The news: China rolled out a new regulation this week that would require apps using algorithmic recommendations to let users opt out of personalized content and product suggestions, per the South China Morning Post.
The rationale: The Cyberspace Administration of China (CAC), one of the parties responsible for drafting the legislation, said the goal is to prevent “algorithmic discrimination,” whereby apps charge people different prices for the same product or service depending on their spending habits. It also seeks to combat “content intoxication,” which refers to the practice of keeping users engaged with an app through a constant flow of content tailored to their interests.
The implications: Several of China’s most successful companies—including Alibaba, Tencent, Meituan, and TikTok’s parent company, ByteDance—rely heavily on algorithms to drive consumer engagement and sales. The new law will almost certainly hinder growth for these companies.
Seen in the greater context of China’s recent antimonopoly campaign, the reduction in algorithmic efficacy may help small businesses compete more effectively with dominant players. But given the tremendous market share that companies like Alibaba and JD.com already have, the odds of a new entrant being able to unseat established giants are low.
Will others follow? Anti-Big Tech movements have been gaining steam around the world, including in the US. While China’s regulatory approach is more heavy-handed than most, other countries can study the effect of these regulations on homegrown innovation, economic growth, and consumer behavior, and apply those findings to their own legislative agendas.