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The year 2022 will not be synonymous with respite for Chinese technology companies. After facing a major government crackdown in 2021, Beijing wants to go further in its control by imposing a thorough examination of their precious algorithms.
Beijing does not appreciate the power that technology companies have acquired over the years and makes it known through ever stricter regulations. It is in this context that China has launched an official campaign of examinations of the algorithms of the Internet giants, with a view to detecting and curbing potential abuses. How social platforms deliver ads and content to lure users is under scrutiny from Chinese regulators, reports Bloomberg.
A close examination of their most treasured secret
A month following new rules on web giants’ algorithms came into force, China’s Cyberspace Administration said in a statement that it will carry out on-site inspections of companies, as well as scrutiny of their various services to ensure that large-scale websites, platforms and products have complied with the new rules.
These govern the industry’s use of algorithms to display certain types of content to users. Beijing’s goal is to limit the growing influence of internet giants that have come to control all spheres of entertainment and public discourse over the years.
Change of strategy
The campaign put in place by the Chinese government for more than a year now has already paid off as the country’s biggest tech companies shifted their priorities from unbridled expansion to grassroots growth, in line with Beijing’s vision. . But beware of the path taken, because the Chinese government still ensures the proper functioning of the industry.
That’s why the cyber watchdog interviewed several top business representatives following 216,800 were removed from July 2021 to March 2022. A worrying situation for Beijing, as it might have a destabilizing effect on the wider economy. from the country. But the Cyberspace Administration of China said that over the same period, these companies had hired 295,900 people, a sharp increase.
Shy investors
Last year, Tencent shares lost 19% of their value, due to the Chinese government’s crackdown on tech companies. A repression of which the investors, as well as the main interested parties, do not see the end. This is why they are now more cautious and it shows on the stock market. This Friday, Tencent lost 1.8% on the Hong Kong stock exchange, the video streaming company Bilibili Inc was among the worst performers. Sequoia Capital’s announcement of a reduction in its stake in meal delivery giant Meituan also had an impact on its value.
But investors are especially wondering regarding the future of the social media giants, dominated by Tencent and ByteDance (TikTok), because if Beijing has always controlled the sector with an iron fist – hello censorship – the repression of the Chinese government s ‘ is mostly downed on e-commerce and ride-sharing companies rather than online media platforms. The question is if and when the ax will fall.
But that does not mean that these platforms have been completely spared. Restrictions on algorithms and how companies encourage online addiction have impacted social media giants. They were indeed forced to offer options to their users allowing them to deactivate algorithmic recommendations – in particular Tencent and ByteDance – but also to modify their algorithms to adhere to “dominant values” and “actively spread positive energy”.
It’s hard to know how far China’s crackdown on tech companies will go, but following years of letting things go ‘free’ for years, Beijing seems more than motivated to regain power at all levels, much to the chagrin of these companies and potentially users.