Chinese Watchdogs Tighten Tech Grip With New SAMR Rules

New draft rules were handed down from China’s State Administration for Market Regulation (SAMR) on Tuesday (Aug. 17) that tighten the state’s regulatory grip on how technology platforms conduct business, according to Reuters and other news outlets.

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The updated frame of draft regulations prohibits unfair competition and controls how a company can make use of its customer data. News of the latest SAMR regulations sent shares of Chinese stocks listed in Hong Kong tumbling, according to reports.

“The proposed regulations’ specificity evidences a clear set of priorities in setting the ‘rules of engagement’ for online competition,” said Michael Norris, research and strategy manager at Shanghai-based consultancy AgencyChina, according to Reuters.

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Beijing has been stepping up control over digital companies that primarily conduct business across the internet. At issue, in particular, has been unfair competition, the mishandling of consumers’ information, and fake reviews. The regulator is seeking public opinion on the new rules until Sept. 15. 

The continuing crackdown has led to beefy fines levied against big tech firms, canceled mergers, and halted public offerings. In April, for instance, Alibaba was hit with a $2.8 billion antitrust penalty. Food delivery platform Meituan is under investigation for alleged anticompetitive behavior. Tencent’s merger with Huya and DouYu was stopped, and Ant Group’s initial public offering was blocked.

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“If promulgated, the regulations will likely increase compliance burdens for transaction platforms, including e-commerce marketplaces and shoppable short video apps,” Norris added, per Reuters. 

According to the new draft rules, online platforms “must not implement or assist in the implementation of unfair competition on the Internet, disrupt the order of market competition, affect fair transactions in the market.”

SAMR also stated in the regulation draft that businesses can’t tap data or algorithms in order to reroute online traffic, influence buyers’ decisions, or obtain access to rivals’ data.