The government in Beijing has passed a globally unique regulation for consumer protection on the internet
China installed a new law on Tuesday to rein in algorithms on the internet. The hitherto unique regulation covers applications that make further purchase or reading recommendations to their users based on their behaviour. In future, it will be forbidden to entice customers to excessively spend money or to make them dependent on an internet service. Software-based pricing, if it is to the detriment of consumers, will therefore also be prohibited. After all, operators must prevent fraud and unfair competition, as well as ensure that no false or illegal content is published. The apps should instead “promote positive energy”.
The law affects a wide range of companies, including internet marketplaces such as Alibaba, which has now become a mega-corporation with numerous integrated apps. Delivery service providers must also now revise their technology. The law furthermore addresses the social networks TikTok or Douyin, which are popular among young people and bombard their users with ever new content.
In addition, providers of online news must obtain a licence, they may then only publish information from sources that have been approved by the authorities. Three months ago, the government classified about 1,400 news sources as unobjectionable, writes the South China Morning Post. The newspaper belongs to the Alibaba Group and might be also affected by the changes.
The regulation, which was presented in draft form last August, comes into force on 1 March. It was jointly drafted by various authorities, including the the Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration for Market Regulation. Also involved was the Central Authority for Internet Regulation, Supervision and Monitoring. According to the South China Morning Post, this super-authority wants to combat “algorithmic discrimination” with the measures. It should become more difficult to shape public opinion or “mobilise socially” with the help of algorithms.
Large tech companies must now make the underlying technical procedure transparent and understandable. An option to reject personalised recommendations should be built into the apps. It should also be possible to delete categories into which users are placed by software. These are details such as gender, presumed age or state of health.
So far, it is largely unclear how the new provisions of the law will be put into practice and how any violations will be prosecuted. Many internet companies fear high costs in this regard. Small and medium-sized firms in particular could have difficulties programming their software to meet the requirements. But foreign corporations must also comply with the new law if they offer services in the country. The German business newspaper Handelsblatt writes that the US business platform LinkedIn wants to withdraw from China. However, the law was enacted primarily to regulate the domestic internet industry, which is becoming more and more nested. This was preceded by a Chinese data security law and a data protection law.
With the Algorithm Law, China is breaking new ground worldwide. The USA and the European Union also want to enact such regulations, but they are far less drastic. A year ago, the EU Commission presented proposals for a “Digital Services Act” and a “Digital Markets Act”. Both address tech giants like Google and Facebook, which in future will have to allow their competitors’ applications on their platforms and thus lose their function as “gatekeepers”. The companies are also supposed to make the recommendation mechanisms they use transparent and always identify advertising as such. In addition, the new laws prescribe better rights of appeal and measures against fake news. Both proposals are currently being discussed between the EU member states and the Parliament.