China moved to tighten controls on its technology sector on Tuesday, publishing detailed rules aimed at combating unfair competition and handling of companies’ critical data. Beijing has been tightening its grip on Internet platforms in recent months, years of a more laissez-faire approach, citing risks of abusing market power to stifle competition, misuse of consumer information and violations of consumer rights. reverse after.
The country issued hefty fines to companies including e-commerce giant Alibaba Group and social media company Tencent Holdings in a sweeping action and vowed to draft new laws around technology innovation and monopolies. On Tuesday, the State Administration for Market Regulation (SAMR) released a set of draft rules banning unfair competition and restricting the use of user data.
New York listings of Internet shares Alibaba, JD.com, and Baidu Inc declined about 3% each in premarket trading. Tencent-backed online brokerage Futu Holdings was one of the most actively traded stocks on US exchanges, down 7 percent. Despite better-than-expected earnings, Tencent Music Entertainment Group posted a 3.5 per cent decline and extended losses for the fifth day.
“The specificity of the proposed rules is a clear set of priorities in establishing ‘rules of engagement’ for online competition,” said Michael Norris, research and strategy manager at Shanghai-based consultancy Agency China. “If promulgated, the rules would increase compliance. Burden for transaction platforms including e-commerce marketplaces and shoppable short video apps.”
no hijacking of traffic
Internet operators “should not assist or assist in the implementation of unfair competition on the Internet, disrupt the order of market competition, affect fair transactions in the market,” the State Administration for Market Regulation (SAMR) wrote in the draft. , which is open for public response before the September 15 deadline. Specifically, the regulator said, business operators should not use data or algorithms to hijack traffic or influence users’ choices. They may not use technical means to illegally capture or use the data of other business operators.
Companies will also be prohibited from creating or spreading misleading information to damage the reputation of competitors and need to stop marketing practices such as fake reviews and coupons or “red envelopes” – cash incentives – used to entice positive ratings. goes. Soon after the draft technical regulations were published, China’s cabinet announced that it would also implement rules on the protection of critical information infrastructure operators from 1 September.
The State Council said operators should conduct security inspections and risk assessments once a year, and prioritize purchasing “secure and reliable network products and services”, marking an expansion on the landmark cybersecurity law passed in 2017. does. The Chinese government also took ownership stakes in the domestic entities of social media giants ByteDance and Weibo, Reuters reported on Tuesday, citing corporate filings. Shares of China’s Twitter-like Weibo fell 1.7 percent.
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