Big Tech's China face-off presages an exodus from Hong Kong

FACEBOOK Inc, Google and Twitter Inc - which are 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 to police the Internet on Monday night, those companies plus the likes of Microsoft Corp and Zoom Video Communications all suspended requests for data from the Hong Kong government. ByteDance's TikTok, which has Chinese owners, announced it would pull its viral video app from the territory's mobile stores in the coming days even as President Donald Trump threatened to ban it in the US.

Their dilemma is stark: Bend to the law and infuriate Western nations increasingly at odds with China over political freedoms, or simply refuse and depart like Google did in China a decade ago over similar issues. Big Tech's reaction now could have a much wider impact on Hong Kong's future as a financial hub - potentially sparking an exodus of professionals and businesses.

Said Richard Harris, a former director at 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, Hong Kong authorities have begun explaining how they'll 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 who demonstrated for months last year while also raising fresh questions for businesses.

On Monday night, the Hong Kong government announced sweeping new police powers, including warrant-less 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 also demanding "the identification record or decryption assistance".

"We are absolutely headed for a showdown, and there are no indications that the Hong Kong government is particularly prepared if Facebook or another company refuses a removal request," said James Griffiths, a journalist and author. "These companies appear to have realised that there is no compromise they could make that would truly satisfy Beijing or make them seem trustworthy. This could make them more willing to stand up against Chinese censorship in Hong Kong." American Internet giants have made overtures towards Beijing in recent years as the market exploded, but few have so far acceded to China's censorship framework.

Of the rare examples, like Microsoft's LinkedIn, censors were content to allow it to operate a Chinese version, while Apple complies with local regulations in policing its app store and other services. Reports that Google entertained the notion of returning - via potentially a censored version of search called Project Dragonfly - enraged lawmakers and its own employees torpedoed the idea.

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

The Internet heavyweights are already censoring content across the world for both authoritarian regimes and Western democracies, said Ben Bland, a research fellow at the Lowy Institute in Australia. After a mass shooting last March in Christchurch, New Zealand, top social media firms joined more than 40 countries in a concerted 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, strict lese majeste laws lead to censorship of content deemed offensive to the royal family, while 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 they operate, said Stuart Hargreaves, a law professor at 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. "It is not necessary for Beijing's goal of tamping down certain sentiments and would be the obvious end of Hong Kong as a global city and its particular role as an Asian finance hub."

The exit of TikTok, the viral video app that has insisted it operates independently of Beijing, could actually benefit the Communist Party by removing a forum pro-democracy protesters have used to post videos calling for an independent Hong Kong.

TikTok on Tuesday played up its US ties while pushing back against comments by US Secretary of State Michael Pompeo, who said the government is considering a ban of the short video app. Mr Trump later said the move may be one possible way to retaliate against China over its handling of Covid-19. "We have never provided user data to the Chinese government, nor would we do so if asked," a TikTok spokesperson said, adding that it's led by an American CEO.

Platforms like Telegram that provide end-to-end encryption could become increasingly popular, said Joyce Nip, senior lecturer in Chinese Media Studies at the University of Sydney. Telegram said it has never shared data with Hong Kong authorities. Signal has become the most-downloaded messaging app in the city, topping the communications category in Apple's and Google's mobile app stores.

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 Steve Vickers, CEO of Steve Vickers and Associates, a political and corporate risk consultancy. BLOOMBERG