China’s New Draft Rules to Further Tighten Control over the Tech Sector | Business and Economy News


The draft rules prohibit the use of algorithms or fake reviews to promote goods and services, prohibit forced exclusivity agreements.

China has yet again decided to tighten control over its tech sector, issuing detailed rules to tackle unfair competition and business handling of critical data.

On Tuesday, the State Administration for Market Regulation (SAMR) released a package of regulatory proposals aimed at cover intellectual property and brand reputation protections as well as a ban on the use of algorithms or fake reviews to promote goods and services.

In addition to expressly prohibited behaviors such as forced exclusivity agreements, companies will also not be allowed to use technical means to interfere with the operations of competing platforms or to make these services incompatible with theirs.

The latter could force giants like Tencent and Alibaba to dismantle their closed ecosystems that were preventing users from accessing one company’s services from another’s platforms.

Beijing has tightened its grip on internet platforms in recent months, citing the risk of abusing market power to stifle competition, the misuse of consumer information and the violation of consumer rights, in a reversal after years of a more laissez-faire approach.

Tuesday’s draft regulations are the latest in the government’s change in stance even as it imposed heavy fines on companies such as e-commerce giant Alibaba Group and social media company Tencent Holdings in connection with it. growing repression.

Hong Kong-listed internet stocks fell after the rules were published. Video platform Bilibili Inc fell 7.4%, while Tencent, Alibaba and food delivery service Meituan fell 4.1%, 4.2% and 2.6% respectively.

“The specificity of the proposed regulation highlights a clear set of priorities in defining ‘rules of engagement’ for online competition,” said Michael Norris, director of research and strategy at AgencyChina, a firm consultancy based in Shanghai.

“If enacted, the regulations are likely to increase compliance burdens for transaction platforms, including e-commerce marketplaces and purchasable short video applications. “

No diversion of traffic

Internet operators “must not implement or help implement unfair competition on the Internet, disrupt the order of competition in the market, affect fair transactions in the market”, writes SAMR in the draft , which is open for public comment by September 15. deadline.

Specifically, the regulator said, commercial operators should not use data or algorithms to divert traffic or influence user choices. They may also not use any technical means to capture or illegally use the data of other commercial operators.

Companies would also be prohibited from fabricating or disseminating misleading information to damage the reputation of their competitors and should stop marketing practices such as fake reviews and coupons or “red envelopes” – cash incentives – used to attract reviews. positive.

Shortly after the publication of the draft technology rules, the Chinese cabinet announced that it would also implement regulations to protect operators of critical information infrastructure from September 1.

The State Council said that operators must perform safety inspections and risk assessments once a year and must prioritize the purchase of “secure and credible network products and services,” marking a development of the historic cybersecurity law adopted in 2017.

The Chinese government has also acquired stakes in the national entities of social media giants ByteDance and Weibo, Reuters reported on Tuesday citing company documents.


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