China’s Big Tech crackdown: number of apps falls 40 per cent over 3 years amid new data laws and clean-up campaigns

Chinese app stores had just 2.78 million apps in October, down from 4.52 million in December 2018
The biggest declines came this year, as Beijing clamped down on Big Tech platforms and introduced new data and privacy laws

Apps

Jane Zhang

Published: 7:00am, 21 Dec 2021

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Chinese smartphone users have seen the number of apps available to them fall by 38.5 per cent over the past three years, with the most precipitous drop coming this year amid the country’s crackdowns on Big Tech platforms and internet content, showing how China’s fortified market structure has taken a toll on the digital sector.

The total number of apps in Chinese app stores fell to just 2.78 million by October of this year, down from 4.52 million at the end of 2018, according to a South China Morning Post review of data compiled from the Ministry of Industry and Information Technology (MIIT).

The fall in the total number of apps is partly a sign of China’s maturing app market. WeChat, Tencent Holdings’ social network with 1.2 billion monthly active users globally, has dominated social media in China for years.

Leon Sun Qiyuan, an analyst at investment research firm EqualOcean, said China’s online service market of 1 billion users is no longer a greenfield up for grabs. “China’s internet industry has developed for so many years, and the days of tremendous growth are over,” he said.

However, the change also reflects a more difficult regulatory environment, in which the app decline accelerated last spring. While the market for apps has matured globally, Google Play and Apple’s App Store have seen the number of apps they offer globally grow during the same period. While Google removed about a million apps in the middle of 2018 due to a change in company policy, the number available grew 7.6 per cent to nearly 2.8 million from December 2018 to September of this year, according to data compiled from Google by Statista.

In China, the number of apps available fell by about 850,000 over the course of 2019, when Beijing initiated a 12-month campaign in January cracking down on the irregular collection of personal information. The campaign – jointly conducted by the MIIT, Cyberspace Administration of China (CAC), Ministry of Public Security and State Administration for Market Regulation – was the government’s first major review of apps.

The decline the following year was less drastic, falling by 220,000. But from December that year through October this year, the market saw a net loss of another 670,000 apps. This year has been marked by a barrage of news about app developers being told to “rectify” problems such as data collection practices.

In July, the MIIT announced a six-month internet clean-up campaign. A total of 220,000 apps were removed that month, for a net loss of 110,000, or 3.6 per cent less than the previous month.

As in many other places, gaming is the biggest group of apps in China, where one out of every four apps is a video game. Unlike apps fulfilling daily needs like food delivery, online shopping and ride hailing – which all have entrenched players – gaming remains relatively competitive with new apps routinely vying for players’ attention.

Still, the number of gaming apps decreased in the country to 679,000 in October 2021, down from 909,000 in December 2019. By comparison, Apple saw the number of games in its US App Store grow from less than 820,000 in December 2018 to more than a million as of this month, according to data compiled by Pocket Gamer.

Chinese regulators have not approved any new online games for sale in the country since July. In August, the National Press and Publication Administration, China’s top watchdog for gaming and other forms of online media, issued a rule limiting the gaming time for players under the age of 18 to between 8pm and 9pm only on Fridays, Saturdays, Sundays and statutory holidays, marking the country’s most stringent measure yet to tackle video gaming addiction among young people.

“It has restrained the proliferation of game apps to a certain extent,” said Taylor Lam, the technology, media and telecoms industry leader at Deloitte China.

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China’s focus on regulating apps this year has primarily centred around the collection of personal data without consent, requiring excessive permissions on user devices, and sharing data with third parties without permission, according to a white paper published in November by The China Academy of Information and Communications Technology.

The increasing scrutiny of apps is in line with the country’s moves to tighten laws and regulations governing data and personal information. The country’s Data Security Law and Personal Information Protection Law went into effect in September and November, respectively.

Chinese regulators are taking an increasingly tough stance with app developers. The MIIT regularly names and shames apps over data irregularities. Last month, it told Tencent to suspend app upgrades and releases without prior approval. Tencent received a green light to upgrade nine apps last week.

Other ministerial bodies are able to shut down apps, as well. The CAC, for instance, ordered app stores to remove dozens of apps developed by Didi Chuxing two weeks after the company “forced its way” to an initial public offering in New York, against warnings from the regulator.

At the same time, China’s tightened supervision of apps is just one factor affecting the market. For China’s Big Tech that have established leading market positions, many have turned their key apps into platforms that host smaller, internal apps that do not require separate downloads.

The Didi ride-hailing app seen on a smartphone in Beijing on July 5. Photo: Bloomberg

WeChat, for instance, was hosting 3.8 million so-called mini programs by the end of 2020, according to a report from research firm Alading. Ant Group’s Alipay also had more than 3 million mini programs by May 2021. Ant is an affiliate of Alibaba Group Holding, owner of the Post.

“Mini programs have great cost advantages as the functions are simpler and they have better compatibility as only one version … is needed, and there is no need to develop an Android version and an iOS version,” EqualOcean’s Sun said.

China is still adding new apps in bulk, but newly added apps do not make up for the number removed. In October, Chinese app stores added 110,000 new apps, up from 60,000 in September and 30,000 in August. However, 130,000 apps were removed in October, 140,000 in September and 120,000 in August.

The number of apps available in China may continue to drop, albeit at a slower pace, until new application scenarios brought by technologies such as 5G and the metaverse open new opportunities, according to analysts.

“With the development of technologies including 5G and artificial intelligence … apps in the future will not be limited to just one type of terminal [such as mobile phones],” said Lam. “The application scenarios will be more diversified as well.”