The new rules are perhaps the strictest among recent efforts to curb the power of Big Tech, but are unlikely to be replicated elsewhere
Stricter regulation has been on the cards for some time: Signs of a straining relationship between the Chinese government and its tech scene first emerged earlier this year, when the State Administration for Market Regulation (SAMR) imposed a $2.8bn fine on Alibaba for abusing its market power. It was found to have stopped sellers from using other platforms to market their products by enforcing a ‘choose one out of two’ clause. But this was not the start of the clampdown. In March the SAMR had already fined several of the country’s tech platforms. The Government also hired more staff into the SAMR and increased its budgets, although it is still tiny by international standards. Stricter competition laws were soon passed.
Stock markets are now reacting to the assault: New rules were proposed last week aimed to prevent unfair competition, which will further tighten the grip on large online platforms. If approved, a wide range of conducts would be outlawed, such as faking statistics and information about products, sales, and user reviews. Other forbidden practices include using data, algorithms or other means to redirect web traffic from their rivals or create obstacles that would prevent customers from installing or running rival services. Just days later a new data protection law was introduced, which places strict safeguards on the processing of sensitive personal data. Chinese tech stocks took the hit of these proposals, with Alibaba and Tencent’s share prices falling 4.8% and 4% respectively.
China’s intervention is as much about exerting power as it is about fixing something that’s broken: Countries and regions already embarked on fixing problems with Big Tech will be watching China with interest. But so far, the methods used are unlikely to wash up on these shores. The fine issued to Alibaba in April came only after the company’s founder, Jack Ma, voiced open criticism of the Chinese financial system. Similarly, the new proposals would require businesses that seriously violate the rules to publicly apologise and commit to changing behaviour. So far the crackdown on China’s tech scene seems more a demonstration of the party’s power than a rulebook for the west to follow.
