As the last PRISM partner that had managed to survive in the Chinese market, the exit of Yahoo will have strategic implications in the tech competition between the US and China
Recently, the United States (US)-based former tech giant Yahoo announced its exit from the Chinese market due to the presence of a ‘challenging environment’. This is not the first exit of a US firm from the People’s Republic of China (PRC) market. In recent times, Microsoft-owned LinkedIn decided to leave the PRC market as well. However, since the inception of the Golden Shield Project, many foreign companies have had a tumultuous relationship with the Chinese market.
With the rise in tensions and the subsequent tech competition between the US and the PRC, both powers have attempted to reduce market access to each other’s tech companies. However, the PRC has been less forthcoming in its approach. While the US outrightly banned certain PRC apps and infrastructure from the US market and led global initiatives to limit the PRC’s ability to gather data globally, China has been making operations for foreign firms difficult through new requirements.
Since the inception of the Golden Shield Project, many foreign companies have had a tumultuous relationship with the Chinese market.
At the centre of this storm now is the Personal Information Protection Law (PIPL), which aims to limit personal data collection by firms for provision of services or behavioural profiling. This measure should not be seen in isolation, but as one step in the ‘Reflexive Game’ being played by the US and the PRC in the larger context of the global ‘Surveillance Capitalism’ business model.
Under this business model, firms rely on collecting user data through which they can modify user behaviour for profit, and, thus, can offer their services for free to users. However, this data is also crucial from a national security perspective as it can be used to impose one’s political will on the adversarial state’s citizenry and/or leadership through individualised targetting.
The PRC has been proactive in adopting this new form of warfare, as is evidenced by its foreign influence operations, individualised targetting, and narrative setting through its apps beyond its borders, and through the revelations of attitudinal profiling of foreign leadership under the Zhenua data leak. However, on the other hand, the PRC has been afraid of losing legitimacy and thus the possibility of regime change. This has been the case since the times of the Tiananmen episode.
The PRC has been afraid of losing legitimacy and thus the possibility of regime change. This has been the case since the times of the Tiananmen episode.
Yahoo is no ordinary US company. While its market share isn’t what it used to be, it is one of the primary PRISM partners, a key global data espionage ally of the US National Security Agency, and is one of the last PRISM providers to have stuck around in the PRC market. The presence of Yahoo in the PRC was strategically important for the US to counter the PRC.
The exit of Yahoo and other PRISM providers implies two things: First, the tech competition supposedly initiated by President Trump is alive and kicking even after his ouster; second, that the PRC is increasingly more insecure about prospects of regime change. This paranoia is likely to drive the PRC to engage in more measures to limit the operations of foreign tech companies within its area of control. However, domestic firms are likely to comply without protest.
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