China Trading Desk
China Tech Crackdown – December updates
We continue our coverage on the great tech crackdown in China. If you have missed our previous coverage, read more about Anti-monopoly crackdown, PIPL, Advertising law, October updates, and November updates.
Before we dive into all the doom & gloom, let us start with some positive news. WeChat allows more links and content from third parties to open directly within user chats, in response to Beijing’s push for interoperability among China’s big tech companies and after a recent ban on app upgrades by the company. This comes just days after China’s MIIT suspended Tencent from updating its apps (as of 17 Dec, app update is allowed). While the links can be opened in individual chats & also groups, it is still not available to advertisers who would like to advertise their Taobao products or Douyin videos on WeChat.
A new government report indicated that the government’s campaign to review the country’s 1.12 million mobile apps has yielded initial results, with problematic apps being removed and the country’s new data laws being implemented. The Cybersecurity Administration of China (CAC), has tested 1,425 popular apps since the beginning of 2021, according to a report published on Thursday by the National Computer Network Emergency Response Technical Team (CNCERT). A total of 351 apps have been told to correct “serious violations of laws and regulations”. Along with CAC, the MIIT said at a press conference that it had exerted “high pressure” on app makers, tested 2.44 million apps, named and shamed more than 2,000 apps for violations, and ordered 540 apps to be removed from app stores.
In its most recent crackdown, the Ministry of Industry and Information Technology (MIIT) has ordered 106 apps to be removed from the country’s app stores. Top apps include Douban – a popular social media app, Changba – a leading karaoke app and Aihuishou - an electronics recycling service. These had previously been named and shamed for misconduct such as collecting excessive user data but have yet to properly rectify their practices as required.
Fines have been meted out regularly, Douban was fined 1.5 million yuan (US$235,000) over the “unlawful release of information” a week before their ban. Weibo was fined 3 million yuan (US$471,165) for repeatedly allowing “information forbidden by law and regulations”
The crackdown is affecting everyone from local influencers to international companies.
China’s internet watchdog shut down or suspended more than 20,000 influential social media accounts in 2021 – some with tens of millions of followers amassed over many years – for reasons that ranged from “misuse” to not promoting “core socialist” values. The regulator vowed to further tighten its crackdown on top influencers while giving guidance to internet platforms on their handling of “problematic” accounts. Social media accounts on Weibo, WeChat and Douyin that are deemed to be propagating “soft porn” or engaged in “vulgar” marketing, were also targeted, along with those “spreading rumours”.
Microsoft’s Bing search engine was ordered to pause its auto-suggest feature for 30 days. This comes two days after LinkedIn, Microsoft’s professional networking and job searching site, launched a China-only app named InCareer. This app will not have any social media feed and can only be used to network for job-hunters and recruiters.
Apple has stopped showing mainland Chinese users certain geographic information on the latest version of its Compass app. iPhone and Apple Watch users in China can no longer see their geographic coordinates and elevation on the Compass app, Apple’s built-in map app pulls mapping data from AutoNavi – a company we feature in our App of the month.
Media Publishers are also getting into the act of strict content moderations. Xiaohongshu (also known as Little Red Book) blacklisted 29 popular brands, including Nivea, Dove, Neutrogena, and Wonderlab, on suspicion of false marketing. Posts related to these names no longer appear when searching in the app, although their flagship stores are accessible. Xiaohongshu did not say if or how the brands could get rid of their bans.
Where are we headed in 2022?
We believe that the crackdown and normalization of “excessive capital expansion” will continue well into 2022. All government agencies – CAC, CNCERT, MIIT, SAMR, National Anti-monopoly Bureau have all had senior appointments and have also been provided with more resources to increase scrutiny. There will be more fines, more bans & unbans, warnings and outright removal of apps as punishments for breaking the law will increase.
We are already feeling the impact as more advertisers and advertisements are being banned or asked to alter the content. We will continue to see more frequent revisions to advertising laws and more heavy-handed responses from publishers for advertising approvals & account verification.
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