China gives Google and Facebook an ultimatum

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Google and Facebook have to accept China's censorship and tough online laws if they want access to its 751 million internet users, say Chinese regulators.

CHINA (REUTERS) - Google and Facebook will have to accept China's censorship and tough online laws if they want access to its 751 million Internet users.

That is according to Chinese regulators.

In the past year, China's Communist Party has tightened cyber regulation. Firms must store data locally and accept data surveillance.

The Chinese government also cracked down on VPNs, or virtual private networks, that allow users bypass the country's "Great Firewall".

Google and Facebook are blocked in China, along with Twitter and most major Western news outlets.

Apple operates in the country, but under strict censorship. For instance, it had to remove popular messaging and VPN apps from its China App Store.

Said Carin Pai, executive vice-president and head of equity strategy at Fiduciary Trust Company International: "It's a market that has a lot of opportunity in terms of the potential to penetrate a huge population that is still increasing adoption of the use of Internet social media, as well as advertising. But there's also some pretty well embedded incumbent competitors. That already are doing very well in that marketplace. So, I would say competition is fairly intense. And those companies have great growth opportunities here in the home country, and they are growing very rapidly just here in the US as well as in Europe. So, they don't necessarily need to have that market in order to to grow."

According to Boston Consulting Group, China has the most Internet users in the world. It is No. 2 in online spending - right behind the United States - with almost a billion dollars spent in 2016. The country's online spending has been growing at more than 30 per cent annually in the past five years.

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