South Korea's largest web company pulls its data centers from Hong Kong

The company said the national security law was part of the decision.

ANTHONY WALLACE via Getty Images

Naver is the latest technology company that has decided to leave Hong Kong in the wake of China’s tightening grip on the region. The Financial Times reports that the South Korean company behind (messaging app) Line is pulling its data centers from Hong Kong. The facilities will be relocated to Singapore, with Naver saying that the new Hong Kong National Security Law was a contributing factor in the decision.

For technology companies, Hong Kong has become a useful base of operations in Asia, with proximity to China without its onerous governance. A new law, however, will potentially empower China with the ability to access, seize, control and censor data held on servers in the region. Consequently, a number of big tech companies are reconsidering how best to handle the change in circumstances.

That includes TikTok, which is pulling out of Hong Kong in response to the law, while Facebook (and WhatsApp) said it will “pause” responses to data requests. Google, Telegram and Twitter, too, have said that they will temporarily stop working with local law enforcement. And a Bloomberg report says that a number of technology companies are currently reconsidering their facilities based in the area.

Hong Kong became a British colony in 1842, which was handed back to China in 1997 under a treaty known as the Joint Declaration. The document said that, until 2047, China would respect the region’s laws and economic systems -- better known as the “fifty-year rule.” Since then, China has serially attempted to undermine Hong Kong’s semi-autonomous rule, leading to a number of independence movements.

In 2020, the country erupted again with protests -- stemming from an earlier conflict around an extradition law. Officials opted to pass a new national security bill, which criminalized numerous forms of protected speech, including advocating for independence and criticizing China’s government. It also enables China to extradite people to the mainland for trial, raising concerns about human rights violations — much like those metered out to the country’s Uighur population.

Companies that fail to co-operate with Chinese officials, for instance by handing over individuals private data, could be met with serious fines or prison sentences. It’s likely that a number of companies will have to withdraw their facilities from the territory or risk financial or personal ruin.

Hong Kong’s tech scene more generally may also suffer from a brain drain as technology workers leave the region to escape the law. The UK, which has condemned China’s actions, has offered around 2.6 million residents the right to live and work there with a path to citizenship within six years.