Business Tech

How Tech Giants are Being Affected by China’s New Data Privacy Regulations

China’s government has launched a fresh offensive with the country’s technology giants, looking to target their collection and use of data.

From the rejection of Ant Group’s $34.5 billion listings to Alibaba’s $2.8 billion antitrust fine, Beijing has been slamming domestic tech heavyweights in recent months. The focus has been mostly on preventing a monopoly and financial technology regulation. 

Since the 2017 Cybersecurity Law, China has had some regulations around data. However, tech giants within the country have mainly been used to going unchecked by regulation. The new data privacy regulations will usher in significant change, and it will happen quickly. 

Data Security Law

Because data is so vital to the tech industry, which is a crucial engine of economic growth, regulators are now focusing their attention on it.  

Kendra Schaefer, a partner at consultancy Trivium China, recently explained, “You can’t have a digital economy without strong data privacy protection. And the digital economy is propping up China’s slowing growth”. 

China approved a key data security law in June and is working on additional data protection regulations. Authorities are shifting their attention to data regulation, which will take effect in September, because of its relevance to the IT industry, which is a significant engine of economic growth. The Data Security Law establishes guidelines for how businesses gather, keep, process, and transfer data.

Personal Information Protection Law

A separate piece of legislation called the Personal Information Protection Law is also being worked on. If passed, it will give users more control over their data, further seeing tech giants affected, should they not be stringent with their processes.

“We can definitely expect to see a lot of user data crackdowns as soon as those two laws are passed,” Kendra Schaefer, a partner at consultancy Trivium China, said. “This is definitely another front (of regulation).”

Previously, data was governed by several pieces of fragmentary legislation. It’s considered part of a more significant push to reign in the dominance of Chinese technology giants, who have been allowed to grow and develop unfettered in recent years thanks to a vast collection of data used to train algorithms and build products, according to experts.

Who has already been affected?

Regulators’ spate of actions will undoubtedly have a massive impact on China’s tech giants. Given the recent developments, most will seek counsel from a data privacy company, and the way they operate will likely change dramatically.

Chinese regulators, the Cyberspace Administration of China (CAC), ordered ride-hailing service Didi to be removed from app stores across the country, claiming the business had engaged in illegally gathering and using personal data. This comes just one week after Didi completed an extensive initial public offering (IPO) in the United States.

The next day, the CAC also opened a cybersecurity probe into U.S.-listed Boss Zhipin and subsidiaries of Full Truck Alliance.

Change is afoot, and China’s new data privacy regulations will undoubtedly continue to create some serious waves in the tech giant arena.