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Regulations in 2022 get tougher for Chinese tech companies

China’s regulator asks tech companies not to force users to download apps

China’s information technology regulator has asked technology companies to stop forcing users to download applications from their websites.

The suggestion could cut into the profits of major internet companies, as they could see the number of application and data users decline. Chinese Internet companies use their web applications to attract users to mobile applications. This allows them to collect information and promote their products more easily, especially since browsers have started to apply stricter countermeasures to protect users’ privacy.

Chinese technology companies such as Baidu, Weibo and Zhihu often ask users to download their applications when they visit the mobile version of their services.

Global service providers such as Reddit, Twitter and Facebook have been more focused on integrating app-like features into their sites than Chinese social networking companies. This makes the web experience more enjoyable.

Chinese user’s complaint about forced app installation

After receiving a complaint from the public, regulators demanded that they do so. On 11 February, a user complained that technology companies were making it difficult to access their mobile websites to download applications. This is according to a complaint posted on the bulletin board of the state-run media People’s Daily. The board allows users to submit suggestions to Chinese officials. China’s Ministry of Industry and Information Technology, the administration responsible for China’s computer industry, responded to the complaint and promised to conduct a thorough investigation into the forced installation of applications.

MIIT asked service providers to remove the requirement for users to download applications without their consent and to provide a prominent option to cancel downloaded files.

MIIT also asked service providers to improve the user experience of the mobile web by avoiding folded web pages, pop-up windows encouraging application downloads and frequent alerts.

Zhihu and Sohu had removed their app installation walls at the time of publication. Baidu Tieba requires users to download apps in order to view full threads.

China’s 2022 regulatory plans for technology companies and the platform economy

A new government document shows China’s regulatory plans for technology companies by 2022. It targets antitrust, data security, algorithm security, fintech regulation, gig worker rights and other areas. Monitoring compliance and risk exposure is important for companies operating in this area or those whose business depends on digital platforms. Authorities are constantly developing sector-specific regulatory guidelines.

On 19 January 2021, nine Chinese commissions and ministries jointly issued notices to promote the standardised, sound and sustainable development of the platform economy.

These Opinions were addressed to all local governments and reaffirm Beijing’s commitment to regulate monopolies. They promise increased supervision of advertising, tax reporting, and protection of labour rights in the online platform sector.

The rationale for technology regulation

The platform economy in China has expanded rapidly in recent years. China’s technology giants, Tencent and Alibaba, are extending their influence over all aspects of Chinese life. This includes online shopping, payments, chat, ride-sharing, food delivery, and even online shopping.

After years of tolerating tech companies abusing their monopoly privileges, massively collecting and abusing personal information, and recklessly moving capital into unregulated fintech markets, Chinese authorities last year introduced a flood of laws and regulations targeting various aspects of the sector.

Beijing has made it clear that it will update its laws and regulatory system to combat corporate monopolies, protect consumer rights, ensure data privacy and reduce financial risks. Policymakers want to make it easier for new technology companies to start up by regulating China’s internet giants. Senior leaders want internet companies to engage in “hard tech” R&D, in order to contribute to China’s strategic goals.

How China plans to regulate its technology industry in 2022

Fighting monopolies and unfair competition

China will continue to revise the anti-monopoly law and formulate rules to prevent unfair competition online. The notices state that China will also investigate monopoly agreements and abuse of market dominance.

Algorithm and data security

China will create the Data Security Law and the Personal Information Protection Law, refine data processing rules for platform companies, establish a supervision system with “graduated class + negative list” for cross-border data flows, and study an algorithm security system to protect Internet information services.

Financial services and investment

China will restrict the financial activities of platform companies to stop the “unbridled expansion” of capital.

It can be concluded that the Chinese government will continue to reduce market concentration, penalise personal data violations and abuses, bring fintech companies under financial regulation, push platform companies to protect the rights and labour interests of gig workers and enforce data protection laws.

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