook in Hong Kong every month, a spokeswoman for the company told MLex. This is 0.2 percent of the 2.6 billion people that access Facebook globally every month, but is a significant proportion of the city's population of 7.5 million.

LinkedIn has 1 million members in Hong Kong, a spokeswoman for the company told MLex. It has 690 million members worldwide.

It would be fair to assume that the city doesn’t account for a significant portion of these companies’ global revenues.

Furthermore, Facebook, Twitter and Google can’t be accessed freely in mainland China, and therefore they have potentially less to lose when considering exiting Hong Kong.

However, these companies may be wondering if they can reach a middle ground on how they might comply with the new National Security Law.

But based on recent events in Hong Kong, increasing geopolitical tensions between China and the US, and an assessment of how China regulates online content, it looks unlikely that these companies will be able to find a compromise that will keep both the Western world and the Chinese government happy.

China’s regulation of online content

The new regime that has come into force in Hong Kong mimics the content-regulation regime in mainland China.

Like mainland Chinese laws in this area, the offences outlined under the National Security Law are broad and vague.

For a glimpse into how the law might play out in Hong Kong, companies should look at how online content is regulated on the mainland.

The Chinese standard of illegal content is ambiguous and unpredictable, and it largely depends on what censors think is inappropriate for Chinese people to read or discuss at a certain time.

This uncertainty has landed both international companies and domestic companies in trouble.

In 2018, the Shanghai branch of China’s Cyberspace Administration — which is responsible for regulating online content — investigated international hotel chain Marriott for listing Taiwan as a separate country from China on its Chinese website. The company’s Chinese website and app were shut down for one week for this violation, and Marriott was forced to issue a public apology.

Around the same time, US medical equipment company Medtronic and Spanish retailor Zara were also summoned by China’s Cyberspace Administration over the same issue and forced to issue a public apology.

In April this year Chinese social media apps Zhihu and Douban were also penalized by the same regulator, having their apps temporarily removed from app stores for “failing to fulfill its/their censorship duties.”.

Last month, China’s Twitter equivalent, Sina Weibo, was ordered to suspend updating its list of trending topics — where companies can pay to get their goods or services advertised on that list — for one week after being accused of “disturbing the order of online communication” over its censorship of the online personal affairs of a senior Alibaba executive.

Handling Hong Kong

But the Chinese government has still managed to target companies in Hong Kong even before the National Security Law was passed. It targeted companies whose employees supported the protests in Hong Kong last year, which were sparked after the Hong Kong government tried to pass a law that would allow criminals to be extradited to the mainland. The government later withdrew the bill, although the protests continued.

In August last year, China’s aviation authority, the Civil Aviation Administration of China, targeted Hong Kong airline Cathay Pacific over its failure to rein in staff taking part in protests telling it to remove all employees involved in the protests from flights to the mainland. It simultaneously faced calls to be boycotted in China.

The US National Basketball Association also faced similar boycott threats on the mainland after the general manager of Houston Rockets basketball team voiced his support for the Hong Kong protests.

China vs the West

For years, incidents like the one experienced by Marriott have gone unnoticed outside China, making it easy for companies to just comply with requests by Chinese authorities to avoid a boycott, silently accepting that this is the Chinese way of doing business.

But because Hong Kong’s pro-democracy movement has gathered international attention, it makes silent compliance more difficult.

HSBC, after much pressure, came out to support the National Security Law. But harsh criticism followed from the UK government.

“I’ve been very clear in relation to HSBC, and I will say the same thing in relation to all of the banks: the rights and the freedoms and our responsibilities in this country to the people of Hong Kong should not be sacrificed on the alter of bankers bonuses,” said the UK Foreign Minister Dominic Raab on July 1.

Companies are likely to get caught like this no matter which side they pick, especially as geopolitical tensions between China and the US continue to escalate.

News that the US is investigating whether to ban TikTok could easily spark a tit-for-tat retaliation.

It could even be possible, although probably unlikely at this stage, that these companies that have frozen their cooperation with Hong Kong agencies could well be banned before they even consider leaving.

Ultimately, it remains unclear how aggressively Hong Kong authorities will use their new powers to regulate online content against social media companies.

But the coming months could be a testing period as local elections in Hong Kong are set to take place in September, where social media platforms could come under pressure to remove content that the government interprets as being in breach of the National Security law.

Global tech and social media companies should be reminded, however, that the National Security Law is a political issue that they will have to navigate, and not a regulatory one.

It seems increasingly likely that they will be forced to pick a side and bear the costs.

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