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LinkedIn to Shut Down Service in China, Citing ‘Challenging’ Environment

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LinkedIn said on Thursday that it was shutting down its professional networking service in China later this year, citing “a significantly more challenging operating environment and greater compliance requirements.”

The service, which is owned by Microsoft, said it would offer a new app focused solely on job postings in China. The new app will not have social networking features such as sharing posts and commenting, which have been critical to LinkedIn’s success in the United States and elsewhere.

LinkedIn’s move ends what had been one of the most far-reaching experiments by a foreign social network in China, where the internet is closely controlled by the government. Twitter and Facebook have been blocked in the country for years, and Google pulled out more than a decade ago. China’s internet, which operates behind a system of filters known as the Great Firewall, is heavily censored and has gone in its own direction.

When LinkedIn expanded in China in 2014 with a localized service, it offered a tentative model for other major foreign internet companies looking to tap the country’s huge, lucrative and highly censored market. The company partnered with a well-connected venture capital firm, which it said would help it with government relations.

But to do business in China, LinkedIn also agreed to censor the posts made by its millions of Chinese users in accordance with Chinese laws, something that other American companies were often reluctant or unable to do. Even in 2014, LinkedIn acknowledged the challenge, saying, “LinkedIn strongly supports freedom of expression and fundamentally disagrees with government censorship. At the same time, we also believe that LinkedIn’s absence in China would deny Chinese professionals a means to connect with others.”

Seven years on, it has become apparent the experiment did not work. No major internet platform has followed in LinkedIn’s footsteps. Its business in China struggled as it ran up against major local competitors and a population skeptical about publicly listing valuable contacts.

The operating environment in China has also become more difficult. Since President Xi Jinping took the reins of the Communist Party in 2012, he has repeatedly cracked down on what can be said online. Presiding over the rising power of the Cyberspace Administration of China, the country’s internet regulator, Mr. Xi turned China’s internet from a place where some sensitive topics were censored to one where critics face arrests for a constantly shifting set of infractions, like jokes at Mr. Xi’s expense.

In March, the regulator rebuked LinkedIn for failing to control political content, three people briefed on the matter said at the time. Officials required LinkedIn to perform a self-evaluation and offer a report. The service was also forced to suspend new sign-ups of users inside China for 30 days.

The site also suffered as the U.S. relationship with China soured, with anger about LinkedIn’s complicity in China’s information controls rising in Washington. In recent months, after LinkedIn stopped displaying the profiles of several activists and journalists in China, American lawmakers criticized the company.

In one letter last month, Senator Rick Scott, Republican of Florida, wrote to Satya Nadella, Microsoft’s chief executive, demanding to know why it had censored the accounts of three journalists. Mr. Scott called the censorship “gross appeasement and an act of submission to Communist China.”

LinkedIn’s business has also grown, with China contributing minimally. Since Microsoft bought LinkedIn for $26.2 billion in 2016, revenue from the business has tripled. Mr. Nadella told investors in July that LinkedIn’s revenue had surpassed $10 billion in annual sales, up 27 percent from the previous year.

LinkedIn declined to comment beyond its announcement.

While Microsoft has tried to build a market in China for more than a decade, it has had only modest success. Last year, Brad Smith, Microsoft’s president, said the country accounted for less than 2 percent of its revenue.

Microsoft Windows and Office are common in China, but a large number are using pirated copies. The company has tried to overcome the issue, by hosting its software online and by tapping a major Chinese military contractor to help it offer an operating system better trusted by China’s government. Microsoft’s Bing search engine, one of China’s last remaining portals to the global internet, briefly appeared to have been blocked by government censors in 2019, even though the service directed users in China to state media accounts on disputed topics like the Dalai Lama.

It remains unclear precisely what will happen to the millions of Chinese user accounts on LinkedIn. In the past, when foreign internet firms have stopped offering locally censored services, their sites have been quickly blocked by the government.

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Norwegian Watchdog Slams Meta for Cumbersome Opt-Out Process in AI Training Plans

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Meta Platforms Inc., the parent company of Facebook and Instagram, is facing a new legal challenge in Norway over its plans to utilize user images and posts to train artificial intelligence (AI) models.

The Norwegian Consumer Council has lodged a complaint, criticizing Meta’s cumbersome and deceptive opt-out process, which it argues breaches stringent EU data protection regulations.

The Council’s statement on Thursday highlighted that Meta’s method for allowing users to opt out of data collection for AI training is overly complicated and intentionally confusing.

“The process to opt-out breaches strict EU data protection rules and has been made deliberately cumbersome by using deceptive design patterns and vague wording,” the Council said.

This isn’t Meta’s first run-in with European regulators regarding data privacy. The tech giant has previously faced multiple complaints for allegedly failing to obtain proper consent from users before collecting their data to target advertisements.

Also, the European Union’s top court has warned Meta about safeguarding public information on users’ sexual orientation from being used for personalized advertising.

“We are urging the Data Protection Authority to assess the legality of Meta’s practices and to ensure that the company is operating in compliance with the law,” stated Inger Lise Blyverket, head of the Norwegian Consumer Council.

