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.
It has issued hefty fines to companies including e-commerce
giant Alibaba Group and social media company Tencent Holdings 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.
Shares in Hong Kong-listed Internet stocks slid after the
rules were published. Video platform Bilibili fell 7.4 percent, while Tencent,
Alibaba, and food-delivery service Meituan dropped 4.1 percent, 4.2 percent,
and 2.6 percent, respectively.
"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 September 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 September 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 on Tuesday citing corporate filings. © Reuters
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