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China puts an end to a long-standing tech industry practice in its latest regulatory move

The Chinese ministry’s order is the latest in the country’s attempts to impose stringent regulations on big tech companies.

Chinese tech giants have been asked to dispense with the practice of blocking each other’s links on their platforms by China’s Ministry of Industry and Information Technology (MIIT), according to a Reuters report. The ministry threatened companies with consequences if they did not comply with the guidelines but failed to specify what the consequences will look like, the report added. 

The practice affects user experience, infringes upon the rights of users, and disrupts market order, MIIT spokesperson Zhao Zhiguo said. The spokesperson did not single out any companies by name. However, Reuters cited a report by 21st Century Business Herald which revealed that Alibaba and Tencent were among the firms directed to stop the practice.

The ministry was responding to reports and complaints it had received from users following a review of industry practices in July, Reuters elaborated. Instant messaging platforms will be the first category under the ministry’s scanner, the agency stated. 

The latest salvo is another step in Beijing’s attempts against tech companies to purportedly prevent them from becoming alternative power centres. The multiple new requirements could have repercussions for the world at large as China’s approach to regulating the tech industry will shape how other countries approach the same. 

China’s attempts to constrict the growth of tech giants

 The Chinese government has undertaken several measures to cut virtual monopolies of big tech companies like Tencent, Alibaba, and ByteDance, etc., to size. 

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  • Data Security Law, passed in early June, goes into effect on September 1. It requires private-sector data to be classified as per their importance to the interests of the state. The vaguely worded provision will make it easier for authorities to demand data they deem essential to the state and make it harder for businesses to refuse, MediaNama reported then. 
  • Personal Information Protection Law (PIPL), puts in place one of the world’s strictest data privacy laws, Wall Street Journal reported. The law resembles Europe’s robust General Data Protection Regulation (GDPR), and is set to go into effect on November 1, the report added. 
  • The Chinese government issued new rules limiting the amount of time minors (under 18) can spend on online gaming to three hours per week in an effort to combat addiction.
  • Alipay, an online payment platform by Ant Group, was asked to spin off its loans business into a separate app following a restructuring order. This was in response to the proposed regulations in 2020 that require fintech firms like Ant and Tencent to transmit credit statistics that they have gathered into either a centralised system run by the central bank or a credit-rating agency controlled by the state.
  • The Cyberspace Administration of China (CAC) ordered app stores to remove ride-hailing app Didi Chuxing citing serious violations on the collection and usage of personal data, On the other hand, WeChat had to suspend user registration for a temporary period in order to comply with the law.
  • Financial regulators banned the cryptocurrency sector by limiting banks and online payment firms from use of cryptocurrency. They also barred institutions from providing exchange services between cryptocurrencies and fiat currencies, and prohibited fund managers from investing in cryptocurrencies as assets.
  • CAC also published draft regulations for recommendation algorithms for the following types: generative or synthetic, personalised recommendation, ranking and selection, search filter, and dispatching and decision-making. It is a first-of-its-kind draft proposing sweeping regulation of algorithms that tech companies use to predict user behaviour and enhance their offerings. 

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