Big tech firms face dilemma over new HK powers

If they do not bend to regulations, they could leave as Google left China a decade ago

Facebook, Google, Twitter, Microsoft and Zoom are among the major technology companies that suspended requests for data from the Hong Kong government hours after the territory on Monday announced sweeping new powers to police the Internet.
Facebook, Google, Twitter, Microsoft and Zoom are among the major technology companies that suspended requests for data from the Hong Kong government hours after the territory on Monday announced sweeping new powers to police the Internet.PHOTO: BLOOMBERG

NEW YORK • Facebook, Google and Twitter - all blocked in the mainland - are now headed towards a showdown with China that could end up making Hong Kong feel more like Beijing.

Hours after Hong Kong announced sweeping new powers on Monday to police the Internet, those companies, as well as Microsoft and Zoom, suspended requests for data from the Hong Kong government.

ByteDance's TikTok, which has Chinese owners, said it would pull its app from the territory's mobile stores in the coming days.

Their dilemma is stark: Bend to the law and infuriate Western nations at odds with China over political freedoms, or refuse and depart as Google did in China a decade ago.

Much like that seismic event shook the mainland in 2010, Big Tech's reaction now could have a much wider impact on Hong Kong's future as a financial hub.

"Google is pretty important to people here, and if that's cut off, then it's really extremely serious," said Mr Richard Harris, a former director of Citi Private Bank who now runs Port Shelter Investment Management in Hong Kong.

"In Hong Kong, we don't know where the boundaries are, and that's threatening to a lot of business people."

Over the past week, the Hong Kong authorities have begun explaining how they will enforce a law that officials in Beijing called a "sword of Damocles" hanging over China's most strident critics.

The legislation, which sparked the threat of sanctions from the Trump administration and outrage elsewhere, has had a chilling effect on pro-democracy protesters while raising fresh questions for businesses.

On Monday night, the Hong Kong government announced sweeping new police powers, including warrantless searches, property seizures and online surveillance.

If a publisher fails to immediately comply with a request to remove content deemed in breach of the law, police can seek a warrant to "take any action" to remove it while demanding "the identification record or decryption assistance".

American Internet giants have made overtures towards Beijing in recent years as the market exploded, but few have acceded to China's censorship framework.

KNIFE-EDGE

Foreign firms are on something of a knife-edge here, caught between their natural affinity with freedom of information and their commercial desire to operate in the huge Chinese market.

MR STEVE VICKERS, CEO of Steve Vickers and Associates, on the dilemma faced by companies operating in China.

Of the rare examples, Microsoft's LinkedIn censors content to operate a Chinese version, and Apple complies with local regulations in policing its app store and other services.

Reports that Google entertained the notion of returning - via a censored version called Project Dragonfly - enraged lawmakers, and its own employees torpedoed the idea.

Twitter and Facebook have never been consistently available in China, but Mr Mark Zuckerberg flirted with Beijing before regulatory scrutiny and a user backlash grew at home.

Still, Internet heavyweights are already censoring content across the world for both authoritarian regimes and Western democracies, said Mr Ben Bland, a research fellow at the Lowy Institute in Australia.

After a mass shooting in March last year in Christchurch, New Zealand, top social media companies joined with more than 40 countries in a call to end the spread of extremist messaging online.

Germany has banned online Nazi and right-wing extremist content, and most countries have blocks in place against online pornography and criminal activity.

In Thailand, lese majeste laws lead to censorship of content deemed offensive to the royal family, while communist-run Vietnam expunges anything deemed "anti-state".

Big Tech companies must gauge the importance of the markets in China and Hong Kong with possible reputational damage in other places, said Professor Stuart Hargreaves, a law professor at The Chinese University of Hong Kong.

"I do not expect to see the Great Firewall extended from mainland China to Hong Kong, at least in the medium term," he said.

While China's leaders know Hong Kong needs a free flow of information to function as a world-class financial centre, "much seems to rest in the hands of the few newly empowered bureaucrats who will police the new laws", said Mr Steve Vickers, chief executive of Steve Vickers and Associates.

"Foreign firms are on something of a knife-edge here, caught between their natural affinity with freedom of information and their commercial desire to operate in the huge Chinese market," said Mr Vickers, a former head of the Royal Hong Kong Police Criminal Intelligence Bureau.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 09, 2020, with the headline 'Big tech firms face dilemma over new HK powers'. Print Edition | Subscribe