The move comes after the career-networking site faced questions for blocking the profiles of some journalists.
Microsoft will launch a jobs-only version of the site, called InJobs, later this year. But this will not include a social feed or the ability to share or post articles, the report said.
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LinkedIn senior vice-president Mohak Shroff wrote in a blog, "We're facing a significantly more challenging operating environment and greater compliance requirements in China."
LinkedIn was the only major Western social media platform operating in China.
When it launched there in 2014, it had agreed to adhere to the requirements of the Chinese government in order to operate in China but also promised to be transparent about how it conducted business in the country and said it disagreed with government censorship, the report said.
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Recently, LinkedIn blacklisted several journalists' accounts, including those of Melissa Chan and Greg Bruno, from its China-based website.
Bruno, who has written a book documenting China's treatment of Tibetan refugees, told Verdict that he was not surprised that the Chinese Communist Party did not like it, but was "dismayed that an American tech company is caving into the demands of a foreign government".
In a letter to LinkedIn chief executive Ryan Roslansky and Microsoft boss Satya Nadella, US Senator Rick Scott called the move a "gross appeasement and an act of submission to Communist China", the report said.