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China to Implement New Regulations for Algorithm Recommendation Services

China will carry out China said on Tuesday it would put in force new rules that will boost oversight over how its platform companies make plans to list abroad or use recommendation algorithms, in moves set to tighten Beijing’s grip over its sprawling technology sector. CAC also said it would implement new rules that require platform companies with data for more than 1 million users to undergo a security review before listing their shares overseas.

The regulation, jointly issued by the Cyberspace Administration of China (CAC) and three other departments, stipulates that algorithmic recommendation service providers shall not use technology to engage in illegal activities or spread illegal information, and shall take measures to prevent the dissemination of harmful online content. The regulation prohibits algorithmic recommendation service providers from generating fake news or disseminating information from unauthorised sources.

The regulation states that algorithm technology shall not be used to influence online public opinion, evade supervision and management, and engage in activities of monopoly and unfair competition. It also calls on algorithmic recommendation service providers to promote mainstream values and spread positive energy.

In a separate statement, the CAC also said it would implement new rules governing the use of algorithm recommendation technology, requiring companies to give users the right to switch off the service and increasing oversight of news providers that use such technology to disseminate information.

The CAC first proposed the cybersecurity reviews, saying they would put a focus on the risks of data being affected, controlled or manipulated by foreign governments after overseas listings. The new rules appeared to have shrunk the scope of the companies likely to be affected by the changes, as compared to the proposal.

The most significant change in these cybersecurity review measures seems to be the narrowing of the review’s application to only critical information providers, data processors that may impact national security, or platform operators holding over 1 million individuals’ personal data, but he added the rules still do not provide ample specificity as to what types of companies will be affected.

Previously, CAC solicited public opinion on a new draft of rules for algorithm management in late August, which required algorithm service providers not to use algorithms to block information, manipulate ranking lists or search results, control searches or selection, forge likes and comments, or hijack online traffic.

Algorithms are mostly based on Artificial Intelligence (AI) and are used by enterprises to promote their products and services. For instance, e-commence apps recommend different products to individual users based on their preferences.

The notice aims to regulate the use of algorithms and protect the legal rights of consumers and online users, as some businesses and online platforms have used algorithms inappropriately to attract traffic or promote certain products and services. Consumers sometimes pay two different prices for a product on the same shopping platform, which harms their interests and represents unfair competition.

As reported by OpenGov Asia, China has also passed regulations on cybersecurity. Measures including monitoring, defence, and proper handling of cybersecurity risks and threats from both home and overseas will be carried out to ensure that relevant facilities are protected from attacks, intrusions, interference and sabotage. The regulation came as the country’s major IT infrastructure faces severe security challenges including frequent cyberattacks.

The regulation also called on operators of major IT infrastructure projects to bear their primary responsibility of maintaining the integrity, confidentiality and availability of relevant data. Requirements for these operators include conducting security checks and risk assessments every year and prioritising safe and creditable internet products and services in procurement.

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