China acts against unfair tech competition, misuse of data

SHANGHAI • China acted yesterday 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 abuse of 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.

It has issued hefty fines to various firms, including e-commerce giant Alibaba Group Holding and social media company Tencent Holdings, as part of a widening crackdown, and has vowed to draft new laws around technology innovation and monopolies.

The State Administration for Market Regulation (SAMR) yesterday issued a set of draft regulations banning unfair competition and curbing the use of user data.

Shares in Hong Kong-listed Internet stocks slid after the rules were published. Video platform Bilibili fell 7.4 per cent, Tencent lost 4.1 per cent, Alibaba shed 4.2 per cent, and food-delivery service Meituan slid 2.6 per cent.

"The proposed regulations' specificity evidences a clear set of priorities in setting the 'rules of engagement' for online competition," said research and strategy manager Michael Norris from 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."

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", 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 from Sept 1.

The State Council said any purchases of Internet products and services that may affect national security by operators should go through security scrutiny.

The Chinese government has also taken ownership stakes in the domestic entities of social media giants ByteDance and Weibo, Reuters reported yesterday, citing corporate filings.

REUTERS