Timeline: China’s tech crackdown 2021
Good day.
"Crackdown" is definitely the buzzword of the year for China's tech industry. After more than a decade of rapid growth, tech companies of all likes, social, education, gaming, you name it, began to face strict regulations from the central government, challenging the way they had paved for profit and prosperity.
When looking back, 2021 could be the starting point of Beijing showing their understanding of technology, such as how private sectors can use it and what role the user should play in the process.
Although it's still early to see the outcome of the clampdown, which shows no hints to stop any time soon, it's still worthy of having a review on how everything started. So let's rewind the clock...
February 2"Qinglang" Spring Festival Special Actions
Type: Rectification
Authority: Cyberspace Administration of China (CAC)
CAC started this campaign to "rectify the disorder such as pornographic, and vulgar information on the internet that affected people's online experience".
More than 2.08 million pieces of illegal information have been cleared; more than 7200 illegal live streamers have been banned; more than 2300 websites and apps have been shut down.
March 22 Provisions on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications
Type: Legislation
Authority: CAC
Under the Provisions, apps are prohibited from refusing users to use the apps' essential functions if users do not provide additional personal information beyond necessary personal information.
The Provisions specify 39 common types of apps and the scope of necessary personal information these apps may collect and use, depending on the specific type of app.
April 10, Alibaba fined 18 billion yuan for platform exclusivity.
Type: Market regulation
Authority: State Administration for Market Regulation (SAMR)
The e-commerce giant was found to have practiced a "choose 1 from 2", or platform exclusivity policy towards sellers, essentially forcing them to either open shops on Alibaba's sites alone or be banned on all of the company's platforms. But there was more than that. The unfair competition methods also include incentives such as giving subsidies and user/traffic bonuses to obedient sellers.
The fine was 18.23 billion yuan, which is the largest publicly-known anti-monopoly fine in China to date that equals roughly 4% of the company's 455.7 billion yuan domestic revenue in 2019.
April 15 SAMR to step up inspection in major anti-monopoly cases
Market regulation
SAMR
SAMR granted one month for all internet platforms to inspect and rectify any potential monopoly behaviors.
April 23Measures for the Administration of Live Streaming Marketing
Legislation
CAC, Ministry of Public Security, Ministry of Commerce, Ministry of Culture and Tourism, State Taxation Administration, SAMR, National Radio, and Television Administration
The live streaming e-commerce industry was estimated to be nearly worth 971 billion yuan in 2020, more than double the scale in 2019.
The measures were released amid the increase in misbehavior of some live streamers, false advertisements, and counterfeit goods in the live streaming sales industry.
Under the new measures, live streamers need to provide their real names as well as tax information. In addition, live streaming platforms have to monitor live streaming content and immediately handle any illegal and harmful information.
Legislation
CAC, SAMR, MPS
April 26 Food delivery giant Meituan under antitrust investigation
Market regulation
SAMR
The State Administration for Market Regulation (SAMR) said in a statement on Monday that its investigation focused on the company's practice of forcing suppliers to exclusively use its platform, which is also known as "choose 1 from 2".
According to Wall Street Journal and people familiar with the matter, the fine will be about $1 billion for allegedly abusing its dominant market position.
May 11SAMR issued a notice to strengthen anti-monopoly enforcement in critical areas
Market regulation
SAMR
May 12Several Provisions on the Administration of Automobile Data Security (Trial)
Legislation
CAC
The Draft is the first time a Chinese ministerial department has issued data security management rules for the automotive industry. The draft rules strictly on data collection by car companies, stipulating that operators need to gain permission from users before collecting personal information, and the data should also be stored safely to allow car owners to access it conveniently.
June 10 Data Security Law of the People "s the Republic of Chinapassed.
Legislation
National People's Congress of the People's Republic of China
It is the first comprehensive data security legislation in China. The Data Security Law aims to regulate a wide range of issues about the collection, storage, processing, use, provision, transaction, and publication of any data and becomes a pivotal supplement to China's Cybersecurity Law which has been effective since June 1, 2017. The Data Security Law is expected to impact data processing activities and business operations in China profoundly.
June 15"Qinglang" Fan Circle Culture Special Actions
Rectification
CAC
The actions aimed to end the "chaos" involving these online fan clubs, with millions of passionate followers supporting a celebrity such as a film star.
July 2 Didi took a cybersecurity review after going public in the US.
Cybersecurity inspection
CAC
CAC launched a new investigation into Didi to protect national security and the public interest just two days after Didi began trading on the New York Stock Exchange. During the investigation, Didi was not allowed to register new users.
July 5, CAC initiated a review into more US-listed tech companies.
Cybersecurity inspection
CAC
After alleging the Didi app had a "serious violation" of Cybersecurity Law and delisting it from all app stores, Chinese cyber regulators have opened a security review into three more apps, including Boss Zhipin, Yunmanman, and Huochebang. All apps are owned by companies that recently began trading in the US stock market.
