© Reuters. FILE PHOTO: A map of China is seen through a magnifying glass on a computer screen showing binary digits in Singapore in this January 2, 2014 photo illustration. Picture taken January 2, 2014. REUTERS/Edgar Su/File Photo
By Josh Horwitz
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 data.
Beijing has been firming its grip on internet platforms in recent months, 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 approach.
The country issued hefty fines to companies including e-commerce giant Alibaba (NYSE:) Group and social media company Tencent Holdings (HK:) as part of a widening crackdown and has vowed to draft new laws around technology innovation and monopolies.
On Tuesday, the State Administration for Market Regulation (SAMR) issued a set of draft regulations banning unfair competition and restricting the use of user data.
New York listings of internet stocks Alibaba, JD.com Inc, and Baidu Inc (NASDAQ:) fall about 3% each in premarket trading. Tencent-backed online brokerage Futu Holdings slides 7% and was among the most actively traded stock across U.S. exchanges.
Tencent Music Entertainment Group shed 3.5% and extended losses to a fifth day despite reporting better-than-expected earnings.
“The 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 apps.”
NO HIJACKING OF TRAFFIC
Internet 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 deadline.
Specifically, 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’ data.
Companies 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 ratings.
Soon after the draft tech rules were published, China’s cabinet announced it would also implement regulations on protecting critical information infrastructure operators from Sept. 1.
The 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 2017.
The Chinese government has also taken 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 dropped 1.7%.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
