In a world where most of the major economies are passing new legislation and rules to tame Big Tech companies, China may be considering pausing its regulatory spree to boost the country´s economic outlook.
According to the Wall Street Journal, China´s top internet regulator is set to meet next week with the country’s tech giants to discuss the regulatory landscape. For some people with knowledge of the matter, this may be described as a sign that officials acknowledge the toll that regulations have had on the private sector when China´s economic outlook is clouded due to COVID measures.
For the last year, China has adopted a number of regulations to limit the power of Big Tech firms, from the way companies use algorithms to make online recommendations to investment rules and most importantly, new monopolization rules.
Read more: China Clarifies Big Tech Monopoly Rules
But after a slower than expected growth in the economy, China may be planning to hold off on new rules that would limit the time young people spend on mobile apps or even the new rules that would give the government a direct role in corporate decisions.
This is not to say that China will scrap its plans to pass new rules. In a Friday meeting of the Politburo, China´s top decision-making body, Xi Jinping and other senior Communist party officials said that they would carry on completing their plans, the WSJ reported. However, the change in the tone of the speech and the fact that there was no reference to a timeline suggests that the government may take a softer approach.
China has already adopted measures against some of the biggest tech companies, like Tencent and Alibaba. It planned to do the same with ByteDance (TikTok´s owner) and Meituan. Still, now the effects of tighter regulations, compounded by the strict measures introduced due to COVID, may be translating into a bigger impact across the whole private sector, not only the Big Tech companies.
This decision by the Chinese authorities brings back the debate about how far it is necessary to go in regulating Big Tech companies to get more competition in the market and the unintended consequences of having additional rules.
Legal experts told PYMNTS about the risk of assuming that big is bad without adequately analyzing the consequences of more regulation. “We shouldn’t fall into the trap of saying good competition means a lot of competitors,” said Jon Roellke, partner at Morgan Lewis, in an interview with PYMNTS.
Similarly, Europe is passing new regulations, most notably, the Digital Markets Act and the Digital Services Act, which will impose new requirements and limits on how Big Tech firms operate. The main difference between China, the U.S., and Europe is that the EU regulation mainly targets non-EU companies (but not exclusively) to promote more competition in the EU market. The main beneficiaries of this move will likely be EU companies.