China’s tech regulator orders companies to fix anticompetitive, security issues

China’s Ministry of Industry and Information Technology, which oversees China’s telecommunication and industry policies, said Monday that its new six-month rectification program was aimed at correcting a range of industry issues, including disrupting market order, infringing on user’s rights, mishandling user data and violating other regulations.

Monday’s release didn’t specify any businesses by name. But the ministry listed several infractions that have earned some of China’s largest tech platforms regulatory blowback in the past few months.

As a result of China’s regulatory crackdown, the country’s large tech companies have come under greater scrutiny this year for practices that previously went unquestioned. One such issue raised by the tech-sector regulator is the “malicious blocking of website links" to other company sites and products, which keeps competitors locked out of major tech ecosystems and has created hard lines between rival platforms.

That habit, once a core tenet of China’s tech industry, looks to be changing under the new regulatory environment. The Wall Street Journal reported earlier this month that China’s two most powerful tech companies, Alibaba Group Holding Ltd. and Tencent Holdings Ltd., were working on opening up their services to one another’s platforms.

That could mean allowing users to utilize Tencent’s payment system on Alibaba’s e-commerce apps, or view Alibaba-sold products in Tencent’s social media apps.

Shares of Chinese tech companies declined Monday, hit by investor concerns over further regulatory action targeting the sector and other Chinese businesses. Tencent shares fell 7.7%, and Meituan dropped nearly 14%. Alibaba’s Hong Kong-listed shares declined by more than 6%.

“This announcement seems to indicate the MIIT will tackle, among other things, the interoperability and unfair competition issues," said Angela Zhang, author of “Chinese Antitrust Exceptionalism" and an associate professor of law at the University of Hong Kong. “That means that Chinese tech giants will face pressures from yet another regulator."

While the tech-sector regulator lacks some of the enforcement powers of the country’s main antitrust watchdog, it has the ability to impose low-level fines for violations and can ask firms to rectify their behavior, Ms. Zhang said.

The wave of regulatory backlash started last year with the cancellation of Ant Group’s blockbuster initial public offering, but has since ensnared other major tech companies, including e-commerce behemoth Alibaba, food delivery app Meituan, and most recently ride hailing giant Didi Global Inc.

The tech-sector regulator said it held a virtual meeting last week with members of the internet industry, adding that the next steps for participants include self-examination and rectification, gathering information and strengthening legal enforcement and accountability.

The action is “intended to guide the formation of an open, interoperable, safe and orderly market environment, and promote the development of a standardized, healthy and high-quality industry," Monday’s announcement said.

This story has been published from a wire agency feed without modifications to the text