Tech

China’s tech crackdown: inspired by the EU, but more drastic in action

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The vigorous action taken by the Chinese political leadership and regulatory authorities against foreign and above all national technology corporations such as Alibaba, Tencent and the transport service provider Didi may seem difficult to understand to Western observers. For Angela Huyue Zhang, head of the Center for Chinese Law at the University of Hong Kong, it is in principle derived directly from the three main principles and goals of the communist leaders.

Above all, Beijing wants to “promote economic growth and wealth for individual citizens, social stability and nationalism,” said Zhang on Friday at the conference of the Cologne Institute for Media and Communication Policy to the “new political economy of information” in Strasbourg. Overall, it is also about maintaining the legitimacy of the top government. This must bring these goals “under one roof” and in a balance, “in order to stay at the helm”.

If the economy is not doing well, this hurts not only the interests of the rich, but of all citizens, the legal scholar made clear. The exponential and therefore too rapid growth of the digital giants has led to problems with the financial system, for example. The platforms would have made the economy more efficient, for example with solutions for mobile payment such as those offered by Tencent with WeChat and Alibaba with Alipay. Ultimately, however, they wanted to make as much profit as possible. This logic favored monopolies and caused market failure; the user complaints would have increased.

The Chinese regulators, who acted as the executive and enforcement bodies of the government, actually tend to put their hands on their laps and not think outside the box, according to Zhang. At the same time, they are anxious to secure their own careers and to control politics a little. The whole system is organized “very hierarchically”.

For years, Beijing has encouraged the platforms to make business decisions, explained the lawyer. The requirement to shift the focus from industrial production to more services played a decisive role in this. “The regulators had to be careful,” says Zhang. In addition, the antitrust law is largely toothless, penalties are quite low. Even when some corporations had reached “critical mass”, pinpricks by the authorities were ineffective.

The turnaround was brought about by a speech by Alibaba founder Jack Ma last fall, in which China’s richest man dismissed the Middle Kingdom’s financial sector as backward and attacked supervision. According to the expert, this then decided “not to put up with this”. According to reports, state and party leader Xi Jinping was informed and personally prohibited the IPO of the Alibaba financial subsidiary Ant Group.

As a result, the political management level started a campaign more or less overnight “to better regulate Big Tech,” reported Zhang. With the crackdown that has taken place since then, not only cartel issues would come on the table, but also labor law, for example. So the employees of the corporations should be better off and at the same time the support of the users should be ensured. Political executives would now even be smuggled into the companies.

According to the researcher, a source of inspiration was the “transition to an intervention model” vis-à-vis the US Internet giants in Europe: “If the EU takes action, that is a reason for Beijing to follow suit.” In China, the old continent is seen as a “superpower in the area of ​​regulation” and as a role model. The Chinese antitrust regulations are based on European competition law, the new data protection law is closely based on the General Data Protection Regulation (GDPR). When necessary, Beijing often reacts in “guerrilla style” and thus faster and more drastically than Western countries.

Paul Nemitz, chief advisor to the EU Commission for Legal Affairs and Consumer Protection, advocated democratic legislation to contain the empires of Google, Apple, Microsoft, Amazon, Facebook & Co. This approach could best ensure that everyone benefits from binding rules. It is important to maintain basic rights in the age of artificial intelligence (AI) and large digital platforms, especially from the USA and China. At the same time, the free press is crucial for the control of state and private-sector rulers.