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Illustration: Sarah Grillo/Axios

Big Tech companies are scrambling to figure out what China's imposition of a new national security law in Hong Kong means for their businesses there.

The big picture: Tech companies, like other multinationals, had long seen bases in Hong Kong as a way to operate close to China without being subject to many of that country's most stringent laws. Now they likely must choose between accepting onerous data-sharing and censorship requirements, or leaving Hong Kong.

Driving the news:

  • Under the new law, passed last week, companies doing business in Hong Kong are required to hand over a wide range of customer information and comply with censorship requests.
  • For now, many of the big tech companies said they have temporarily paused all responses to data requests from Hong Kong authorities as they seek to understand the law's implications.
  • Chinese-owned TikTok, meanwhile, said it would pull its app from the Hong Kong market as it seeks to maintain the distinctions between its popular international app and a similar service its parent company ByteDance runs inside China.
  • ByteDance has said that TikTok hasn't shared data with the Chinese government nor would it, a position it probably could not maintain were it to continue being made available in Hong Kong.

Yes, but: These pauses aren't seen as anything but a very short-term solution. In the long term, companies will likely face the choice of doing business in Hong Kong the way China wants, or picking up stakes and moving employees elsewhere in Asia.

Be smart: The big U.S. tech companies have taken different approaches when it comes to doing business in China.

  • Apple and Microsoft do significant business in China, while Facebook and Twitter don't.
  • Google at one time had operations in China, but very publicly pulled out in 2010. (Since 2018, there have been reports the company is weighing a reentry, though CEO Sundar Pichai has stressed there are no current plans to resume offering search in mainland China.)

Our thought bubble, via Axios China's Bethany Allen-Ebrahimian: The global future of digital free speech may hinge in part on what these companies decide over the coming weeks.

  • China's new national security law for Hong Kong states clearly that all of its provisions apply to every person in the world, and the new internet laws require individuals working at internet firms to hand over data and comply with censorship requests, or else face a year in jail and large fines.

What they’re saying: Google, Facebook, Microsoft, Twitter and Zoom have all paused their processing of user data requests from Hong Kong authorities and said they’re reviewing the details of the new law. Twitter in a statement said it has “grave concerns regarding both the developing process and the full intention of this law.”

What's next: Companies that have operations in Hong Kong could consider moving operations to Taiwan to stay close to China without being subject to the new Hong Kong law. Other companies may decide to locate regional operations elsewhere in Asia, while still others may choose to continue in Hong Kong and deal with the added restrictions.

Go deeper

Oct 13, 2020 - World

As Taiwan's profile rises, so does risk of conflict with China

Illustration: Sarah Grillo/Axios

Taiwan's success in fighting the coronavirus, along with high-profile U.S. support in recent months, has raised the nation's profile on the international stage. But Beijing views this new prominence as a serious provocation.

Why it matters: Military conflict between China and Taiwan could embroil not just Asia but also the U.S. and other outside players in a larger conflagration.

Ina Fried, author of Login
Oct 14, 2020 - Technology

More tech companies plan to let workers stay remote post-pandemic

Illustration: Eniola Odetunde/Axios

A growing number of tech companies say workers need not ever come back to the office if they don't want to. The move comes as pandemic-related closures have already kept many tech workers out of the office for months.

Why it matters: Technology's spread into every corner of the broader economy keeps boosting demand for workers with tech skills. That pushes employers to accommodate tech talent wherever they find it.

Dems race to address, preempt stimulus fraud claims

Illustration: Aïda Amer/Axios

Biden officials are working to root out the systematic fraud in unemployment and Paycheck Protection Program claims that plagued the Trump administration’s efforts to boost the economy with coronavirus relief money, Gene Sperling told House committee chairmen privately this week.

Why it matters: President Biden just signed another $1.9 trillion of aid into law, with Sperling tapped to oversee its implementation. And the administration is asking Congress to approve another $2.2 trillion for the first phase of an infrastructure package.