LinkedIn China exit saves Microsoft owner’s political grief

LinkedIn was a surprise hit in China. But its days as the only major US-based social network are ending. He plans to phase out its InCareer streamlined job search app by early August. The move should make it easier for parent company Microsoft to operate in China.

LinkedIn attracted 54 million users in China, which it entered in 2014. That was unprecedented for a foreign platform, making China the second-largest market for LinkedIn after the United States. By contrast, rivals such as Twitter, Facebook and Google have struggled there.

LinkedIn, which had already shut down its local social networking site in 2021, blamed a weak economy and fierce competition for the InCareer phase-out. This decision could also respond to fears about the security of data on foreign social networks, strong in China as in the United States.

InCareer didn’t have all the features of LinkedIn in the west. But a messaging capability may have raised official suspicion.

Shutting down could help Microsoft grow, assuming it can avoid similar issues. The US software giant is underexposed to China. In 2020, he said the market only generated 1.8% of his global revenue. The stoppage will hardly affect his top line.

Microsoft entered the Chinese market in 1992. It established Microsoft Research, its first research center in Asia, in China a few years later.

Reflecting geopolitical tensions, Microsoft was among the first US companies to ask hardware vendors to diversify production from China to Southeast Asia. It has a long-standing presence in Taiwan, investing heavily in a data center there in recent years.

LinkedIn’s withdrawal from China is expected to benefit Tencent’s WeChat and smaller local rivals such as Zhaopin and Maimai. These two private groups are already fierce competitors, the latter having more than 100 million users.

The implied valuation of LinkedIn, which cost Microsoft $26 billion in 2016, would take a hit. But China’s real financial value to Microsoft is as a software market, not a recruiting service.