China rolls out new regulation to rein in algorithms used on apps as Beijing continues to clip wings of Big Tech firms
- The new regulation, which was drawn up by four government agencies, will take effect on March 1
- Algorithms, which leverage artificial intelligence and big data generated by app users, have helped shape trends and online discussions in China
“Tech companies that use personalised recommendation mechanisms, such as those operating food delivery, customised content distribution and e-commerce platforms will experience the most impact from this new regulation,” said Ding Mengdan, a lawyer at Beijing Yingke (Hangzhou) law firm.
While algorithm technology has helped promote economic development and broader internet use across China, it has also caused problems, such as using big data analysis to price products to the disadvantage of consumers
The new regulation, according to a statement from the CAC on Tuesday, seeks to address “algorithmic discrimination”, which has led to differentiated pricing of products and services. Certain internet platforms have been charging consumers extra fees based on data about these users’ spending habits.
The algorithm regulation is expected to help authorities clamp down on information recommendations, which have the potential of “shaping public opinion” or “social mobilisation”, according to the CAC.
The new regulation directs algorithm recommendation service providers to “protect the interests of elderly people”. In particular, these platform operators must monitor, identify and provide information related to telecommunications network fraud for the benefit of the elderly.
With the SAMR’s involvement, the new regulation also provides clauses related to antitrust and unfair competition requirements.
“Tightening regulation [on algorithms] means the disappearance of grey areas and the increase of operating costs [for platform operators],” said Wang Qiongfei, lawyer at Hangzhou-based Kinding Law Firm. “Some small and medium-sized internet companies may face difficulties in terms of development, a factor that affects their survival [in the industry].”