LinkedIn China: exit saves owner Microsoft political grief

LinkedIn has been a surprise hit in China. But its days as the only big US-based social network operating are ending. It is planning to phase out its simplified jobhunting app InCareer by early August. The move should make it easier for parent Microsoft to operate in China.

LinkedIn garnered 54mn 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 US. In contrast, rivals including Twitter, Facebook and Google have struggled there.

LinkedIn, which had already closed its local social networking site in 2021, blamed a weak economy and tough competition for the phase out of InCareer. The move may also address data security fears about foreign social networks, strong in China as in the US.

InCareer lacked the full functionality of LinkedIn in the west. But a messaging capacity may have prompted official suspicion.

The closure could help Microsoft expand, assuming it can avoid similar concerns. The US software giant is underexposed to China. In 2020, it said the market produced just 1.8 per cent of its global revenue. The shutdown will hardly dent its top line.

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

Reflecting geopolitical tensions, Microsoft was among the first US companies to ask hardware suppliers to diversify production from China to south-east Asia. It has a longstanding presence in Taiwan, investing heavily in a data centre there in recent years.

LinkedIn’s withdrawal from China should benefit Tencent’s WeChat and smaller local rivals such as Zhaopin and Maimai. These two privately owned groups are already fierce competitors, the latter with more than 100mn users.

The implicit valuation of LinkedIn, which cost Microsoft $26bn in 2016, would take a dent. But the real financial value of China for Microsoft is as a market for software, not recruitment services.