The complaint was prepared by the European Center for Digital Rights and will be submitted to the Norwegian Data Protection Authority, as well as other European data protection authorities.

Due to Meta’s EU base in Dublin, the Irish Data Protection Commission will serve as the lead authority in this matter.

The outcome of this complaint could have significant implications for how Meta, and other tech companies, handle user data within the EU.

Meta’s use of user data for training AI has raised significant privacy concerns. Critics argue that without clear and straightforward consent mechanisms, users are often unaware of how their data is being used.

This latest complaint underscores the ongoing tension between big tech companies and European regulators striving to enforce robust privacy standards.

The Norwegian Consumer Council’s action reflects a growing impatience with tech giants’ data practices, emphasizing the need for transparency and user control.

As AI technologies continue to advance, ensuring ethical and lawful data usage remains a critical challenge for both companies and regulators.

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Meta’s Revenue Woes Shake Tech Industry Confidence

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The tech industry faced a wave of uncertainty as Meta Platforms Inc., formerly known as Facebook, delivered a disappointing earnings report that sent shockwaves through the market and dented investor confidence.

Meta’s forecast of weaker-than-expected sales for the current quarter, coupled with plans for higher capital expenditures, rattled investors who were eagerly anticipating robust results.

Shares of Meta plummeted by as much as 19% in after-hours trading to trigger a cascade effect across the tech sector.

The tech-heavy Nasdaq 100 Index experienced a decline of up to 1%, reflecting broader concerns about the health of the industry.

Analysts and investors alike expressed dismay at Meta’s inability to meet revenue expectations, citing uncertainties surrounding the company’s adoption and monetization of artificial intelligence (AI) technologies.

Jack Ablin, Chief Investment Officer at Cresset Wealth Advisors, highlighted the disappointment on the revenue front, overshadowing any optimism about AI adoption.

Questions lingered regarding the efficacy of AI investments and their potential benefits to users, leading to increased skepticism among stakeholders.

The repercussions of Meta’s earnings miss extended beyond its own stock, impacting other tech giants slated to report earnings in the coming days.

Alphabet Inc., Amazon.com Inc., and social media companies like Snap Inc. and Pinterest Inc. all witnessed notable declines, signaling a broader sentiment shift within the industry.

The fallout from Meta’s revenue woes reverberated across the tech landscape, affecting chipmakers, server manufacturers, and software firms. Nvidia Corp., Micron Technology Inc., and International Business Machines Corp. were among the companies affected, as investor concerns over AI investment and revenue growth cast a shadow over the sector’s outlook.

As the tech industry grapples with Meta’s disappointing results, stakeholders are left to ponder the implications for future investments and strategic decisions.

The episode serves as a stark reminder of the inherent volatility and uncertainty within the tech sector, underscoring the importance of diligent risk management and strategic foresight in navigating turbulent markets.

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TikTok Vows Legal Battle Amid Threat of US Ban

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As the specter of a US ban looms large over TikTok, the popular social media platform has declared its intention to wage a legal battle against potential legislation that could force its Chinese-owned parent company, ByteDance Ltd., to divest its ownership stake in the app.

In what amounts to a fight for its very existence in one of its most crucial markets, TikTok is gearing up for a high-stakes showdown in the courts.

The alarm bells were sounded within TikTok’s ranks as Michael Beckerman, the company’s head of public policy for the Americas, issued a rallying cry to its US staff.

In a memo obtained by Bloomberg News, Beckerman characterized the proposed legislation as an “unprecedented deal” brokered between Republican Speaker and President Biden, signaling TikTok’s readiness to challenge it legally once signed into law.

“This is an unprecedented deal worked out between the Republican Speaker and President Biden,” Beckerman stated in the memo. “At the stage that the bill is signed, we will move to the courts for a legal challenge.”

The urgency of TikTok’s response stems from recent developments in the US Congress, where lawmakers have fast-tracked legislation mandating ByteDance’s divestment from TikTok.

The bill, intricately linked to a vital aid package for Ukraine and Israel, has garnered significant bipartisan support and is expected to swiftly pass through the Senate before landing on President Biden’s desk.

Beckerman minced no words in his critique of the proposed legislation, labeling it a “clear violation” of TikTok users’ First Amendment rights and warning of “devastating consequences” for the millions of small businesses that rely on the platform for their livelihoods.

TikTok’s defiant stance reflects the gravity of the situation facing the tech giant, which has spent years grappling with concerns from US officials regarding potential national security risks associated with its Chinese ownership.

Despite extensive lobbying efforts led by TikTok CEO Shou Chew to allay these fears, the company now finds itself at a critical juncture, where legal action appears to be its last line of defense.

ByteDance, TikTok’s Beijing-based parent company, has also signaled its intent to challenge any US ban in court, signaling a united front in the face of mounting pressure.

However, navigating the legal landscape will not be without its challenges, as ByteDance must contend with both US legislative measures and potential obstacles posed by the Chinese government, which has reiterated its opposition to a forced sale of TikTok.

As TikTok prepares to embark on what promises to be a protracted legal battle, the outcome remains uncertain.

For the millions of users and businesses that call TikTok home, the stakes have never been higher, as the platform fights to preserve its presence in the fiercely competitive landscape of social media.

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