China’s New Big Tech Regulations Could Harm Innovation

China is clearly trying to hobble its leading global superstars. This is happening even though it has some skin in the game, so to speak, in taking some of the profits, as the government takes stakes in those same firms, reported PYMNTS.

But will the current strategy prove to be short-sighted — sabotaging tech innovation, and consumers who benefit from that innovation, in the process?

The conundrum — how much power to allow, in terms of crafting and taking advantage of new eCommerce, social media and other markets — applies to companies homegrown in China, as well as US firms that might be dissuaded from wanting to enter those markets in the first place.

Related: China Steps Up Tech Regulation & Stocks Plummet

Tencent’s comments on its recent earnings call point toward the expectation that more regulations will be in the offing. Said Martin Lau, president, “I think that the point we want to make is that number one… regulation on the internet is a global trend, and it’s not just limited to China. It’s actually happening in the US, in Europe. But China, it’s a bit ahead in terms of the execution of a more structural regulation framework … we should expect, in the future, in the near future, [that] more regulations should be coming.”

The latest salvo has been one where China’s State Administration for Market Regulation (SAMR) this week handed down that anticipated framework. As part of SAMR’s 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.” Those same firms cannot leverage their data or their algorithms to re-route traffic or influence buying decisions, according to the reports.

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