Beijing Goes Full Nanny State On Internet Tech

 "The Wild West days of China's consumer internet are now well and truly over.

Instead, the sheriffs from Beijing seem determined to micromanage industries like ride-hailing and online advertising for the benefit of the little guy -- or at the very least be seen to be doing so, as regulators rally behind President Xi Jinping's new policy of "common prosperity."

On Tuesday, Chinese regulators published new rules for the ride-hailing sector. Protecting drivers' rights is a key objective, including ensuring they get enough time off and benefits like social insurance. The guidelines also said ride-hailing companies should set a "reasonable" cap on their take from fares -- and disclose them publicly. Language on the dangers of the "disorderly expansion of capital" and using "big data" to exploit customers was repeated.

These broad guidelines may be followed by other more specific ones, but for now their lack of clarity raises some obvious questions. What level of commission rate is reasonable, considering that ride hailers like Didi have been losing money for years? What exactly constitutes predatory pricing?

What is clear is that the ride-hailing business in China may need to make fundamental changes to its business model. The labor rights of gig workers is a contentious issue around the globe. Beijing now looks ready to tackle it more directly.

Chinese regulators have also issued new draft rules on online advertising. To see how far the government is willing to wade in, look at the proposed rules on pop-up ads. Existing rules say users should be able to close pop-up ads using one button, but the new rules are more detailed. Ads won't be permitted to contain countdown timers or to require more than one click to close. They won't be allowed to pop up more than once on the same page.

The proposed regulations also prohibit advertising medicine and beauty products to underage people, or online games that are deemed bad for mental health. Live-streaming sites -- a popular way to sell products in recent years -- are specifically forbidden to advertise many health-related products. Ads for after-school tutoring are also banned, but that is effectively the case already -- one reason advertising revenue for companies like Tencent and Baidu slowed in the recent quarter.

Some of the proposed changes may not mean much. Scrutiny for online healthcare advertising, for example, has been quite strict since the 2016 death of a student with cancer who sought treatment through search engine Baidu.

Some may indeed make life better for consumers or gig workers, although they may also result in slower employment growth in previously rapidly expanding sectors. What is clear is that a year into the regulatory action against consumer tech, regulation continues to get more intrusive, and there is no obvious end in sight." [1]

1. Beijing Goes Full Nanny State On Internet Tech

Wong, Jacky.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 02 Dec 2021: B.11.