China’s Latest Internet Regulation Could Cripple Businesses

China announced a sweeping update to its internet protocol, which would now allow citizens to control their algorithm preferences. How will businesses reliant on this service cope?

What Happened: On January 5, China announced a sweeping update to its internet protocol. The update, to be implemented on March 1, 2022, will require algorithm service providers to offer internet users increased control over how companies target them, or the option to turn off recommendation services — thereby limiting companies dependency on the moderation of content. The State Internet Information Office, the Ministry of Industry & Information Technology, the Ministry of Public Security, and the State Administration for Market Regulation all jointly issued the Internet Information Service Algorithm Recommendation Management Regulations reform.

The Jing Take: This new regulation aims to give netizens power over what online preferences they see online. This will affect companies that have pegged their business model, and gained popularity, through the operation of and overreliance on predicting preferences. Up until now, companies and merchants have been able to use seemingly all-knowing algorithms to target specific demographics or individuals in order to sell products or influence opinion. Algorithms could anticipate your spending power, ensuring that merchants could adjust their selection accordingly. Businesses such as Douyin (with 600 million monthly active users) and even Taobao (with over 800 million monthly active users) rely heavily on services predicting consumer preferences in order to operate. Continue to read the full article here