China: new tightening in sight in tech, the sector plunges on the stock market – archyde

The Chinese internet giants were roughed up on the Hong Kong Stock Exchange on Tuesday, e-commerce heavyweight Alibaba yielding nearly 5%, after further tightening in the digital sector.

The Chinese market regulator made public on Tuesday the main lines of a regulation, intended to fight more effectively against unfair competition on the internet.

Technology companies are specifically targeted by these rules, which supplement or clarify legislation, which is sometimes too vague in digital and e-commerce.

The text under study notably prohibits the use of algorithms or fake reviews to promote goods and services.

In the name of competition, it also makes illegal the use of technical means which prevent interoperability between competing services.

In China, for example, certain payment systems are excluded from e-commerce apps, belonging to a rival group. And video platforms are blocking content sharing to competing social networks.

The market regulator has not specified when this new regulation will come into force.

People walk past the headquarters of video game giant Tendent in Shenzhen, southern China (AFP / NOEL CELIS)

But the news caused the shares of major Chinese tech companies to unscrew in Hong Kong on Tuesday.

E-commerce champion Alibaba finished down 4.77%, while rival JD.com plunged more than 5%.

Video game giant Tencent lost 4% and competitor NetEase lost more than 5%.

The authorities have shown themselves in recent months particularly intransigent against the digital giants, for practices hitherto tolerated and widespread.

Several behemoths in the sector have been pinned down in particular in terms of personal data, competition and user rights.

Beijing has since extended its “rectification” campaign to other sectors including the very lucrative private tutoring classes and the delivery of meals.

And China will “tighten” over the next five years the regulations in large parts of its economy, the government said last week.

sbr / zif / clp /