The draft rules prohibit unfair competition; Tencent, Alibaba slide

GUANGZHOU, China – China’s market regulator on Tuesday released draft rules aimed at ending unfair internet competition, as Beijing continues its sweeping crackdown on the country’s tech sector.

Rules published by the State Administration for Market Regulation (SAMR) cover a wide range of areas, from bans on how companies can use data to eliminate bogus product reviews.

Chinese tech stocks listed in Hong Kong fell sharply on the news. Gaming giant Tencent was down 3.5% in trading late in the morning, while e-commerce giant Alibaba fell 2.5%.

The latest SAMR rules continue Beijing’s regulatory assault on Chinese tech giants.

Here are some of the other key rules described:

• Operators should not provide false data, such as the number of clicks on content.
• Operators should not hide negative reviews and only promote positive reviews.
• Internet platforms must not use data, algorithms and other technical means to influence users’ choices, or other methods to carry out what is known as traffic diversion. This is where a business seeks to redirect a user to their own website or service while they are browsing another.
• Operators should not use data and algorithms to collect and analyze competitors’ business information.

SAMR said it could hire third-party institutions to audit the data if an operator breaks the rules.

The regulator is seeking public opinion on the new rules until September 15. They have not yet entered into force.

However, the SAMR draft rules highlight pressure from the market regulator to tighten antitrust and competition laws. Earlier this year, the authority promulgated antitrust guidelines for the so-called platform economy.

The regulator has also taken action against Chinese tech giants.

Alibaba was fined $ 2.8 billion in April following an anti-monopoly investigation, and SAMR is now investigating food delivery company Meituan for “suspected monopoly practices.”

– CNBC’s Iris Wang contributed to this story.

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