Experts urge tougher laws to protect data

Calls come after meeting reiterates need to boost oversight of internet-related economy

Laws and regulations associated with data protection and the improvement of the internet-based economy are widely expected as Beijing signaled a fresh round of efforts to curb monopolies and bolster fairness in the fast-growing sector, experts said.

A key meeting presided over by President Xi Jinping on Monday reiterated the necessity of strengthening oversight of the economy supported by internet platforms, which has helped raise efficiency in the allocation of resources yet faces malaises such as unregulated growth and an insufficient governance system.

Mounting calls for expedited improvement of related rules and systems, as well as the development of a property rights system for data, would herald an era of strengthened regulation and lawmaking on data and privacy-related protection, said Li Bing, principal of consultancy Roland Berger.

“With the basic framework for privacy protection already put in place, laws on data security and information protection are likely to be passed in the next one or two years, which will enhance the legal basis for market operations and further unleash the vitality of internet players,” Li said.

Since the end of last year, the government has taken serious steps to investigate internet giants, like Alibaba Group, suspected of misconduct and has followed up on a number of cases involving issues ranging from abuses of monopolistic status to the untimely disclosure of business acquisitions.

In the latest instance, the State Administration for Market Regulation announced on Tuesday it would conduct a probe into the quality of products sold via online livestreaming, a burgeoning practice that facilitates e-commerce sales but lacks regulatory scrutiny.

The move comes after the agency fined 12 companies 500,000 yuan ($77,000) each last week over understated acquisitions and investments.

“Anticompetitive practices in the internet-related economy do not help companies to stand out. In the long term, they are expected to leverage products, content or technology to generate fresh growth engines,” said Wang Peng, an associate professor of the Hillhouse Research Institute at Renmin University of China in Beijing, who pointed out there were hardly any regulations so far on the internet sector.

From an economic point of view, the value of data can hardly be maximized if a company confines the data to its own use, said Yi Tong, a researcher at the Beijing Academy of Science and Technology.

“Sustained efforts are needed to curb data monopolies and promote the freer flow of data during the rapid development of the internet-related economy, in order to stimulate technological innovation and enable more breakthroughs,” said Yi.

Lack of regulations

Even if most leading internet platforms reap gains from user data and enjoy a monopolistic status, Yi said there is a lack of clear rules on data circulation, and the existing laws are insufficient in terms of ensuring the proper utilization of data and curbing monopolies.

“It is especially important when China is accelerating informatization and calling for continuous breakthroughs in technologies such as chips and operating systems,” she said. “Without proper data flows, companies cannot foster further technological innovations.”

According to Yi, a flexible data flow policy will help China gain an edge in global competitiveness, especially as economies like the United States and Europe have already started to leverage their data.

For instance, the US launched an action plan last year to make data a strategic resource, while Germany has proposed an action plan to build a standard communication structure for safe data circulation.