China is seeking to tighten rules on unfair internet competition, sending tech shares lower


August 18, 2021: -China’s market regulator issued draft rules on Tuesday to stop unfair competition on the internet, as Beijing continues its broad crackdown on the country’s technology sector.

The rules published by the State Administration for Market Regulation (SAMR) cover areas from prohibitions on the way companies can use data to stamp out fake product reviews.

Chinese listed technology stocks in Hong Kong decreased sharply on that news. Gaming giant Tencent was 3.5% lower in morning trade, while e-commerce giant Alibaba decreased 2.5%.

The latest rules of SAMR continue Beijing’s regulatory assault on China’s technology giants.

Internet platforms do not use data, algorithms, and other technical means to influence user choices or other methods to carry out traffic hijacking. This is where a company is looking to redirect a user to their website or service while they browse another;

Operators should not use data and algorithms to collect and analyze the trading information of the competitors.

It could hire third-party institutions to audit data if an operator falls foul of the rules, SAMR said.

The regulator seeks public opinion on the new rules until September 15. They have not yet come into effect.

However, SAMR’s draft rules highlighted the market regulator’s efforts to tighten the laws nearly antitrust and competition. This year, the authority promulgated antitrust guidelines for the near platform economy.

The regulator has also been taking action against China’s technology giants.

Alibaba is slapping with a $2.8 billion fine in April due to an anti-monopoly probe, and SAMR is investigating food delivery firm Meituan for “suspected monopolistic practices.”

And last month, SAMR has blocked Tencent’s plan to merge video game streaming sites Huya and DouYu on antitrust concerns.

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