China Unveils New Rules To Govern The Technology Sector

China has moved to further tighten control of its technology sector, publishing detailed rules aimed at cracking down on unfair competition and companies' handling of personal data.

Beijing has been tightening its grip on internet platforms in recent months, citing the risk of abusing market power to stifle competition, misuse consumers' information and violate consumer rights.

Regulators have issued hefty fines against various companies, including e-commerce giant Alibaba and social media company Tencent Holdings, as part of a widening crackdown and vowed to draft new laws around technology innovation and monopolies.

On Tuesday (August 17), China’s State Administration for Market Regulation issued a set of draft regulations banning unfair competition and restricting the use of user data.

Shares in Hong Kong-listed internet stocks slid across the board after the rules were published. Video platform Bilibili fell 7.4%, while Tencent and Alibaba (NYSE:BABA) dropped 4.1% and 4.2% respectively.

Going forward, internet operators "must not implement or assist in the implementation of unfair competition on the Internet, disrupt the order of market competition, affect fair transactions in the market," the State Administration for Market Regulation wrote in its draft rules.

Specifically, the regulator stated, business operators should not use data or algorithms to hijack traffic or influence users' choices. They may also not use technical means to illegally capture or use other business operators’ data.

Companies would also be barred from fabricating or spreading misleading information to damage the reputation of competitors and need to stop marketing practices such as fake reviews and coupons or provide cash incentives to entice positive ratings.

Soon after the draft technology rules were published, China's cabinet announced it would also implement regulations aimed at protecting critical information starting on September 1.

The Chinese government has also recently taken ownership stakes in domestic social media giants ByteDance and Weibo, according to the latest corporate filings.