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China’s tech giants should be put under tighter regulation

While Facebook and Google are denied access to the Chinese market, their Chinese counterparts perform no better, if not worse

By NewsChina Updated Mar.1

In the past couple of years, especially in 2018, some of the world’s biggest tech giants such as Facebook and Google have come under public scrutiny for a range of issues, including leaks of private information, the spreading of false news and providing biased online search results.  

While Facebook and Google are denied access to the Chinese market, their Chinese counterparts perform no better, if not worse. For example, Baidu, China’s leading search engine that accounts for 70 percent of the online search market, has come under constant criticism for favoring advertising over organic search results. The company was blamed for the 2016 death of a college student who died of cancer due to misleading information about treatment options provided by unlicensed providers that he found through Baidu’s search results. The scandal led to a major public outcry that unveiled massive false and misleading information about medical treatment on Baidu. Despite Baidu’s repeated pledges that it would correct its practices, very little appears to have changed. 

In May, last year, China’s State-run Xinhua News Agency reported that Baidu had again prioritized media advertising over organic medical-related search results on its mobile app. The Beijing News also reported that private medical institutions can still pay Baidu to increase their rankings in search results. In some cases, Baidu put a price tag on specific names of well-known public hospitals. It is the same in other fields. In November 2018, a Chinese professor from Shanghai’s Fudan University complained that Baidu gave priority to a third-party agent over an official visa application center when he searched for how to apply for a Turkish visa, which meant he paid a higher fee.  

In the meantime, concerns over WeChat, China’s most popular messaging app that has over one billion active users, are also increasing. WeChat has developed from a messaging tool into an online platform, with an ambition to become an operating system. In its latest version, the app started to allow app developers to launch their own “mini-apps” within the WeChat app. It is now reported that the WeChat platform is increasingly a hotbed for online financial scams and illegal businesses such as prostitution.  

As tech companies become bigger as well as more powerful and influential, authorities need to strengthen regulation. First, regulators need to increase penalties for irregularities. Compared to their Western counterparts like Facebook and Google, which are often fined millions, if not billions of dollars, the price of irregularities for Chinese tech companies are next to zero. For example, in response to Baidu’s scandal in 2016, the company was fined a mere 28,000 yuan (US$4,100) by the Shanghai Industry and Commerce Bureau.  

Second, the regulations need to keep abreast with tech developments. In the case of WeChat, for example, more than a year since the company launched its mini-app platform, there appears to be no rules or laws about how to regulate these mini-apps. Regulators need to continually adjust the regulatory framework that applies to internet companies as they have increasingly started to operate across sectors. A possible solution may be a joint regulatory body that could facilitate cooperation between the Ministry of Public Security, the State Administration for Industry and Commerce and the Ministry of Industry and Information Technology.  

In the past, Chinese authorities have adopted a rather liberal approach to the development of  
internet companies, partly in an effort to foster a sector deemed to be the future of China’s economic development. But as China’s tech companies have become so big and powerful, penetrating every aspect of ordinary people’s lives, it is time for the government to overhaul its regulatory thinking on this sector.