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Quickly Withdraw Approval for New Facebook Venture
Published on: 2018-07-26
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031Just one day after Facebook gained permission to open a subsidiary in China, the government pulled the business filing and began to censor mentions of the news.

Facebook planned to open up a $30 million subsidiary called Facebook Technology (Hangzhou) and run a startup incubator that would have made small investments and gave advice to local businesses.

The sudden rejection stems from a disagreement between Chinese authorities. Local officials in Zhejiang, an eastern province that houses Alibaba’s headquarters, gave Facebook the initial permission, but the Cyberspace Administration of China, Beijing’s internet regulator, had not.

033According to screenshots of the business filing on the remaining social media posts that haven’t been censored, the subsidiary had been listed as wholly owned by Facebook Hong Kong Limited. Facebook does have a sales office in Hong Kong, which isn’t subject to the rules and censorship of the mainland. In a statement yesterday, the company said, “We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups.”

Facebook previously tried to open an office in Beijing in 2015 and got as far as obtaining a permit, but ultimately, it was unsuccessful, a pattern that seems to be echoed here. Last year, Facebook quietly launched an app in China called Colorful Balloons that let users share photos with friends. Oculus, Facebook’s VR company, also has an office in Shanghai.

032Last week in an interview, chief executive Mark Zuckerberg expressed significant doubt that his company could successfully reach China. When asked where Facebook was on China, he responded, “I mean, we’re blocked.” He then elaborated on the grim situation: “I mean, we’re a long time away from doing anything. At some point, I think that we need to figure it out, but we need to figure out a solution that is in line with our principles and what we wanna do, and in line with the laws there, or else it’s not gonna happen. Right now, there isn’t an intersection.”

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