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China or the US? Multinationals under pressure to choose sides

Zoom, Activision and more bow to Beijing's push for show of loyalty

A student in Spain takes online classes at home using software from Zoom, one of many corporations feeling that they need to choose between the U.S. and China.   © Reuters

PALO ALTO, U.S. -- As tensions rise between China and the rest of the world, western companies face growing pressure to abide by Beijing's political demands in order to keep doing business in the world's second-largest economy.

The latest display of Beijing's growing influence was seen at Zoom Video Communications. The popular California-based teleconferencing app was the subject of reports that it blocked a Chinese human rights group for several days following an online vigil it held for the 1989 Tiananmen Square crackdown at the end of May.

Chinese authorities had apparently demanded Zoom terminate the host accounts, since many of the vigil's participants were in China, where content regarding the Tiananmen protests are censored.

"Like any global company, Zoom must comply with laws in the countries where we operate," a company spokesperson said in response to reports. But Zoom added in a statement Thursday that it went too far in freezing the accounts, and planned to develop the ability to block meeting participants by country.

Some believe Zoom initially agreed to China's requests because so much of the app was developed in the country. Founder and CEO Eric Yuan was born and raised in China, and has invested heavily into the operations in the country. Both the massive U.S. market and Chinese developers have been crucial to the app's success.

Zoom is not the only company struggling to strike a balance between Washington and Beijing. Last fall, American video game company Activision Blizzard banned a player from an e-sports tournament after he expressed support for Hong Kong's pro-democracy protests. British multinational HSBC Holdings also recently backed China's plans to impose national security legislation on Hong Kong.

Meanwhile, Australian podcast player Pocket Casts was removed from Apple's App Store in China at the request of local authorities, Chinese media report. The move is seen as retaliation for Australia's push for an independent inquiry on how the coronavirus began and spread.

Homegrown companies are also feeling pressure from Beijing. The Chinese government found 15.19 million cases of what it deemed inappropriate online content posted by domestic companies in May, up 22% on the year.

These developments have fueled harsh criticism among China hawks in the U.S.

Vice President Mike Pence in October slammed Nike and the National Basketball Association for ignoring China's track record on human rights and free speech. "When American corporations, professional sports, pro athletes embrace censorship, it's not just wrong; it's un-American," Pence had said.

Some companies are bolstering their presence in the U.S. as well in a bid to avoid such complaints. Video-sharing app Tik Tok hired a Disney veteran as its new CEO, and is working on becoming more independent from its Chinese parent, ByteDance. Zoom has begun investing into additional development capability in the U.S.

Additional reporting by Shunsuke Tabeta in Beijing.

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