China is poised to tighten even more control over the digital giants

China is poised to tighten even more control over the digital giants

New draft rules against unfair online competition. Digital laws are multiplying, in a plan that aims to restore centrality to the party and favor "heavy" technology

Digital China (Getty Images) China is preparing a new crackdown in the digital market. On August 17, the state administration for market regulation (Samr), the antitrust authority of Beijing, released the draft of a new regulation to counter the dominance and competition of large online companies. A document that made the stocks of the Dragon technology giants tremble on the stock market, starting with two already in the crosshairs of the Samr offices: Alibaba, the ecommerce giant, and Tencent, whose activities range from the Wechat super app to video games.

The draft of the regulation, disclosed for a public scrutiny that will close on September 15, provides for a series of squeezes on the operation of the platforms. Among these, for example, the ban on hiding negative reviews, promoting positive ones to protect one's image even with cash incentives (red envelopes, such as those traditionally used for gifts on the occasion of the Lunar New Year). Or the blocking of the practice of diverting user traffic to its sites. Or again: the stop to the use of data to influence consumer choices or to analyze the activity of the competition.

If approved, the package will be added to two other pieces of Beijing's plan to put stakes in the development of the digital economy: the law on data security, adopted on 10 June and in force since 1 September , and that on the protection of personal information, which is partly inspired by the European general regulation (GDPR), which has been a forerunner on the issue. In the latest issue of Eurobiz, the journal of the Union of European Chambers of Commerce in China, two lawyers from the law firm Dla Piper prepare companies for the new Chinese law on personal data, which has its pillar in informed consent, replicating some passages of verification already provided for by the Gdpr. An ad hoc regulation for the safety of critical infrastructures is also looming on the horizon, a hot topic in the West as well.

Fines and discipline

Beijing's strategy to dictate the law in the rampant sector of digital is moving on both tracks. On the one hand, the hunt for big fish. Alibaba's financial arm, Ant Financial, was the first multinational to pay the price, with the sudden stop of its $ 37 billion listing. At the beginning of July it was the turn of Didi Chuxing, the queen app for booking car rides, expelled from the marketplaces after a 4.4 billion debut on Wall Street on charges of problems in the management of personal data and, subsequently, subject to a cybersecurity investigation. Tencent was fined for anti-competitive practices. At the end of July, the authorities' focus shifted to some companies that provide online education platforms. The latest to risk a billionaire fine is Meituan, the giant of home delivery, which together with Eleme must guarantee better conditions for its delivery men.

In parallel, Beijing is churning out laws in flurry to adjust the business route tech. As noted by the Mercator institute for China studies (Merics), a German study center, a department was established in June to oversee private training companies. About a month before the tile on education technology companies. And a few weeks later, a draft was developed that regulates the security of those companies that hold the data of at least one million people.

A new agenda

According to Merics, management it is clear. The Communist Party of China, which has reached its 100th anniversary, aims to free itself "from economic growth as the main source of its legitimacy and, on the contrary, to focus on campaigning against social discontent". Furthermore, the observatory notes, "it wants to consolidate its control over private sector actors, making sure that they serve the political agenda of the party rather than their economic interests". A useful move for President Xi Jinping ahead of Congress in 2022. According to the Trivium China study center, the data economy will account for 55% of the Dragon's gross domestic product by 2025.

However the maneuver it is more complex than it appears on the surface. On the one hand, Beijing, which thanks to the unbridled gallop of its technological giants has found itself competing on an equal footing with the United States, has found itself under the same problems that Washington and Brussels are also facing. Issues of privacy, antitrust, the overwhelming power of platforms, new rights to be recognized are on the agenda on institutional tables in the United States and Europe. On the e-commerce front, for example, the Union is also fighting a similar battle.

Not even China, in short, is unscathed and has responded in its own way. With thunderous blows, like the stop at Ant, or with more subtle maneuvers. Such as the news, first reported by The Information, of the acquisition by a state-controlled company, WangTouZhongWen, of 1% of Beijing Bytedance Technology, the company behind Tiktok and its Chinese counterpart, Douyin. This quota will be enough for the government to appoint a trusted person on the board of the group, having a voice, in this way, on operations in the motherland (and not, due to the complex corporate structure, abroad via Tiktok).

According to The Economist, in addition to wanting to regulate markets, working conditions, user rights and opportunities for small and medium-sized enterprises, the Chinese squeeze also seems to respond to a government interest in heavier technology. In short, favoring artificial intelligence, quantum computing, 6G, space, cloud and chips, to consolidate the autarchy outlined in the Made in China 2025 plan and anticipate international competition, in spite of social media and online shopping. Finally, according to a Bloomberg Businessweek editorial, the tech campaign is a message to investors: these are our rules of the game. Now it will be necessary to see how much they are willing to accept them.

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Alibaba China Cybersecurity Ecommerce Europe Fintech Gdpr Privacy Security United States telecommunications globalData.fldTopic = "Alibaba, China, Cybersecurity, Ecommerce, Europe, Fintech, Gdpr, Privacy, Security, United States, telecommunications "

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