China steps up technical oversight with unfair competition rules and critical data

SHANGHAI, Aug. 17 (Reuters) – China on Tuesday decided to tighten control over its tech sector, issuing detailed rules to tackle unfair competition and business handling of critical data.

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.

He has imposed heavy fines on companies such as e-commerce giant Alibaba Group (9988.HK) and social media company Tencent Holdings (0700.HK) as part of a growing crackdown and pledged to draft new laws on technological innovation and monopolies. Read more

On Tuesday, the State Administration for Market Regulation (SAMR) released a package of regulatory proposals banning unfair competition and restricting the use of user data.

Hong Kong-listed internet stocks fell after the rules were published. Video platform Bilibili Inc (9626.HK) fell 7.4%, while Tencent, Alibaba and food delivery service Meituan (3690.HK) 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 will likely increase compliance burdens for transaction platforms, including e-commerce marketplaces and short, purchasable video applications. “

NO RETURN OF CIRCULATION

Internet operators “must not implement or assist in the implementation of unfair competition on the Internet, disrupt the order of competition in the market, affect fair transactions in the market,” wrote the Administration of ‘State for Market Regulation (SAMR) in the draft, which is open for public comment before the 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 on the protection of critical information infrastructure from September 1.

The State Council said that any purchase of Internet products and services that could affect national security by operators should be subject to a security review.

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

Reporting by Josh Horwitz and Brenda Goh in Shanghai, Yingzhi Yang in Beijing; Editing by Lincoln Feast.

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