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China: New rules for Alibaba, JDcom and Tencent

2022-01-06T16:50:28.085Z


Distortion of competition, fake news and rising suicide rates among young people: the algorithms of the internet, social and gaming giants have long been the subject of criticism. China is now taking action - and has issued strict rules for the previously well-guarded mechanisms of corporations. In Europe too, supervision is to be tightened.


Enlarge image

Always on

: Beijing is increasing access to its Internet companies

Photo: Oscar Wong / Getty Images

The Chinese Internet companies have been through a lot in the past few months: The Chinese online retailer Alibaba, for example, reported an 81 percent decline in quarterly earnings after the government significantly tightened regulation of the Chinese Internet giants and imposed a fine in the billions on the retailer in April. The rival JDcom even posted a quarterly loss of the equivalent of $ 440 million. The gaming group Tencent, meanwhile, reported its slowest growth since 2004 in the fall.

Now the tech companies have to prepare for even harder times.

Because after the computer game time limits already imposed for young people and stricter market surveillance, the Chinese government is now devoting itself to the core of the tech companies: the algorithms.

In other words, the "secret sauce" of the Internet companies with which they classify their users and, depending on their assumed purchasing power, personal preferences and previous buying behavior, make them different offers - and encourage them to play even longer, to buy more, to read certain messages or Watch videos.

On March 1st, the new rules come into force, which noticeably limit the ability of tech giants to fuel their own businesses.

Accordingly, corporations such as Tencent, Baidu, Alibaba or the Chinese Tiktok parent company Bytedance will have to become much more transparent in the future when it comes to the use of recommendation algorithms. And the corporations are no longer allowed to send recommendations that make users "dependent" or encourage them to "spend excessive money". Instead, they are supposed to spread "positive energy" and politically desirable information, which should further strengthen the existing control and censorship by the government in Beijing over the content available on the Internet.

In addition, providers must use what is known as opt-out in the future to give their customers the option of turning off certain factors on the basis of which they sell advertising or generate recommendations.

And they must disclose the basic principles, intentions and mechanisms underlying the algorithm.

A regulatory package that is largely unique in this form and to this extent.

German companies also affected

German corporations operating in China are also affected by the new legislation, provided they make algorithm-based offers to their customers.

However, the extent here is likely to be significantly lower than in the case of the large tech companies operating in the People's Republic.

It's not the first innovation. Last year, the Chinese government passed new data protection rules that also oblige foreign companies to store all data in China and to give the government access to it under certain circumstances.

In many other countries around the world - including the USA and Europe - there is currently a struggle for more appropriate regulation in view of the effects of algorithms.

For example, EU Vice

Commissioner Margrethe Vestager

(53) presented concrete proposals for better regulation of tech companies in December 2020 with the Digital Services and Digital Markets Act.

In addition to better rights of objection for users, this is intended to oblige the platforms, among other things, to take significantly stronger measures against the spread of fake news.

In addition, the platforms should offer their users more transparency in the use of their data for advertising purposes and recommendation mechanisms.

More transparency for users: Europe and the USA are also preparing tougher regulation

When exactly the new law will also take effect in this country is still open.

After the European Council and currently the European Parliament commented on the draft law in November, a compromise has to be found in the so-called "trialogue process".

Only then can the law take effect.

But it will certainly not come close to the density of regulations of the Chinese.

In the USA, too, there are repeated attempts to offer users more transparency.

In November, for example, a non-partisan alliance introduced a new bill into Congress with the "Filter Bubble Transparency Act".

It stipulates that Internet corporations will in future have to offer their users a version of their services in which content is not determined by "obscure algorithms" based on private data.

A disclosure of how the algorithms work is - unlike in China - not intended.

At the beginning of the year, US President Joe Biden also appointed the well-known big tech critic Lina Khan to head the FTC.

A comprehensive regulatory initiative has so far been a long time coming.

mihec

Source: spiegel

All news articles on 2022-01-06

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