China passed an online privacy law to protect consumers from scams and the large tech companies that have been hoovering up personal data. The new law is aimed at preventing businesses from collecting sensitive personal data.
An online privacy law or a farce?
Under new rules passed by China’s top legislative body, businesses must reduce the amount of user data they collect and obtain consent from the customer. Still, the Chinese state security apparatus will maintain access to certain amount of the customer data. Beijing has long been accused of using big tech to help control citizens’ lives.
A key piece of the new cybersecurity rules is to reign in the misuse of personal data. So, with this in mind, tech giants like Didi and Tencent have been at risk in recent months. But they’re not the only ones affected. So, China’s entire tech sector will be affected by the new rules. Already the stocks of Alibaba and Tencent have dropped this morning.
The law aims to protect those who “feel strongly about personal data being used for user profiling and by recommendation algorithms.” So, it would prohibit such activities. The new legislation is a response to businesses that have been profiting from personal data. They used it in an unfair way to determine prices as well as for their own gain in the form of profiling customers.
To be consistent, businesses should not set different prices for the same service based on clients’ shopping history. Thousands of consumers have complained about paying more for the same taxi service based on their iPhone model rather than a cheaper mobile phone or business traveler status. Thus, the authorities say that consumers in China now have new protection thanks to a new law.
Europe’s GDPR was an example
The online privacy law is modeled after the European Union’s General Data Protection Regulation, one of the strictest online privacy laws. Moreover, China is not looking at the short term, but rather long term, to better protect people’s digital information.
Kendra Schaefer, partner at Trivium China, said that this should build a foundation “over the next 40 or 50 years.”
So, the new law stipulates that companies cannot transfer personal data to countries with lower privacy standards than China. This new rule can cause trouble for foreign businesses.
As a result, the authorities can fine companies who fail to comply with the law up to 50 million yuan ($7.6 million). Still, some of them could pay five percent of their annual turnover depending on the seriousness of the issue. In the new law, personal data and can include information that could lead to discrimination, serious harm, or even death.
But there are surveillance cameras throughout many cities in China. Some of these come with facial recognition technology, which can monitor citizens’ biometrics daily. Nevertheless, authorities in the region of Xinjiang even force residents to install surveillance software on their mobile phones. This allows police to access their location, photos, or even text messages.