Internet companies in Hong Kong are now facing the dilemma of whether to surrender user data to the authorities or exit the local market
Internet companies in Hong Kong are now facing the dilemma of whether to surrender user data to the authorities or exit the local market © Jon Bilous/Dreamstime

Hello, Mercedes here. I now live in Singapore but my head this week has been in Hong Kong, my previous home for several years. In the space of one week it has become clear that China wants to extend its “Great Firewall” regime to Hong Kong. Beijing may not be immediately successful in imposing its model on the territory — as the pushback from US tech giants shows — but this is certainly the intent. As one Hong Kong-based lawyer told me this week: “There is a level of scrutiny now on this city that I have never seen as long as I have lived here, which is a long time.” See our Big Story this week for more on how the city lies on the frontline of US-China tensions. 

You will have noticed our rebranding. We are now called #techAsia and we have a refreshed line-up for you. Please see our new “Best of Comment” section, inaugurated with an insight this week from Yuan Yang, the FT’s deputy Beijing bureau chief.

Please listen in today at 9pm HKG time (2pm in London, 9am New York) for the first of our series of FT LinkedIn Live events. Today’s is called “US-China tech decoupling: a new cold war?” and our special guest is tech expert Dan Wang from Gavekal Research. He joins us from Beijing and will be in conversation with James. Click this link to join the event.

The Big Story

Big tech is pushing back against China’s imposition of controls on Hong Kong. TikTok, Zoom and Microsoft have become the latest companies to rethink operations in the territory after Beijing’s introduction of a sweeping national security law, says the FT here and the Nikkei Asian Review here.

TikTok, the wildly popular video app owned by Chinese technology company ByteDance, said it would stop operations in Hong Kong “in light of recent events”. Microsoft and Zoom, the video conferencing app, said they would temporarily block Hong Kong authorities from accessing user data when requested.

Key implications: China appears intent on extending its “Great Firewall” internet regime to Hong Kong. All internet companies in the territory are now facing the dilemma of whether to surrender user data to the authorities or exit the Hong Kong market. Lex's take: “Expect polarisation to deepen.”

Facebook, Google and Twitter, which do not operate in mainland China, also said they would suspend processing Hong Kong authorities’ requests for user data. Apple, which last year generated $44bn of revenue in Greater China — an area that includes mainland China, Hong Kong, Macau and Taiwan — said it was “assessing” the impact of the new law. 

Upshot: Data privacy or profits? This is the basic choice facing big tech in Hong Kong. Their decisions will reveal whether they really believe the fine rhetoric about “free and open” internet societies. Our bet: several will surrender their data (see Best of Comment below).

Mercedes’ Top 10

  1. Apple will use OLED screens for its forthcoming 5G iPhones this year, according to this scoop in the Nikkei Asian Review. The move is sure to spark new competition between Korean and Chinese suppliers of OLED technology.

  2. The UK is set to phase out Huawei from Britain’s 5G phone networks, according to this exclusive in the FT. But if the UK implements such a move, it will “bear the consequences”, warns China’s ambassador to London.

  3. US moves to limit supplies of chips to Chinese tech companies have boosted China’s semiconductor self-sufficiency drive, with companies raising much more money this year than last, writes Yusho Cho in the Nikkei Asian Review.

  4. Illustrating this theme, the plan by Chinese chipmaker SMIC to raise $6.55bn from a share offering in Shanghai is likely to boost the company’s firepower as it competes against Taiwan’s TSMC and Korea’s Samsung Electronics.

  5. Zomato, the Indian food delivery unicorn, is being deprived of sustenance. The fallout from the India-China border clash last month has cut the company off from its biggest Chinese investor.

  6. Indonesia needs to bolster its tax revenues and is enlisting Amazon, Google, Netflix and Spotify to its cause.

  7. One of the oldest rites of passage — internships at big investment banks — are going virtual. Citi’s Asia business has virtually signed up 3,500 students from more than 500 universities in two weeks, which would normally take several months of physical campus roadshows and millions of dollars in costs.

  8. Canada, here we come. “We have had a dramatic increase in . . . inquiries from software engineers in the US,” said the CEO of a company specialising in relocating tech workers from the US to Canada. Find out why.

