Thu. Jan 20th, 2022


Recommendation algorithms define our online reality. These programs show us information and products that match our interests on US-based sites like Google and Amazon. The technology, often so advanced that it borders on whimsical, has also made Chinese peers very profitable. Stricter scrutiny of a state that intends to disrupt trust – and control of citizens’ access to news and opinions.

The algorithms, the “secret sauce” of many technology companies, is just one target of China’s latest Chinese business repression. Regulators want full disclosure of how technology groups are refining big data and users’ viewing history to show them products or content.

The move is more vague than recent cyber security assessments for local technology groups hoping to list overseas. Western news reports focused on the dwindling listing options of companies such as TikTok owner ByteDance and autonomous management startup Pony.ai. But potential state interference in algorithms poses a greater threat to business models.

Advertising sales, locally called “online marketing services”, are a core revenue stream for technology groups. They are typically responsible for a significant portion of revenue, regardless of the core business. Tencent, for example, earned nearly a fifth of its total advertising revenue in 2020, despite the fact that its main business was gaming. Advertising sales are directly related to how many users stay on the premises, and for how long they do so.

It sets up technology groups for conflict with regulators who want to dilute algorithms they blame for Internet addiction and online overspending. News organizations will also face tougher investigation into how they channel eyeballs. Regulators will require websites to enable users to disable algorithmic recommendations.

Watchdogs have set themselves a complicated task, requiring extensive security evaluations and inspection of code. Technical groups face a loss of competitive advantage if regulators adapt their own technology or leak algae to competitors. Chinese web users may find that officials have even greater access to their most personal information.

By seizing control of algorithms, Beijing has possibly found the most effective way to strengthen its grip on its technology giants, and also its citizens.

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