The Chinese central government has launched a far-reaching six month crackdown on China’s massive online economy, in the wake of aggressive action directed at leading tech companies Ant Group and DiDi Chuxing.
The Ministry of Industry and Information Technology (MIIT) announced on 26 July that it had “decided to undertake a specialist rectification campaign targeting the Internet sector, on the foundation of previous specialist rectification of apps.”
According to MIIT the six-month rectification campaign officially kicked off on 23 July after a teleconference was held with participating officials.
MIIT said that it would “further clear out hotspot and difficult problems of the Internet sector that have attracted a high level of social attention, exert broad influence, and have triggered a strong public response, with the goal of guiding the formation of an open, connected, secure and orderly market environment.”
The campaign will focus on eight problems across four areas, including:
- Disruptions to market order. Malicious blocking of URL links and disruption of the products and services of other enterprises, including restrictions on regular link access to other websites without appropriate reason, and the implementation of discriminatory blocking measures.
- Infringement of user rights and interests. Software launching pop-up windows to defraud or mislead users, as well as mandatory provision of personalised services, including pop-ups that are redirect links, or the inclusion of fake closure buttons.
- Threats to data security. Failure of enterprises to adopt necessary management and technological measures when collecting, transmitting, storing or externally providing data, including failure to encrypt sensitive information during data transmissions, and failure to elicit the consent of users when providing data to third parties.
- Breaches of resource and qualification administrative provisions. “Black broadband” and failure to perform website registration procedures, including the transfer leasing or usage of illicit online link resources, and failure to promptly update registration information.
On 28 July MIIT took the further step of ordering that 14 Chinese apps, including Tencent Mobile’s “QQ Reader,” complete required rectification measures prior to 3 August, or else be subject to “disposal work” by the authority.
The move comes just after Chinese authorities launched an investigation into leading ride-share platform DiDi Chuxing on 16 July, as well as ordered the removal of its apps from online sale at the beginning of the month.
The investigation and app removals came at an extremely inopportune period for DiDi, given that it listed on the New York Stock Exchange on 30 June, raising USD$4.4 billion based on a valuation of almost $70 billion.
The Chinese government has previously sought to bring other Internet giants in the country to heel, slapping e-commerce giant Alibaba with a massive $2.78 billion fine in April for anti-trust breaches, as well as scuppering the mammoth listing of its fintech affiliate Ant Group on the Hong Kong and Shanghai bourses just prior to launch in November last year.
