China Increases Pressure on Technology Companies: Approves Information Protection Act

The Chinese government today (Friday) approved a law to protect information, which sets stricter rules regarding how companies collect data and manage users’ personal information, according to a report on CNBC.

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The new laws are part of the increased regulation the government has taken in recent months, and may affect the way Chinese technology giants operate.

The law, called the Personal Data Protection Act (PIPL), defines for the first time the rules regarding the collection, processing and protection of information. Chinese media report that the law was officially approved today, but its final version has not yet been released.

According to an early draft that was revealed, the law requires the information collections to get the users’ approval to do so. Moreover users can revoke their consent at any stage. Companies that process the information may not refuse to provide services to users who do not agree to share the information unless this information is necessary to obtain the service or product in question. The law also includes strict requirements regarding the disclosure of information by Chinese citizens outside the country. Companies that do not comply with the laws will be fined.

The law was approved while regulators in the country increase control over technology companies. “With the approval of the law, the basic system for monitoring information will be completed, which will lead to a new era of information management for technology companies,” said Kendra Shapper, a partner at Beijing-based Trivium China.

The Chinese government fears the amount of information companies collect, especially in the Internet sector, and the potential consequences. In July, regulators cracked down on an investigation against travel-sharing giant Didi, just days after the company was issued in the United States. The investigation led to Didi being forced to stop accepting new users and her app was removed from the app stores in China. The regulator accuses Didi of illegally collecting information about users.

In line with the trend, large technology companies are already preparing for further restrictions. On Wednesday, Tencent, the owner of the popular WeChat messaging app, warned that more regulations in the technology industry were expected.

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