Tech Regulation Digest: A Look into China's New Algorithm Regulation

Overview

In March 2022, a new law has taken effect in China that regulates the use of recommendation algorithms by internet service providers. China’s new algorithm law, Internet Information Service Algorithm Recommendation Management Regulations, was initially released to the public in August 2021 by the internet regulator—the Cyberspace Administration of China. While similar legislation has been proposed in the US and Europe, China is the first major jurisdiction to implement these restrictions.

Background

China has historically taken a soft approach towards regulating its technology sector; however, beginning in 2020 the Chinese government began implementing strict regulations against its largest tech firms. This change was catalyzed when China’s notorious tech mogul, Jack Ma spoke at a conference in Shanghai at the end of 2020. Ma criticized Chinese authorities for their “outdated supervision” and aired other grievances regarding the government’s approach to regulation.

There were sweeping tech policy changes in 2021 that included passage of the Personal Information Protection Law (PIPL) and the Data Security Law, as well as antitrust draft amendments being introduced to the Anti-Monopoly Law. The PIPL, passed by China’s National People’s Congress Standing Committee, was China’s first all-encompassing data privacy law.

China’s State Council and Communist Party Central Committee have also passed a five-year plan to strengthen antitrust enforcement and target monopolies. The plan aims to reduce the monopoly power of large digital platforms in China.

Why is this important?

China’s algorithm law is important because it is the first of its kind to be fully implemented. Positive or negative, it will likely serve as a model for AI regulation in other jurisdictions. This is similar to the role Europe’s General Data Protection Regulation had on the data privacy landscape, with California and others closely modelling their own privacy rules after it.

What happens next?

Looking forward, it is possible that these restrictions will benefit China’s AI business community by reducing uncertainty. However, recent reporting suggests that Chinese authorities are looking to implement further restrictions against some of the largest tech firms that were already targeted in 2021. Given this dynamism, it is likely that more restrictions on AI technologies will come in the future.