The Chinese device is pleased: nothing less than the strictest law in the world for the protection of personal data has been initiated, rejoices the press of the party. Adopted by the Standing Committee of the People’s Congress, the law applies from November 1. And at first glance, it’s similar to the European General Data Protection Regulation (GDPR), which grants citizens comprehensive rights when storing personal data.
Chinese law, for example, stipulates that the processing of personal data must have an appropriate purpose and be limited to “the minimum necessary to achieve the purposes of the data processing”. It also sets out the conditions under which companies can collect personal data, including user consent and guidelines for ensuring data protection when data is transferred overseas. The law also obliges the services which process personal data to designate a responsible person as the interlocutor of the Chinese authorities. Regular checks are also supposed to be. So on paper the new law is indeed tough, but it has a blind spot.
The law is mainly aimed at private companies. The desire of the Chinese device to monitor everything, read everything, listen to everything remains unchanged. Government access to company data will not be affected by the new law. Due to national security law, authorities can still access personal data at any time and request companies to make it available.
Digital companies in particular will be weakened by the new requirements
So why the new law? Digital businesses in particular will be weakened by the new requirements. Its influence in China has grown dramatically in recent years, and it looks increasingly frightening to Beijing’s rulers. Most Chinese hardly ever use cash or bank cards to pay, but instead use Wechat or Alipay. The Corona apps, which decide who is allowed to fly where and when, or through a restaurant entrance, run either on Wechat or on Alipay. The power of these services is great.
The device has been systematically opposed to it since the end of 2020. It all started in November 2020 with the Ant group, which operates Alipay. Days before the company’s debuts on the Shanghai and Hong Kong stock exchanges, supervisors stepped in – regulatory difficulties, he said. It should have been the largest public offering in the world, with revenues of $ 37 billion. Millions of shareholders had subscribed to the newspaper in advance, tens of thousands borrowed additional money or took on debt to enrich themselves with shares in Ant. It became the largest IPO in the world that has ever happened, postponed indefinitely.
Ant founder Jack Ma has virtually disappeared from the public eye since then, and regulators fined parent company Alibaba in the spring of this year with the equivalent of $ 2.8 billion for abusing its dominant position in the market. Since then, the anxious question on the boards of Chinese tech companies has been: who among us is next?
For years, Chinese authorities have left domestic internet companies with almost no regulation. While Twitter and Facebook are blocked in the People’s Republic, other businesses and services have grown in the country behind the great firewall: Baidu instead of Google, Wechat instead of Whatsapp, Alibaba and not Amazon. As much as Beijing has blocked the Internet and suppressed politically unpleasant expressions of opinion, so many companies like Alibaba or the operator Wechat Tencent have been able to develop and extend their monopoly position without any problem. They dictate the rules for doing business in China today, who is allowed to offer on which platforms and who is not. Alibaba’s financial subsidiary, Ant Group, has even gotten involved in the banking industry, granting loans without a banking license, and even without any collateral. In the meantime, however, hardly a month goes by without government intervention and resignations in the industry.
In March 2021, for example, Colin Huang, the founder of e-commerce group Pinduoduo, left his company. In May, Bytedance boss Zhang Yiming surprisingly announced his retirement. And in July, China’s cyberspace administration opened an investigation into notorious auto service provider Didi for alleged violations of user privacy. Days earlier, Didi went public in New York – a first billion dollars. One thing is more or less certain: the next interventions and measures will follow. There is now a legal basis.