Draft rules prohibit unfair competition; Tencent, Alibaba slide

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China’s national flag

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GUANGZHOU, China – China’s market regulator on Tuesday released draft rules aimed at halting unfair competition on the internet as Beijing continues to crack down on the country’s tech sector.

The rules published by the State Administration for Market Regulation (SAMR) cover a broad spectrum, from prohibiting the use of data by companies to eradicating fake product reviews.

Chinese listed technology stocks in Hong Kong fell sharply on the news. Gaming giant Tencent was down 3.5% in late morning trading, while e-commerce giant Alibaba was down 2.5%.

The latest rules from SAMR continue Beijing’s regulatory attack on China’s tech giants.

Here are some of the other important rules:

  • Operators should not provide false data such as the number of clicks on content;
  • Operators shouldn’t hide negative reviews and only promote positive reviews;
  • Internet platforms should not use data, algorithms and other technical means to influence the choice of users, or use other methods to carry out so-called traffic hijacking. This is where a company is trying to redirect a user to their own website or service while browsing another.
  • Operators should not use data and algorithms to collect and analyze trade information from competitors.

SAMR said it could hire third-party institutions to review data if an operator breaks the rules.