The Chinese government has continued to tighten its grip on the country’s internet sector.
Two big updates:
ByteDance sells to the govt
This week, The Information reported
that a Chinese government entity quietly picked up a 1% stake in ByteDance.
Although the move doesn’t come as a surprise - social commerce platform Weibo sold a 1% stake to a subsidiary of China’s internet watchdog in 2020, and Beijing has been deliberating over small shares in private tech firms for at least 4 years
- the move signals the gradual alignment of tech and state in China.
Why? As part of the deal, the government has the right to one seat on a three-person board of directors at ByteDance, giving Beijing a direct line of control over the company’s operations.
In response, Republican senator Marco Rubio urged
President Joe Biden this week to block TikTok in the U.S.
New data protection law
China has passed a new data protection law, according to Reuters
The law, which takes effect on November 1, is woven from the same fabric as data protection frameworks we’ve seen elsewhere. It:
- Requires app makers to offer users options over how their information is used
- Places data processors to obtain consent in order to process sensitive data - like medical data, financial info and location data.
The move, though beneficial to consumers on the surface, aligns pretty well with government interests:
- Western companies doing business in China will face added regulatory requirements, like needing to report to supervisory agencies.
- The government could easily leverage data protection rules to bring the tech sector under its thumb.
Although China’s taking a gradual approach to its tame-the-internet-people masterplan, it’s been executing it swiftly and consistently ever since Jack Ma was pulled out of the public eye earlier this year.
On the one hand - not great. On the other hand, the splintering of the internet started 23 years ago with China’s Great Firewall, and incremental power moves like the two above shouldn’t come as a surprise.
(Ben Thompson from Stratechery wrote a great piece
on the splintering of the internet last year. Highly recommend).