Chinese regulators on Tuesday issued a lengthy set of draft regulations for the Internet sector, banning unfair competition and restricting the use of user data, the latest move in a crackdown on the country’s powerful technology companies.
China has been tightening its grip on Internet platforms, citing the risk of abusing market power to stifle competition, misuse of consumers’ information and violation of consumer rights.
It has issued hefty fines to companies including e-commerce giant Alibaba Group and social media company Tencent Holdings in recent months.
Shares in Hong Kong-listed Internet stocks fell following the rules’ publication. Video platform Bilibili fell more than 5%, while Tencent, Alibaba and food-delivery service Meituan dropped 3.5%, 2.6% and 1.4%, respectively.
Internet operators “must not implement or assist in the implementation of unfair competition on the Internet, disrupt the order of market competition (or) affect fair transactions in the market,” the State Administration for Market Regulation (SAMR) wrote in the draft, which it published on its website.
What they say
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 capture or use other business operators’ data illegally.
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” used to entice positive ratings.
The draft rules also called for a ban on “two-choose-one”, a practice e-commerce companies used to ban merchants from listing on rival platforms. The rules are currently open to public feedback before a 15 September deadline.
SAMR has imposed various restrictions and punishments on tech giants in an effort to restrict anticompetitive or monopolistic behaviour. In April, following a months-long probe, it fined Alibaba a record US$2.5-billion for engaging in unfair competition.
In July, the regulator ordered Tencent to end exclusive licences for certain songs on its music streaming service, and also blocked a an merger between two game streaming companies Tencent had led. — Reported by Josh Horwitz and Brenda Goh, (c) 2021 Reuters