China’s new data security laws show the days of ‘wild west’ information grabbing are over for Big Tech
- Beijing is strengthening its ability to punish companies for misusing data and tech firms in China need to adjust
- But authorities must be careful not to hurt one of the country’s most dynamic economic sectors in the process
A new business reality is looming in China’s technology sector.
As the central government builds a data regulation regime that restricts or bars companies from grabbing personal information, the days when a technology start-up – blessed by an innovative business model or a genius algorithm – could quickly build up a business empire are over.
Beijing’s decision to limit corporate power in gathering, managing and using data has come with growing recognition that data is a fundamental “production factor” along with land, labour, capital and technology. In other words, for China’s government, data is a strategic resource that cannot be the sole property of the country’s tech capitalists.
Take land for example, the market is firmly under the control of the government, which decides on supply, the way of trading and, increasingly, the sale price.
China’s data regulation will not be as rigid. But in the future, more strings will be attached for any business entity collecting information from Chinese consumers, which will translate into higher costs.
As part of the change, different layers of government are expected to be more aggressive in exerting control over data.