Chinese Tech Under Siege From Regulatory Pressure

China’s relentless regulatory campaign continues to ramp up the pressure on big tech and media industries.

As per a Reuters report, China’s market regulator proposed new rules that would increase oversights in online advertising, also stipulating that adverts should not affect normal internet use or mislead users.

This serves as another instance of Chinese authorities tightening the grip around the neck of domestic enterprise.

Already search giant Baidu Inc and tech titan game publisher Tencent Holdings warned during recent quarterly results that the short-term outlook for adverting sales looked weak.

While the pandemic has had a role to play in the negative forecast, additional complications that have stemmed from China’s controlling crackdowns have certainly compound their woes.

The State Administration for Market Regulation has said internet advertising must “Meet the requirements for the establishment of socialist spiritual civilization and the promotion of excellent traditional culture of the Chinese nation.”

In line with this, the proposed rules call for bans on advertisements aimed at minors promoting medical treatments, cosmetics and online games “that are not conducive to the physical and mental health of minors.”

As per the regulator’s website, the proposed new rules are open for public comment until the 25^th of December. However, it would be imprudent to believe that anything or anyone could persuade the Chinese Communist Party (CCP) to steer off course from their authoritarian vision.

After the news shares in Tencent fell 0.5 per cent which is only a drop in the ocean when measured up against their 38 per cent fall since February. A brutal drop which has largely been attributed to CCP interference.

These new changes follow moves made in September whereby China’s cyberspace regulator published draft rules dictating how companies can use algorithmic recommendations to mitigate instances of ‘unfair competition.’

A victim of this, multi-national e-commerce conglomerate Alibaba Group Holdings Ltd, who received a whopping AUD $3.919 billion fine for engaging in anti-competitive behaviour.

The damage caused from these events are more than cosmetic, compliance with the regime is being stringently enforced.

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