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Microsoft (MSFT) to Wind Up LinkedIn Operation in China

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Microsoft MSFT is shutting down its LinkedIn operation in China by the end of 2021 as disclosed in a blog post.

The tech giant cited the difficulty to conform with ever-increasing compliance requirements by Beijing and a challenging operating environment as reasons for closing the platform operations in China.

In February 2014, LinkedIn had launched the localized version of the platform in China by complying with the requirements set down by the authorities.

Microsoft Corporation Price and Consensus

Microsoft Corporation Price and Consensus
Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

What Went Wrong?

LinkedIn was one of the few foreign social media platforms that was operating in China despite extensive censorship. Social media platforms like Facebook FB, Alphabet’s GOOGL Google Search engine and Twitter TWTR are all restricted in the country.

According to a Bloomberg report, LinkedIn’s problems in the country became more pronounced beginning from March 2021. LinkedIn “paused” new member sign-ups in China as it focused on ensuring greater compliance with domestic internet laws. Citing New York Times, the report further added that Chinese Internet regulatory authorities criticized LinkedIn for its inability to contain sensitive political content.

Also, there were several allegations levelled against LinkedIn that it was blocking several users (primarily western journalists) under pressure from the Chinese government, added the report.

Post the winding of LinkedIn, Microsoft is looking to float a new jobs application platform — InJobs — designed primarily for China by the end of 2021.

InJobs will aid users in China to find jobs but will not include features like social feed and the ability to share posts or articles, noted Microsoft. The company added that the launch of InJobs underscores its commitment to create economic opportunity for all individuals of the worldwide workforce.

Microsoft’s $26.2 billion acquisition of LinkedIn in 2016 is one of its most important acquisitions till date. LinkedIn is one of the world’s biggest professional networking platforms with more than 774 million users across the globe.

In the last reported quarter, LinkedIn revenues advanced 46% from the year-ago quarter’s levels (up 42% at constant currency). The better-than-expected performance was driven by improving advertising and job market scenarios.

For first-quarter fiscal 2022, LinkedIn revenue growth is anticipated to be in high-30% range driven by improving ad and jobs market.

At present, Microsoft carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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