China Launched Fresh Crackdown on Big Tech’s Algorithm Practices

Chinese authorities launched a formal campaign to address in the potential abuse of algorithms by internet giants from ByteDance Ltd. to Tencent Holdings Ltd., taking aim at the way social media platform serve up ads and content to hook users.

The Cyberspace Administration of China said it will conduct on-site inspections of firms and ask them to submit their various services for review, the agency said in a statement on Friday.

It further added, large-scale websites, platform and product with big influence will be targeted as well.

Earlier in 2020, Beijing had launched similar campaigns to narrow down widening influence of China’s largest and richest corporation whose platform control new sphere of public disclosure and entertainment.

In a subsequent statement the agency said,  it had interviewed representatives from a dozen companies including Tencent, Alibaba Group Holding Ltd.,  to address job cuts totaling 216,800 from July to mid-March — a prime concern for Beijing given the potentially destabilizing effect on the broader economy.

The agency also highlighted companies actually hire  295,900 people over the same period, a net increase.

This year alone more than $1 trillion has been wiped out from Chinese tech stock after intense selling pressure during the peak of regulatory crackdown earlier last month.

Earlier Chinese authorities vowed to add policy stimulus and stabilizing markets but with much little done to soothe concerns. The fresh new crackdown would add much to this worry of investors.

Regulators earlier in August 2021 had launched smilier campaign to forbid practices that encourage online addiction, as well as any activities that endanger national security or disrupt social order.

In its 30-point proposal, the government asked that companies disclose the basic principles of any algorithm recommendation service and provide convenient options for turning off algorithm recommendations. It also said algorithms must adhere to “mainstream values” and “actively spread positive energy.”

The Hang Send Tech Index fell as much as 2.6% cutting back some loss from earlier 3%.  Video streaming firm Bilibili Inc. and Tencent supplier GDS Holdings Ltd. were among the worst performers. Meituan also weighed on the gauge, following news that Sequoia Capital reduced stakes.

The Nasdaq Golden Dragon China Index closing 4.5% lower after shares of live-streaming platform lead a decline in the U.S.- listed stocks on Thursday.