China is cracking down hard on Big Tech — here’s why
From facial recognition in games to app store bans, China is getting serious with Big Tech
The curious case of DiDi
It used to be a source of great national pride when a Chinese tech firm was listed on a foreign stock exchange. On June 30 this year, DiDi — China’s version of Uber which operates around the world and in Australia — achieved just that. It debuted on the New York Stock Exchange at US$14 per share.
The initial public offering (IPO) raised US$4.4 billion and valued the company at US$68 billion, making it the second-largest US IPO by a Chinese company, after Alibaba. Just days after the phenomenal success, however, DiDi wasabruptly pulledfrom China’s app stores, along with 25 other apps linked to the company.
From a height of more than US$16 per share, DiDi shares have lost a third of their value to date. The company is now subject to a class-action lawsuit from investors who bought into its IPO, for not revealing itsongoing legal issuesrelating to compliance with China’s data security regulations.
The Cyberspace Administration of China claimed DiDi was guilty of serious violations of laws and regulations in the collection and use of personal data, the Global Timesreported. But DiDi has been in the Chinese market for more than nine years, so surely these issues should have surfaced sooner.
Analysts havespeculatedthe Chinese government is more concerned the data owned by DiDi — a company that accounts for about 90% of China’s taxi and rideshare services — would end up in the hands of the US government following its listing on the US stock exchange.
This data could be used to construct detailed travel logs of Chinese residents, with obvious implications for national security. This concern may be legitimate, as US government agencies routinely request data from even homegrown tech firms.
Firms have the right tochallenge such requests. But this is naturally at the firm’s discretion, and a lack of direct control is something the Chinese government traditionally eschews.
The fallout from DiDi’s regulatory troubles has spread more widely as other US-listed tech firms have also come underincreased scrutiny, signaling regulatory reforms may be on the horizon.
The primacy of social good
To understand the rationale behind the Chinese government’s recent moves, we must first understand the parallel universe that is China’s technological landscape. In China, technology must never be harnessed solely for an individual or organization’s gain. Social good is always emphasized, as defined and enforced by the Chinese government.
DiDi’s listing on the New York Stock Exchange would have undoubtedly fuelled the company’s global expansion. But in the eyes of the Chinese government, it could have also hurt the nation’s collective interests. It remains to be seen whether this apparent contradiction can be resolved.
China’s collectivist approach to technology consumption is also evident in its regulation of mobile games.
This weeknews emergedthat Tencent — which owns WeChat and is one of the largest gaming companies in the world — willuse a facial recognitionfeature called “Midnight Patrol” to restrict the activities of under-18 gamers. Tencentsaidthe feature was already being used in 60 games, with more additions planned.
In 2019, the Chinese government imposed a video game curfew on minors, banning them from playing between 10pm and 8am — allegedlyto curbgaming addiction. South Korea is the only other country with such a curfew.
It’s expected the Midnight Patrol rollout will prevent minors from using their parents’ devices or identities to circumvent the curfew. Facial recognition trials for this purpose started in 2018, but Midnight Patrol is unique in its scale of implementation.
From a Western point of view, such measures may seem a draconian violation of privacy and freedom. In China, however, they are generallylauded and welcomed. The prevailing view is tech firms may profit commercially from the exploitation of technology, but not at the expense of social good.
For consumers of Chinese tech services in Australia and other countries, the good news is these firms have always tried to differentiate their services for domestic and international markets.
For example, the massively popular video-sharing platform TikTok is named Douyin in China, where it abides by vastly different rules to the TikTok used by the rest of us. And if there are privacy concerns, international consumers can always choose to not use these services.
Chinese consumers, unfortunately, don’t have this choice.
Article byBarney Tan, Associate Professor, Business Information Systems,University of Sydney
This article is republished fromThe Conversationunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
An independent news and commentary website produced by academics and journalists.An independent news and commentary website produced by academics and journalists.
Get the TNW newsletter
Get the most important tech news in your inbox each week.
