Hong Kong's newly proposed anti-doxxing law has triggered fresh concerns amongst global tech giants about potentially increased risks. Any wholesale exit will be a very unwelcome contingency for the financial sector.
Earlier this month, Singapore-based industry group Asia Internet Coalition (AIC) – its members include the likes of Google, Facebook, Apple, LinkedIn and more global tech giants – expressed concerns about Hong Kong’s newly proposed anti-doxxing law that exposes internet platform employees to penalties of up to HK$1 million ($128,700) and five years in prison.
«The only way to avoid these sanctions for technology companies would be to refrain from investing and offering their services in Hong Kong, thereby depriving Hong Kong businesses and consumers, whilst also creating new barriers to trade,» said AIC managing director Jeff Paine in a letter that called the proposed amendments to the privacy law as «completely disproportionate and unnecessary response to doxxing».
Global financial institutions have been heavily influenced by free access to the worldwide tech market for more than just daily operations, extending to far-reaching aspects such as culture and innovation. Any wholesale exit would be a very unwelcome contingency.
More Costs
Although many global firms have contingency plans in place for various forecasted events – Canada’s consul general in Hong Kong and Macau Jeff Nankivell said some Canadian firms were studying certain data transferals in response to the national security law (NSL) – any shift caused by a tech exit will incur costs.
In addition to the cost of transitioning, global firms that continue to operate in Hong Kong may have to face a world with a dual tech regime. This is estimated to create $250 billion of yearly costs and annual demand destruction of 2-3 percent to the information and combinations technology (ICT) sector – an effect that will likely cause ripples elsewhere including the financial sector.
«For corporates, it would mean having to deploy two different communication and networking standards across several geographies to ensure inter-operability,» said a Deutsche Bank report last year titled «The Coming Tech Wall».
Talent Bottleneck
The possibility of a tech-xit also has the potential to affect Hong Kong’s ability to attract international talent – even prior to the latest proposed anti-doxxing law, a survey by the American Chamber of Commerce (AmCham) in Hong Kong said that 42 percent of expatriates might leave the city with NSL cited as the top reason.
Beyond professional life, personal life could be directly impacted from reduced access to preferred platforms for social media, internet searches, instant messaging and more.
«Based on the survey results, AmCham strongly suggests that the government pay close heed to the sentiment of expatriates in Hong Kong and work towards allaying major concerns through stronger understanding of Hong Kong’s international talent, lest the city lose competitiveness versus other business hubs,» the U.S. business group said.
Intangible Losses
A Hong Kong tech market that is missing industry leaders could also affect the financial sector through even more costs of the intangible nature such as the loss of innovativeness from reduced connectivity.
Whilst many firms can ship off their innovation labs to alternative hubs like Singapore – the city-state ranked first as a global tech hub, according to the latest PwC rankings – there will undoubtedly be benefits lost from closer vicinity to Hong Kong and mainland China, at least areas related to the local market.
HSBC, for example, partnered with Google Cloud to launch a natural language processing solution last year to review contact center conversations in Hong Kong – a design uniquely made for the city due to the common use of Cantonese and English interchangeably within daily conversations. With a lack of existing open source data or machine learning models, such a project would likely be significantly more difficult without close collaboration.
Outside The Great Firewall
Hong Kong’s government officials have reiterated their focus on illegal doxxing and empowering the city’s privacy commissioner for investigations. But some in the business community have flagged the proposed amendments as a source of worry for future endeavours.
«One of the key attributes of Hong Kong is that you can go onto Google, you can go onto Facebook and any other platform you want versus what you can do in mainland China,» said AmCham president Tara Joseph in an interview that followed a newly issued U.S. business advisory.
The Hong Kong legislature will kick off discussions on the new bill today.
