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Yahoo’s decades-long China controversy and the responsibility of tech companies

Six Chinese former political prisoners are suing Yahoo and other defendants for failing to manage a fund designated to help people like them.

December 13, 2023
seen from between parked cars, workers with hard hats and ladders are taking down the Y of an old Yahoo! billboard
Michael Macor/San Francisco Chronicle via AP

This story first appeared in China Report, MIT Technology Review’s newsletter about technology in China. Sign up to receive it in your inbox every Tuesday.

It’s a perennial debate: whether American tech companies are contributing to government control of the internet in China. But long before Apple ceded control of local user data to the state or Microsoft was found to have partnered with a Chinese military-run university on artificial-intelligence research, there was Yahoo.

Back in the early 2000s, Yahoo was operating a popular search engine and email service in China, and it was one of the first tech companies to be found sharing user information with the Chinese government, leading to the imprisonment of a number of Chinese citizens. The ensuing attention and subsequent lawsuit against Yahoo from the families of two political prisoners landed a big blow against the company. 

All this probably seems like a lifetime ago, but my colleague Eileen Guo has found that the consequences of Yahoo’s actions are still very much felt today.

Back then, to settle that lawsuit and climb out of its PR crisis, the company set up the Yahoo Human Rights Fund (YHRF) to aid other victims in similar situations. While the move earned enough positive attention for Yahoo at the time, YHRF was something of a disaster—at least that’s what a new lawsuit alleges. This suit was brought by six Chinese former political prisoners, who had all kinds of trouble receiving assistance from YHRF; they allege it squandered millions of dollars and spent only a tiny fraction of its total funds on cyber dissidents like them. 

You can read all the details of Eileen’s investigation—including new information about how the fund was managed and what Yahoo did (or didn’t do) in response—here.

Today I want to share with you a little of the story behind the story. 

Eileen, MIT Technology Review’s senior reporter for features and investigations, first heard about the case from a Twitter thread by Times Wang, the lawyer representing the men now suing Yahoo and other defendants with connections to YHRF. Wang described how he fought for years, often alone, against the onetime tech giant and the organizations it had entrusted to run the fund.

“What really stood out to me was that I had never heard of this happening before,” says Eileen, referring to Yahoo’s turning over user information to the Chinese security apparatus. “It just seemed crazy to me that this had happened and that we don’t talk about it anymore.”

From there, she went through thousands of pages of court documents, requested that key information be unsealed by the court, and talked to the plaintiffs to understand what had gone wrong and how their lives had been affected.

Eileen, it turns out, was not the only person who had questioned how the fund’s money was spent. “There were multiple proposals by Yahoo shareholders over multiple years trying to get more information, transparency, and responsibility by Yahoo,” she tells me. “One of them was actually the office of the New York City comptroller, because multiple NYC agencies have invested in Yahoo.” (Yahoo opposed many if not all these proposals.)

What was particularly astonishing to me was that after all these efforts, the fund still remains incredibly obscure. The total amount in the fund ($17.3 million) was only revealed eight years after it was established, in a 2016 investigation by Foreign Policy; it’s unclear how much of that is left; and it’s not even publicly known which or how many Chinese dissidents YHRF helped. For a fund that was set up for a bona fide humanitarian purpose, its operations certainly deserve more scrutiny.

Of all the lawsuits that have tried to hold Yahoo and the people who managed the fund accountable, the current case has gotten the furthest, Eileen says. It may finally go to trial next year, six years after it was initially filed; in that process, more relevant information could finally be unveiled to the public. (Yahoo’s chief communications officer, Sona Moon, told Eileen that the lawsuit “does not allege any claims for human rights abuses by Yahoo,” adding: “The case is wholly unrelated to Yahoo's current business or ownership. We take seriously our duty to respect and uphold human rights everywhere we operate.”)

For the plaintiffs, who say they were denied the assistance they believe they were owed, this lawsuit could bring some much-needed closure. But it also matters to everyone else, including those who never had a Yahoo account or even remember the site’s heyday.

Even though the company is almost irrelevant in the tech industry today, the mess it created provides an important lesson on how difficult it is for tech companies to fix the damage they all too frequently cause.

When Yahoo announced the humanitarian fund back in 2008, it was applauded as an example of a tech company taking responsibility and adhering to its values. “It changed a lot of different narratives about Yahoo almost immediately. Yahoo was lauded as a leader of human rights,” Eileen says. 

The way it has unraveled since, though, shows that a good gesture is not enough. “One of the takeaways for me is that it’s really easy for a tech company to make amends through very successful crisis communications and public relations strategy. But our collective memory is short,” Eileen says. “But it shouldn’t be, because the results of something like this last, in some cases, for the rest of people’s lives.”

Many tech companies still maintain a large presence in China and process Chinese user information locally. They certainly would oblige government requests to hand over identifying information, but we don’t necessarily know how much their actions have led to the Chinese government crackdown on online speech.

If there’s one thing the still-ongoing Yahoo saga tells us, it’s that it can take years to expose what tech companies have done to harm their users in China and under authoritarian regimes elsewhere, and it can take even longer to hold them accountable. 

“I think for me, the lesson as a journalist is that it’s always worth looking back at initiatives like the Yahoo Human Rights Fund,” Eileen says, “and try to understand what happens when the media attention and the collective memory moves on.”

Read the full story here.

What do you think is the lesson here for present-day American tech giants? Let me know your thoughts at zeyi@technologyreview.com.

Catch up with China

1. The Biden administration will exclude US-manufactured EVs from being eligible for the full EV purchase tax credits if they have Chinese-made battery components. (Financial Times $)

2. China unveiled a new domestically developed supercomputer. State media reported it was “many times more powerful” than the previous version, but didn’t share more details. (Reuters $)

3. US Commerce Secretary Gina Raimondo publicly called out Nvidia for trying to continue doing business with China: “If you redesign a chip around a particular cut line that enables them to do AI, I’m going to control it the very next day.” (Bloomberg $)

4. Gao Yaojie, the outspoken doctor who exposed the 1990s AIDS epidemic in rural China, died at 95. (Associated Press)

5. One Chinese court decided that an artificial-intelligence-generated image is covered by copyright law. Earlier this year, a US court determined the opposite. (Semafor)

6. As China’s EV market grows rapidly, the country is facing a shortage of skilled technicians to build the cars. (New York Times $)

7. Sky Xu, the founder and CEO of Shein, likes to remain in obscurity. The company’s looming IPO might make that impossible. (Wall Street Journal $)

8. Some covid-19 quarantine facilities in China are being converted to affordable housing units for young workers. (NPR)

Lost in translation

Two months after TikTok was banned from providing e-commerce services in Indonesia, the company has found a workaround by acquiring a local e-commerce player. 

As the Chinese publication 21st Century Business Herald reported, TikTok has over 125 million monthly active users in Indonesia, its third-largest user base behind the US and Europe. Because of this, Indonesia was the first international market where TikTok experimented with e-commerce functions. But all that came to a halt in October when the country’s government decided to ban those functions, arguing that the low price of Chinese products sold through TikTok could harm domestic businesses. 

Now TikTok’s local e-commerce operation is set to merge with Tokopedia, a former competitor owned by GoTo, the largest Indonesian technology company. The e-commerce feature comes back online on TikTok today.

One more thing

Beware of garlic! Or not.

Senator Rick Scott of Florida recently said garlic imported from China poses a national security risk—because human feces may have been used as fertilizer for the garlic. It might sound unappealing, I know, but scientists have shown that recycled human waste is perfectly fine to be used as fertilizer.

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