Data protection

Chinese tech giant Alibaba is currently facing a penalty of USD2.75 billion from the government. The Chinese authorities alleged the company of anti-competitive practices. Reports reveal that the strict scrutiny of tech companies in the country has extended towards others like Tencent, ByteDance, and more. As a part of ensuring data protection, China published the draft of its Personal Information Protection Law (PIPL) last year. The draft outlines stricter rules for data protection and regulation and imposes serious penalties for violations. The PIPL applies to all the citizens of China and both foreign and Chinese companies doing business in the land and collecting data from people. 

Do these two scenarios seem to have any connection? As part of the effort to control and regulate the technology giants in the country, Beijing has been issuing fines and has brought down companies like Alibaba and Ant Group under the scanner. 

China has been competing with the US to gain leadership in technology and innovations. A CNBC report, “China and the U.S. are competing for AI dominance. A group of experts chaired by former Google CEO Eric Schmidt said China could soon replace the U.S. as the world’s AI superpower.” The report stated that the sudden revamp of data protection laws can be a step towards taking the control of internet and tech companies, to accentuate the idea of becoming a tech leader. Winston Ma, from the New York University of Law, told CNBC that this new model China is putting forth can be its step towards becoming the superpower since the World Trade Organization could provide leadership power to countries with strong data laws. 

Last year, the Shanghai Stock Exchange suspended the record-breaking IPO of the Ant Group, in which Alibaba has a large share. This was a starting point and soon Alibaba and Ant Group came under the surveillance of the government. According to a Financial Times report, Tencent Holdings, a Chinese tech conglomerate confirmed talks with Chinese antitrust regulators, which was completely voluntary. This was in the milieu of other tech firms coming under the scrutiny of the government. The Chief Executive of the company, Pony Ma told to the Financial Times that they were actively cooperating with the regulatory authorities and sorting out issues including past investments. 

The Personal Information Protection Law (PIPL) has similarities with the European Union’s General Data Protection Regulation. Both these laws are aiming to protect data by transferring the power and consent to its citizens. The PIPL states that data collection should be done with the consent of an individual and they have the freedom to withdraw the consent whenever they want. Personal information processes cannot deny services to individuals who refuse or withdraw their consent and separate consent is required if the processed personal information is shared with a third party. In addition, the law makes strict statements on data localization and cross-border transfer of data, which can only be done with special permission from the government. 

Will these regulations be implemented in the state handles and organizations other than the private ones? The draft says yes, the regulations will be applicable to state organs like legislatures, courts, and more. As Kendra Schaefer, a partner at Trivium China, a research firm based in Beijing, spoke to CNBC, said, “ We often think about the PIPL in terms of its applications to Alibaba or Tencent but we forget that China’s state agencies are the country’s largest data processors.” Kendra puts forth an important statement by saying this. Country while keen on regulating the private sector, often ignore the amount of data collected by the government authorities and the way they utilize the data. For example, the Indian Government was looked upon with suspicions with regards to the rampant data collection during the pandemic last year. There were debates going on whether personal information is used for mass surveillance or misused in any other way. Similarly, the current scenario in China could end up in heated debates regarding the Government’s adherence to these regulations.