China to regulate the algorithms of its tech giants

In China, tech doesn’t have a free pass. On Friday, August 27, Beijing published a draft regulation that aims to strictly control the use of algorithms by digital giants, as the government takes control of the sector.

Algorithms are used by the giants of the sector to ensure their success. They are at the heart of the digital economy and serve as the brain of many applications and services on the Internet. They allow to analyze the amount of information collected on a user and to make automatic recommendations according to his habits or preferences.

Beijing is concerned about the lack of transparency of the tech giants regarding this practice. The authorities are therefore seeking in recent weeks to further regulate the algorithms. Under a new regulation, digital companies will have to allow their users to “deactivate” recommendation algorithms.

The latter “cannot be used” to “determine prices based on preferences and habits”, says the text published Friday by the Cyberspace Administration of China (CAC). This “unreasonable” practice is common in the tourism industry, where applications for booking tickets offer different prices for the same product or service depending on the degree of loyalty of a user.

A call to order
The regulation also prohibits the use of algorithmic recommendations for minors, in order to prevent any “internet addiction”. Algorithms are widely used by video entertainment platforms, such as Douyin (the Chinese version of TikTok), an application that is very popular among young Chinese.

These new guidelines are subject to comment for a month. The potential entry into force of the regulation is not specified. The Chinese authorities have been particularly intransigent in recent months against the digital giants, for practices that were tolerated and widespread until now. Several behemoths of the sector have been pinned down in terms of personal data, competition and users’ rights.

Beijing has since extended its “rectification” campaign to other sectors, including the very lucrative private tutoring and meal delivery services. China passed a major law last week to prevent abusive collection of personal data online by digital giants. There is no law limiting government data collection, however.