China isn't done curbing the power local internet services have in the largest market. The nation released draft guidelines Friday on how to regulate the algorithm firms that make recommendations to users, following a series of regulatory crackdowns.
Cyberspace Administration of China (CAC), published a draft of guidelines with 30 points Friday. It proposed that companies be prohibited from using algorithms that encourage high consumption or addiction, endanger national security, or disrupt public order.
According to the guidelines of the internet watchdog, the services must adhere to business ethics and principles that promote fairness. Their algorithms cannot be used to create false impressions or create fake user accounts. The new guidelines will be available for public feedback for one month (until September 26), according to the watchdog.
These guidelines recommend that users have the ability to turn off algorithm recommendations. The CAC must approve algorithm providers with the potential to mobilize citizens or influence public opinion.
Friday's proposal comes as Beijing is increasing targeting companies because of how they handle consumer data and for their monopolistic position in the country.
China Consumers Association, a Beijing-backed organization, stated earlier this year that local internet companies were attempting to intimidate users into purchasing and promoting their products and undermining privacy rights.
Beijing's recent data security crackdown and tightening regulations regarding tutor services have scared off investors and wiped out hundreds of billions of USD.
Friday's guidelines seem to target ByteDance and Tencent Group, Tencent and Didi, as well as other companies whose services are built upon proprietary algorithms. Tencent and Alibaba shares fell slightly upon the news.
Many governments, including the U.S. and India, have tried unsuccessfully in recent years to gain better understanding of how big tech companies' algorithms work and to put in place checks to prevent misuse.