China moves to further tighten control of technology sector with new rules

SHANGHAI Reuters -China moved on Tuesday to tighten control of its technology sector publishing detailed rules aimed at tackling unfair competition and companies handling of critical dataIn recent months Beijing has been firming its grip on internet platforms citing the risk of abusing market power to stifle competition misuse of consumers information and violation of consumer rights in a reversal after years of a more laissez-faire approachIt has issued hefty fines to companies including e-commerce giant Alibaba Group and social media company Tencent Holdings as part of a widening crackdown and has vowed to draft new laws around technology innovation and monopoliesOn Tuesday the State Administration for Market Regulation SAMR issued a set of draft regulations banning unfair competition and restricting the use of user dataShares in Hong Kong-listed internet stocks slid after the rules were published Video platform Bilibili Inc fell 74 while Tencent Alibaba and food-delivery service Meituan dropped 41 42 and 26 respectivelyThe proposed regulations specificity evidences a clear set of priorities in setting the rules of engagement for online competition said Michael Norris research and strategy manager at Shanghai-based consultancy AgencyChina If promulgated the regulations will likely increase compliance burdens for transaction platforms including e-commerce marketplaces and shoppable short video appsNO HIJACKING OF TRAFFICInternet operators must not implement 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 to public feedback before a Sept 15 deadlineSpecifically the regulator stated business operators should not use data or algorithms to hijack traffic or influence users choices They may also not use technical means to illegally capture or use other business operators dataCompanies would also be barred from fabricating or spreading misleading information to damage the reputation of competitors and need to stop marketing practices like fake reviews and coupons or red envelopes cash incentives used to entice positive ratingsSoon after the draft tech rules were published Chinas cabinet announced it would also implement regulations on protecting critical information infrastructure operators from Sept 1The State Council said operators must conduct security inspections and risk assessments once a year and should give priority to purchasing secure and credible network products and services marking an elaboration on the landmark Cybersecurity Law that passed in 2017The Chinese government has also taken ownership stakes in the domestic entities of social media giants ByteDance and Weibo Reuters reported on Tuesday citing corporate filingsReporting by Josh Horwitz and Brenda Goh in Shanghai Yingzhi Yang in Beijing Editing by Lincoln Feast and Jason NeelyRelated article