China targets algorithms from the likes of Tencent, ByteDance as crackdown persists
- The Cyberspace Administration of China will conduct on-site inspections of firms and ask them to submit their various services for review
- One of the greatest areas of uncertainty for investors involves Beijing’s intentions for the country’s vast social media sector
China kicked off a formal campaign to rein in the potential abuse of algorithms by internet giants from ByteDance to Tencent Holdings, taking aim at the way social media platforms serve up ads and content to hook users.
The Cyberspace Administration of China will conduct on-site inspections of firms and ask them to submit their various services for review, the internet watchdog said in a statement Friday. Large-scale websites, platforms and products with big influence will be targeted, it said, without naming any.
The campaign is aimed at implementing and enforcing sweeping rules unveiled in August governing the industry’s use of algorithms to surface content for users, which took effect last month. It is part of a broader effort that started in late 2020 to curtail the widening influence of China’s largest and richest corporations, whose platforms now control every sphere of public discourse and entertainment.
A barrage of regulations covering everything from gaming and online education to video censorship has since spooked the industry and prompted a shift in priorities to core growth versus unbridled expansion. The cyber-watchdog said in a subsequent statement it interviewed representatives from a dozen companies including Tencent, Alibaba Group Holding, Meituan and JD.com to address job cuts totalling 216,800 from July to mid-March – a prime concern for Beijing given the potentially destabilising effect on the broader economy.
The agency highlighted that the companies actually hired 295,900 people over the same period, a net increase. Yet competition for jobs in the tech industry remains fierce and employers are willing to shell out to attract or retain top-flight talent. Tencent doled out more than US$200 million apiece to two unidentified executives in 2021, even as it cut founder Pony Ma Huateng’s compensation for a year in which Beijing’s crackdown sent Tencent’s stock down by 19 per cent.
Investors, which wiped out more than US$1 trillion of Chinese tech stock value at the height of the crackdown, remain cautious this year. On Friday, Tencent was down about 1.8 per cent, while video streaming firm Bilibili was among the worst performers in Hong Kong. Meituan also weighed on the gauge, following news Sequoia Capital had reduced its stake in the food delivery giant.
One of the greatest areas of uncertainty for investors involves Beijing’s intentions for the country’s vast social media sector – an arena dominated by Tencent and ByteDance.
