China tightens control over information collected by businesses over the public under a law passed Friday by its ceremonial legislature, which expands the Communist Party government’s crackdown on Internet industries.
The law would impose some of the strictest controls in the world on the manipulation of private sector information on people, but it does not appear to affect the ruling party’s widespread surveillance or access to such corporate data.
Its passage follows anti-monopoly actions and other enforcement measures against companies such as e-commerce giant Alibaba BABA,
and gaming and social networking operator Tencent TME,
this brought down the prices of their shares.
The law, which goes into effect on Nov. 1, follows allegations that companies misused or sold customer data without their knowledge or permission, leading to fraud or unfair practices such as charge higher prices to some users.
The law contrasts the information that companies can collect and sets rules on how it should be stored. The full text was not published immediately, but previous drafts would require the client’s permission to sell data to another company.
Alibaba shares lost 2.6% in Hong Kong following the news of the passage of the law. Tencent sank after the announcement, but finished 1%. Pinduoduo PDD,
an online supermarket, fell 1.2% in pre-market trade on the U.S.-based Nasdaq.
The law is similar to the European Data Protection Regulation (GDPR), which limits the collection and processing of customer data. But unlike Western country laws, previous drafts of Chinese law say nothing about limiting the ruling party’s or government’s access to personal information.
The ruling party has been accused of using data collected on Uighurs and other members of predominantly Muslim ethnic groups in the northwestern region of Xinjiang to carry out an extensive crackdown.
Chinese authorities are “concerned about the amount of data that big technology has about the population and the power they can provide,” said Paul Haswell of the Pinsent Masons law firm. He called the measure the Chinese version of the GDPR.
Most organizations, however, should be prepared after Chinese authorities impose other restrictions on data monitoring, Haswell said.
In April, Alibaba received a record $ 2.8 billion fine for anti-competitive practices.
This month, the government said online education companies are no longer allowed to receive foreign investment or operate as for-profit companies.