China has not finished curbing the impact of local internet services on the world’s most populous market. After an increasing series of regulatory raids in recent months, the nation released draft guidelines on Friday regulating the algorithms that companies run to provide referrals to users.
In a 30-point draft guideline published on Friday, the Cyberspace Administration of China (CAC) proposed banning companies from using algorithms that “encourage addiction or high consumption” and endanger national security or disrupt public order.
The services must adhere to business ethics and fairness principles, and their algorithms must not be used to create fake accounts or create any other false impressions, according to the guidelines of the Internet Watchdog, a key leadership group chaired by the President Xi is reporting to Jinping. The watchdog said it would take public feedback on the new guidelines for a month (through Sept. 26).
The guidelines also suggest that users should be given the option to simply turn off algorithm recommendations. Algorithm providers who have the power to influence public opinion or mobilize citizens must be approved by the CAC.
Friday’s proposal comes at a time when Beijing is increasingly targeting businesses for their handling of consumer data and what monopoly positions they have taken in the country.
Earlier this year, the Beijing-backed China Consumers Association said local Internet companies “intimidated” users into purchases and promotions and undermined their privacy rights.
Beijing’s recent data security crackdown and tightening of tutoring regulations have scared investors and wiped hundreds of billions of dollars.
Friday’s guidelines appear to target ByteDance, Alibaba Group, Tencent and Didi, and other companies whose services are built on proprietary algorithms. Alibaba and Tencent stocks fell slightly on the news.
In recent years, several governments, including those in the US and India, have tried – with little to no success – to gain more clarity about how the algorithms of these large technology companies work and to put in place controls to prevent misuse.