July 10 China revises Cybersecurity Review Measures, requiring security reviews for all overseas IPOs
Cybersecurity inspection
CAC
The revised Measures now add an article that explicitly requests companies to apply for a review with the cybersecurity review office before filing an IPO request in foreign stock markets.
July 10 Douyu-Huya merger blocked.
Market regulation
SAMR
In accordance with the Anti-Monopoly Law and the Interim Provisions on the Examination of Concentrations of Undertakers, the regulator decided to block the merger led by Tencent.
If the merger proceeded, it would further strengthen Tencent's dominant position in the game live streaming sector, which is not conducive to fair market competition and may reduce consumer interests, said the top market regulator.
As China's most popular video game-streaming sites, Huya and Douyu are ranked number one and number two in the market.
July 13 Provisions on Administration of Security Vulnerability of Network Products
Legislation
Ministry of Industry and Information Technology (MIIT), CAC, Ministry of Public Security
The Provisions have established rules for the detection, collection, publication, and other activities in relation to the security vulnerability of network products.
July 21 "Qinglang "Summer Vacation Special Rectification for Schoolchildren
Rectification
CAC
The particular rectification actions focused on solving 7 types of harmful online content that could damage minors' physical and mental health, including live-streaming, online courses, cartoons, forums, fan circles, cyberbullying, and the ineffective implantation of the anti-addiction system and "teenager mode."
July 24 Tencent Music Entertainment to give up exclusive label rights after a fine of 500,000 yuan
Market regulation
SAMR
SAMR stated that TME sat at over 80% market share after merging with China Music Corporation in 2016, gaining market dominance with the potential of securing more exclusive label licensing deals or excluding competitors by paying a high premium for the licenses.
The regulator ordered that Tencent must not sign any more exclusive label rights agreements henceforth and void all existing agreements within 30 days. However, deals with individual artists who sign directly with TME will be partially excluded from the order. SAMR did order, however, that exclusive partnerships with these individual artists must not extend beyond 3 years, while exclusive deals regarding new songs must not extend beyond 30 days.
July 26 SAMR required food delivery platforms to guarantee drivers' benefits.
Market regulation
SAMR
SAMR issued a guideline ordering food delivery platforms to guarantee riders' income above minimum pay, insurance, and relaxation in deadlines for deliveries.
Chinese food delivery platforms, including Meituan and Alibaba's Ele.me, have long been under fire on social media for their harsh treatment of delivery workers. Most of the drivers are not covered by fundamental social and medical insurance. They have to bear the unreasonable quotas assigned by the platform and highly tight delivery timelines set by algorithms.
August 17 SAMR to ban unfair competition in the internet sector
Market regulation
SAMR
According to a document published on the website of the SAMR, business operators should not use data, algorithms, or other technical information or means to influence users' choices, hijack traffic or disrupt the operations of website products and services provided by other business operators.
August 17 Rules on the Security Protection of Critical Information Infrastructure
Legislation
MIIT, CAC, MPS
Experts noted that the new regulations showed China's efforts to strike a balance between data usage and security, which is necessary as the US is raising more data submission requirements for Chinese companies seeking US IPOs.
The regulations, which will be effective from September 1, stated that China would take measures to monitor, defend and cope with cybersecurity risks and threats both at home and abroad, protect the country's critical information infrastructure from being attacked, invaded, disrupted, and damaged, and punish criminal activities.
August 20 Personal Information Protection Law
Legislation
National People's Congress
As one of the most aggressive personal information protection laws, the People's Republic of China Personal Information Protection Law categorizes "personal information" as identified and/or identifiable information about natural persons, whether digital or physical. It becomes clear that the law's primary focus is personal data.
The law also adds several clear-cut protections to users and also explicitly targets algorithms.
August 27 Regulations on Algorithm Recommendation Management of Information Services
Legislation
CAC
The regulations are meant to cover "algorithmic recommendation technology" to provide information services within China's mainland. Violations could result in fines ranging from 5,000 to 30,000 yuan.
August 27 "Qinglang "Special Rectification on Apps' Pop-up and Push Notification
Rectification
CAC
This rectification focused on excessive push notifications and in-app pop-up windows. The long-existing problems are highlighted in 5 aspects like notifying illegal rumors and unverified social incidents, the abusive use of algorithmic recommendations, etc.
August 30 Notice of Further Preventing Minors from Indulging in Online Games
Legislation
National Press and Publication Administration
The Notice required that users under the age of 18 would only be able to play games from 20:00 to 21:00 every day on Friday, Saturday, Sunday, and holidays. That's a change from the previous limit of 1.5 hours of online gameplay on most days.
Gaming companies are not allowed to provide minors with online game services in any form outside those hours and must have a real name verification system in place to ensure the new rules are enforced.
That's so much for now, but we will surely see more in the future. So stay tuned with us and see you next week!