China is taking the next step in taming big tech with Personal Data Protection Act

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China has passed laws setting stricter rules for how businesses handle user data, a move fueling its campaign to curb the influence of big tech.

The Asian nation’s legislature has approved the Personal Data Protection Act, China Central Television said in a report on Friday morning.

Details of the new legislation were not immediately released, but previous drafts required companies to obtain user consent to collect, use, and share information and provide them with an opportunity to opt out. Companies that break the rules could face fines of up to 50 million yuan ($ 7.7 million), or 5% of their annual sales.

China under President Xi Jinping is taking action against its most powerful tech stars, including Alibaba Group Holding Ltd., Tencent Holdings Ltd and Didi Global Inc., to secure its influence on society. The government is also moving to address consumer concerns about the gradual erosion of their privacy as tech companies make rapid strides in using tools from facial recognition to big data.

The country’s lawmakers passed law in June giving Xi the power to shut down or refine tech companies that stood in the way of his efforts to control the vast amounts of data they create. The moves come as some US lawmakers call for the breakup of internet titans like Facebook Inc. and Alphabet Inc., and European regulators give antitrust action priority and give users more control over the data.

This law, which comes into force on September 1, would also help the Chinese government turn the world’s second largest economy into a leading provider of big data. Beijing has poured money into data centers and other digital infrastructures to make electronic information a national economic engine and strengthen the legitimacy of the ruling Communist Party.

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The new law promises to further contain China’s tech giants, who are already under attack by a thicket of regulations that govern everything from the way they do business and price performance to the way they do it use enormous amounts of data that are absorbed every day. Coupled with previous legislation, data protection regulations threaten to severely restrict a number of online trading services that rely on personalized data to target consumers and sell their goods.

Drafts of the latest data protection law would tighten the rules for user profiles businesses run and the recommendations apps can make. All decisions that are made automatically in the apps must be “fair and equitable,” said Zang Tiewei, spokesman for a commission for the legislature, at a press conference in Beijing last week.

They also allowed restrictions on the transfer of personal data across borders and required that all critical information be stored within China.

“The data localization requirements are not new or unique to China, but in terms of the practical implications for businesses here, there is no question that legal compliance is more cumbersome than it was before,” said Nathaniel Rushforth, Cybersecurity and Data Counsel at the DaWanda law firm Shanghai.

“We should expect more frequent and substantial enforcement actions against all companies in China,” he said.

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