  9. In case you missed it, the UK will be going head to head with Elon Musk in the race to deliver high-speed internet connections from space after joining forces with India’s Bharti Enterprises.

  10. Hot around the collar? As the mercury rises, Japan’s Sony and Fujitsu have developed personal cooling gizmos that fit around the neck or tuck under the shirt.

When Sages Speak

  • This Wikistrat report, which draws on the expertise of 40 China experts, predicts that Beijing will circumvent US sanctions on sensitive technology by reaching out to its network of partners in countries such as Japan, Korea and Taiwan. Worth a read.

  • In a similar vein, Yukon Huang and Jeremy Smith find in this piece that US-China supply chain decoupling may be more of a whimper than a bang.

  • Judd Devermont of CSIS and Temidayo Oniosun of Space in Africa warn in this piece that if Washington doesn’t start paying closer attention to Africa’s orbital ambitions, the US will see itself outpaced in the continent’s space race by China and Russia.

  • As US-China tech tensions build, it may be useful to consider this: while the US holds the world lead in top-tier AI talent, the largest non-US source of such researchers working in America is China, write Ishan Banerjee and Matt Sheehan at MacroPolo.

Best of Comment

The fate of Zoom, the popular video conferencing company, may come to exemplify the problems that lie ahead for tech companies seeking to operate under Hong Kong’s new national security law, writes Yuan Yang, the FT’s deputy Beijing bureau chief.

Zoom has promised to upgrade its technology to allow it to boot out individual users based in China from group video meetings at the government’s request (before that, it could only end the entire meeting). In June, the company suspended the accounts of several US-based Chinese-American activists who were holding online commemorations of the massacre of pro-democracy protesters in Tiananmen Square.

Under Hong Kong’s new national security law, the local government can demand that tech companies hand over private user data on protesters or help conduct covert surveillance. The Hong Kong police can request companies freeze user accounts.

We have yet to see how much the Hong Kong government wants to sacrifice business interests to political ones. At the most extreme, the government and police force could bring national security charges against the Hong Kong offices of US tech giants like Google, Facebook and Microsoft, who are now refusing to assist with law enforcement while they review the law.


Charles Chao is taking Nasdaq-listed Chinese internet company private. A former journalist, Mr Chao has a place in US-China financial history: back in 1999 he helped devise the so-called “VIE structure” that allowed Chinese tech companies to bypass Beijing’s regulations and list in New York.

This opened the floodgates for Alibaba, Baidu,, NetEase and many others also to adopt a “VIE structure” and list in the US.

Sina’s delisting marks the end of an era. A company that Mr Chao controls is offering investors in $41 per share to take it private — a 20 per cent premium to its average closing price in the last 30 days. After that, the betting is that Sina may seek to relist in Shanghai or Hong Kong at a higher valuation.

Art of the deal

  • Indonesia-based Traveloka, south-east Asia’s biggest online travel start-up, is close to raising fresh funds at a private-market valuation of about $2.75bn — roughly 17 per cent less than its most recent fundraising, reports Bloomberg.

  • Facebook-backed Indian ed-tech company Unacademy has acquired Chandigarh-based start-up PrepLadder for $50m as it expands its presence in the country. Meanwhile, Indian ed-tech decacorn Byju’s has made a $300m offer to acquire smaller peer WhiteHat Jr.

  • Sequoia Capital has closed a $1.35bn India venture and growth fund, the largest by the blue-chip Silicon Valley fund for the region.

  • Has SoftBank Vision Fund done another deal? The Japanese fund may have picked up an additional stake for $130m in Indian digital insurance broker PolicyBazaar at a $1.5bn valuation, in exchange for a 15 per cent stake. The start-up has been profitable for years.

  • The investment fund of Chinese internet giant Baidu has led a $71m Series D round in Shanghai-based FineEx, a third-party logistics provider serving ecommerce businesses.

Smart data

Japan lags the US and Europe in working from home

Nikkei examined data Google collected via its map app, discovering how commutes changed as the pandemic took hold — and it seems not all nations are equal. Countries including Japan and South Korea trail the US and Europe when it comes to employees ditching the office to work from home. One reason, in Japan’s case, is that economy and society lag behind when it comes to digitisation. But this may be changing. A move by Japanese technology company Fujitsu to cut its office space in Japan by half over the next three years could herald a new trend in the country.

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