What has followed over the ensuing 12 months is an unprecendented and ongoing regulatory onslaught. Hundreds of companies have been fined north of USD 3 billion, apps have been taken off stores, and Jack Ma – until then China’s richest man – inexplicably went missing for three months.
China’s Cyber Sword is being wielded not just at individual companies or apps but at entire industries and ecosystems. A whole range of antitrust guidelines and rules have been introduced that e-commerce platforms, social media providers and live-streaming services have to abide by.
Enforcers are pushed to use and test the new regulatory power
One of the biggest effects so far has been to create uncertainty. For businesses, especially foreign ones, it is hard to predict where the next regulatory wave will come from as the whole campaign appears to lack a systematic approach. However, the ministries and agencies issuing these regulations, even if they target only tech-adjacent industries such as digital education, are in fact coming together under one flag.
Disentangling the web of regulations reveals a consolidation of institutional power and the progressive implementation of a broad legal framework. The overall shape of the campaign is only slowly becoming clear because the most significant laws just came into effect over the last two years. What is happening now is that the enforcers are being pushed to use and test these new powers.
All this is happening against the backdrop of a digital economy that has celebrated immense growth over the past decade. New business models developed rapidly and labor markets and financial dynamics underwent paradigmic shifts. However, with these changes came a host of “regulatory problems”, which the government is keen to tackle using different new bodies applying a number of new laws.
The State Administration for Market Regulation (SAMR), for example, was only found in 2018 and tackles market regulation. It enforces the Anti-Unfair Competition Law that has been in effect since 2019. The SAMR has succesfully investigated more than 3,000 cases of unfair competition and collected CNY 206 million in fines in the first half of 2021. It has also made use of the new E-Commerce Law, effective since 2019, and the Anti-Monopoly Law. Meanwhile, China’s new cyber watchdog, Cyberspace Administration of China (CAC), has focused on implementing the 2017 Cyber Security Law and the 2021 Data Security Law. It found more than 100 apps in violation of collecting users’ personal information and ordered Didi, China’s biggest ride-hailing app, to be taken offline.