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“[Chinese tech companies] grew quickly and became innovative because they existed in this space that the state did not regulate and did not fundamentally understand.
Now it has clearly laid down the marker and said: That era is over.”
- Adam Segal, the director of the digital and cyberspace policy program at the Council on Foreign Relations
THE STORY
Last week, the Chinese government introduced a set of new regulations which include limiting the amount of time that children under the age of 18 are allowed to spend playing online video games to just three hours – on Fridays, Saturdays, and Sundays between 8-9 p.m.
Cybersecurity regulators also released draft rules for regulating the use of recommendation algorithms. The Chinese government wants more control over how tech giants are using user data to push their services.
WHY IT'S INTERESTING
Cutting children’s gaming time was said to be aimed at China’s biggest gaming companies like Tencent and NetEase.
But despite the new regulations, major Chinese gaming stocks rallied last week: NetEase was up 6.42% while Tencent rose 1.5%. And it’s not like they’re untouchable. Only last month both companies’ shares plunged after the state media published an article which called online gaming “opium”.
But with the upcoming changes regarding algorithms, dodging a bullet may be much harder.
Here’s what the Chinese regulators propose in draft rules:
Companies will be forbidden to use algorithms that push users to become addicted or spend large amounts of money. Each service provider will be required to notify users about the algorithmic recommendation services they use. Users will have full control over algorithmic recommendations they see. They will be able to choose, revise, or delete user tags and switch off the recommendations completely.
Chinese tech giants like e-commerce behemoth Alibaba or TikTok owner Byte Dance, who heavily rely on algorithms to reach new customers and serve up content, will definitely feel the change.
But what’s more important is that controlling the algorithm recommendations will set the global precedent. The whole world will be watching and regulators in the US or EU might even get inspired.
If you want to take a shot at predicting the future of companies like Apple or Google, it’s worth keeping an eye on China’s clash with its tech giants.
DIG DEEPER
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