Alphabet’s (GOOGL - Free Report) Google became the latest tech giant to suspend processing user data requests from the Hong Kong government amid concerns over the newly passed Hong Kong Security Law.
The law recently prompted Facebook (FB - Free Report) , Microsoft (MSFT - Free Report) and Twitter (TWTR - Free Report) to take a similar stand. Although Facebook and Twitter don’t operate in China, they do have offices in Hong Kong.
Meanwhile, Google has a strong presence in Hong Kong where it generates significant revenues from selling advertisements to Chinese clients. Notably, the sales staff of Google, in collaboration with Chinese companies, run digital advertising outside of China.
Zoom Video Communications also joined the bandwagon to stop data requests until it is thorough with the intentions of the new law.
Apart from this, TikTok also has decided to pull its social video app out of Hong Kong, fearing that they will eventually be forced to abide by China’s draconian censorship rules and possibly transfer user data to the mainland.
Rationale Behind the Moves
The law, that came into effect on Jun 30, is anticipated to effectively curtail rights to protest and freedom of speech. The uproar about the law was triggered as the Hong Kong government threatened imprisonment and fines for service providers that do not remove anti-law messages.
Notably, the United States stopped several sensitive technology trade deals with Hong Kong. Critics believe that the new law indicates Beijing’s intention to take full control of Hong Kong, which so far had more autonomy and freedom than other cities in the mainland.
The stand not only reflects the companies’ support for freedom of expression but also highlights concerns regarding complying with the Hong Kong law, which may make them face hostility back in the United States, while not abiding could put their local employees under legal risk.
Alphabet currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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