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China tech crackdown focuses on data after Didi probe

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Traders work during the IPO for Chinese ride-hailing company Didi Global Inc on the New York Stock Exchange (NYSE) floor in New York City, U.S., June 30, 2021.

Brendan McDermid | Reuters

China’s technology giants have grown into some of the world’s most valuable companies largely unchecked by regulation — but that’s changing.

Since the 2017 Cybersecurity Law, China has had some regulation around data.

But in June, the Data Security Law was passed which defines the rules around how companies collect, store, process and transfer data. It comes into force in September.

A separate piece of legislation called the Personal Information Protection Law is also being worked on. If passed, it will give users more control over their data.

“We can definitely expect to see a lot of user data crackdowns as soon as those two laws are passed,” Schaefer said. “This is definitely another front (of regulation).”

Read more about China from CNBC Pro

The probes into Didi, Full Truck Alliance and Boss Zhipin are not under these new laws, but existing regulations. While the cases may seem sudden, regulators have been in touch with several technology companies around a number of issues including data regulation and anti-competitive practices.

In April, China’s State Administration for Market Regulation (SAMR) summoned 34 companies including Tencent and ByteDance and told them to conduct self-inspections in order to comply with anti-trust rules.

“It started in April and they (the Chinese government) have given the companies over 100 items of compliance requirements covering many aspects, antitrust, data, advertisement, pricing, and lots of things,” a lawyer that works with Chinese technology firms on compliance told CNBC.

“They (the government) have given them (the companies) so many instructions and clues asking them to improve their compliance system for all of those aspects,” said the lawyer, who wished to remain anonymous due to the ongoing and sensitive nature of the compliance work.


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