China Plans Control of Tech Algorithms U.S. Can Only Dream Of

Chinese regulators are seeking to implement far-reaching rules about the algorithms technology companies use to recommend videos and other content, claiming authority over internet services that governments like the U.S. have struggled to regulate.

The Cyberspace Administration of China unveiled a 30-point draft proposal for “algorithm recommendation management regulations” that would directly affect companies including ByteDance Ltd., Tencent Holdings Ltd. and Kuaishou Technology. The rules would forbid practices that “encourage addiction or high consumption” as well as any activities that endanger national security or disrupt social and economic order.

Tech industry algorithms have been at the heart of political controversies around the world. Facebook Inc. and Google have been accused of serving up news stories and videos that have exacerbated political polarization and fueled violence. In U.S. Congressional hearings in March, the companies were accused of using their platforms to hook kids on services like YouTube and Instagram.

While the U.S. government has had limited success in forcing changes, Beijing’s regulators have substantial power. The Chinese government has implemented a series of crackdowns this year against monopolistic practices and unfair competition in the technology industry. The CAC is seeking public comment on the draft for 30 days and didn’t specify when it planned implementation. 

It’s not clear how the agency will implement the proposals or which companies would be affected. The proposed rules could impact companies like Alibaba Group Holding Ltd., which uses its technology to recommend products to shoppers, as well as foreign companies like Apple Inc., which steers users to certain products in its App Store.

Here are some of the key proposed regulations.

  • Companies must disclose the basic principles of any algorithm recommendation service, explaining the purpose and mechanisms for recommendations in a “conspicuous” manner.
  • They must provide users convenient options for turning off algorithm recommendations and “immediately” implement any requests to opt out.
  • Algorithms should not be used for price discrimination based on users’ preferences and habits.
  • Providers must regularly assess and test their algorithms and data to avoid models that will induce users’ obsessive behaviors, excessive spending or other behaviors that violate public order and morality.
  • They must adhere to “mainstream values” and “actively spread positive energy, and promote the application of algorithms for the better.”
  • Algorithms cannot be used to set up fake accounts or falsely influence rankings and search results to benefit the provider, influence online discourse or avoid regulatory oversight.
  • Algorithms cannot endanger national security, disrupt economic and social order or infringe on the legitimate rights and interests of others.
  • Algorithm providers who can influence public opinion or mobilize the masses need to submit their services for the CAC’s approval. Those without approval could be fined by up to 30,000 yuan and ordered to terminate service.

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