On Wednesday, China’s cyberspace regulator denied the issuance of any document with new guidelines pertaining to the big internet companies in the country. As per the reports that were in circulation, the guidelines made it mandatory for the companies to attain approval to go ahead with new investments and fundraising. The regulator has completely denied the issuing of any such document. The news concerning such a document with new guidelines came forth after a document surfaced on the Chinese social media with similar guidelines. Although the regulator did not go into detailed information, it confirmed that the document wasn’t issued by it via its WeChat account,
“The Cyberspace Administration of China(CAC) has not issued this document and the information is false.” The concise and brief declaration put an end to the rumors that were adrift following the appearance of the said document on social media.
The What and Why
Although the regulator denied issuing any such document, the lack of details gave rise to a flurry of doubts. The denial did not add any clarity to whether it referred to the existence of the document or further regulation plans. As per the reports from Reuters, it has become clear through the information attained from sources close to the matter that new rules have been drafted by the regulator. These rules would give the regulator some level of control over the investment or fundraising plans of companies with users over 100 million. The regulator is yet to comment on the said report.
Sources close to the matter also hinted towards certain internet companies being briefed about these rules. However, these rules are subject to changes in the future. Even those firms which come under the negative list last year will have to seek approval. The said list was issued last year by the National Development and Reform Commission of China.
The Impact
The impact of these rules if they come into effect would not be in favor of the companies. Over the past few years, China’s regulators have become increasingly stringent and these rules will only augment the oversight from the already assertive regulators. The new regulations might have a rather adverse effect on investments and it might “even end the era for big internet platform operators to build an ecosystem through investments,” (Chen Weiheng, Partner and head, U.S Law Firm Wilson Sonsini’s Greater China Practice.)
A good majority of the tech giants in China have built their empires through investing in smaller players to reap big results. These practices have invited the criticism of the regulators who slam them for being monopolistic and unfair.
