Refinitiv deployed filter to block Reuters reports as Hong Kong protests raged
Under pressure from the Chinese government, the financial information provider that distributes Reuters news to investors has blocked over 200 stories on the mainland that could paint Beijing in a negative light. The censorship began earlier this year after Refinitiv feared its China operation would be suspended.
LONDON – As anti-government demonstrations engulfed Hong Kong in August, Reuters broke a sensitive story: Beijing had rejected a secret proposal by city leader Carrie Lam to meet several of the protesters’ demands in a bid to defuse the unrest. The story buttressed a main claim of the protesters, that Beijing is intervening deeply in the affairs of the semi-autonomous city. A state-run newspaper denounced the story as “fake” and “shameful.” The article soon became unavailable in mainland China. It wasn’t the Chinese government that blocked the story. The article was removed by Refinitiv, the financial information provider that distributes Reuters news to investors around the world on Eikon, a trading and analytics platform. The article was one of a growing number of stories that Refinitiv – which until last year was owned by Reuters’ parent company, Thomson Reuters Corp – has censored in mainland China under pressure from the central government. Since August, Refinitiv has blocked more than 200 stories about the Hong Kong protests plus numerous other Reuters articles that could cast Beijing in an unfavorable light. Internal Refinitiv documents show that over the summer, the company installed an automated filtering system to facilitate the censoring. The system included the creation of a new code to attach to some China stories, called “Restricted News.”
As a result, Refinitiv’s customers in China have been denied access to coverage of one of the biggest news events of the year, including two Reuters reports on downgrades of Hong Kong by credit-rating agencies. Nearly 100 other news providers available on Eikon in China have also been affected by the filtering.
Censorship in China has been intensifying in recent years under President Xi Jinping, and Western businesses have come under rising pressure to block news, speech and products that Beijing sees as politically dangerous. Refinitiv generates tens of millions of dollars of annual revenue in China. As Reuters reported in June, citing three people familiar with the matter, Refinitiv began the censorship effort earlier this year after a regulator threatened to suspend its Chinese operation.
Refinitiv has joined a lengthening list of companies complying with Chinese demands. They include hotel giant Marriott International Inc, which last year temporarily shut down its Chinese websites and apologized for, among other things, listing Taiwan as a separate country in a customer questionnaire. Several U.S. airlines also stopped describing Taiwan as non-Chinese territory on their websites. Beijing considers the self-governed island part of China. The companies have defended their actions.
The censorship has angered the top news and business executives of Reuters and the directors of the Thomson Reuters Founders Share Co Ltd, an independent body tasked with preserving the news agency’s independence.
Speaking to Reuters journalists on a visit to the Singapore newsroom in October, Kim Williams, the Australian media executive who chairs the body, lashed out at Refinitiv, calling its actions “reprehensible” and a capitulation to “naked political aggression” from Beijing. Editor-in-Chief Stephen J. Adler told Reuters journalists in London in November that the censorship was “damaging” the brand. “I don’t approve of it,” he said.
Refinitiv chief executive David Craig and Thomson Reuters CEO Jim Smith have held multiple talks, as recently as this week, in an effort to resolve the issue, said people familiar with the matter. Smith “was very concerned” upon learning about Craig’s decision to impose the filtering, said a senior Thomson Reuters official. It is not clear how close the two are to reaching a solution both sides find agreeable, one of the people said.
“We recognise that the processes that were put in place earlier this year need to be improved and are actively working on enhancements,” Refinitiv spokesman Patrick Meyer said of the filtering system in a statement. “As a global business, Refinitiv must comply with the laws and regulations of the countries in which we operate. This is a challenge that not just Refinitiv faces, but also other companies and distributors of financial market information.”
Refinitiv was formed last year when a consortium led by private equity giant Blackstone purchased a 55% stake in Thomson Reuters’ Financial & Risk business, which included the Eikon terminal business, for about $20 billion and rebranded it.
Refinitiv and Thomson Reuters remain close: Reuters sells news to Eikon, and Thomson Reuters retains a 45% stake in Refinitiv. Refinitiv is by far Reuters’ largest client, providing nearly half its revenue. As part of the spin-off deal, Refinitiv agreed to make inflation-adjusted annual payments of $325 million to Reuters over 30 years for news – a reliable income stream that is rare in the media business.
The Founders Share directors are particularly incensed. They have complained to Thomson Reuters CEO Smith that by suppressing stories, Refinitiv is violating the terms of the deal. They also say they fear that Refinitiv, having given in to China’s demands, might start blocking stories in other countries.
Prior to the Blackstone deal, when Thomson Reuters controlled the Eikon business, Reuters stories were not blocked in China on Eikon. The Chinese government itself has been blocking access in China to the Reuters website for general readers, Reuters.com, for years, as well as the sites of many other foreign news organizations.
“Let the Chinese decide if they ban something,” said Pascal Lamy, a Founders Share director and former head of the World Trade Organization. “But this is not Refinitiv’s or Reuters’ decision.” Lamy said the directors believe the terms of the deal require Refinitiv to adhere to Reuters ethical rules on editorial integrity and independence, known as the Trust Principles, which “prevent you from accepting self-censorship.”
In response, Refinitiv said it is “complying with our obligations with respect to the Trust Principles.” It argues that in filtering out political stories for its own customers in China, it is following local laws and regulations as required by its operating license.
Smith, who sits on the boards of both Thomson Reuters and Refinitiv, did not respond to requests for comment.
The London Stock Exchange has agreed to buy Refinitiv for $27 billion in a deal that’s expected to close in the second half of next year. It declined to comment.