Bid to balance cyber regulations and development
China has tightened regulation of technology companies to curb monopolistic practices and financial flows, to prevent rising risks to the country's financial system, The move, which is aimed at tackling unfair competition and companies' handling of critical data and has led to the imposition of hefty fines on some big enterprises, has drawn the attention of the media, especially foreign media.
In fact, many people have been led to believe the regulatory move is part of an intensifying crackdown on private high-tech companies that have foreign participation.
What the foreign media have failed to report is that the move was necessitated because certain information and communications technology companies, including some high-tech giants, were using their dominant market position to stifle competition, misusing consumers' information, infringing on consumer rights, even exposing certain critical data that created serious national security risks.
The regulations also aim to promote the healthy development of the digital economy, as well as strengthening cybersecurity. And by strengthening cybersecurity, the government can better protect the rights and interests of consumers and businesses, ensure the smooth functioning of infrastructure facilities on which the overall economy depends, and better safeguard national security.
Besides, the move to curb unfair competition is in the long-term interests of concerned industries. It is therefore one of the fundamental responsibilities of the government in the digital era to strengthen cybersecurity and create a level playing field for digital companies.
In the past, the government had adopted a relatively laissez-faire approach toward newly emerging high-tech companies, not least because start-ups need nurturing and support in their early stage of development. The government adopted such an approach also because the digital sector was new for the world, and the development trajectory of the emerging businesses was uncertain.
Perhaps internet-based companies mushroomed, with many of them growing into giants, on a scale comparable to that of the United States over the past decade due to the laissez-faire policy. But a relatively lenient policy does not mean that some companies can use unfair means to grab a bigger market share and make more profits.
That's why the Cyberspace Administration of China, which is mandated by law to oversee cybersecurity, and the State Administration for Market Regulation, whose responsibility is to ensure a fair playing field for all market players, as well as some other authorities, have coordinated to tighten some regulations.
The regulations will help strengthen cybersecurity and better protect consumers' rights and interests. For example, according to the State Administrative for Market Regulation, internet-based companies "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". In other words, business operators should not use data or algorithms to hijack consumer traffic or influence users' choices.
Further examination of the regulations shows they are tailored to address the online market conditions, too. The SAMR, for instance, also requires companies to refrain from fabricating or spreading misleading information with the intention of damaging the reputation of competitors and try not to raise their market ratings by using fake reviews or giving coupons or cash incentives to consumers.
The regulations will ensure that the rights and interests of online consumers are better protected and internet-based companies practice fair competition.
When it comes to protecting critical information on infrastructure facilities, the regulations require operators to conduct security inspections and risk assessments at least once a year. Such moves are also aimed at better protecting people's privacy and liberty, and promoting innovation capability of digital companies, and safeguarding the open nature of the internet.
In other words, an effective and balanced approach will not only promote fair play in the market and help strengthen cybersecurity, but also better protect consumers' rights and thus create a favorable environment for innovation and entrepreneurship.
This is not an easy task. A lot of hard work on the part of the regulators and experts, and interested public, is required to fulfill it. Only when the task is fulfilled will the current regulatory action prove to be a boon for the digital sector.
The author is dean of the School of International Law, China University of Political Science and Law.
The views don't necessarily reflect those of China Daily.