I am reading a lot of comment that assumes Free Trading on the Internet. ( And to an extend that may be true )
I am guessing everyone working in the Software and Internet Industry are so used to Absolute Free Trading, where you could have someone using your SaaS from any parts of the world, with Discovery And Distribution Channel infrastructure in the whole world half sorted out. No one realise Importing and Exporting of real products and services have gazillions of restrictions.
US can stop the import and export of certain products or services from certain countries on any grounds, due to protection ideal ( These deals has always been in place ) Whether that is Food, Steel, Raw Materials or even Services. Using either Standards, Safety Policy, Tariff or other means necessary, or in other words, excuses. The same is true to EU, and especially China, who has been playing this game may be better than anyone.
That would be akin to US ( or in fact any countries ) working in China are required set up a Chinese JV. ( You can read up on what is happening to ARM China CEO ). So this is a policy change not a change of law. And even that is not entirely true, because under the current policy there are different rules to State Companies, and Chinese company can no longer prove they are not a state company. ( May be that is the part they break the law )
And in case someone ask why you have one specific set of policy for China? I would have answered would you expect to have the same policy for everyone including North Korea?
I view this as a trade issues, and China are no longer welcome to trade with US in many front, including its internet services. And in all fairness no one should be blaming US about it.