China increases pressure on tech companies with draft regulations on online advertising

The Chinese market regulator proposed new rules that would increase oversight of online advertising, including a principle that ads should not affect normal internet use, nor mislead users.

The Chinese authorities have tightened regulation this year in a number of sectors, with an emphasis on technology.

The search giant Baidu Inc and games publisher Tencent Holdings warned during their recent quarterly results that the short-term outlook for ad sales appeared weak, affected by the pandemic and China’s regulatory measures.

Internet advertising must “meet the requirements for the establishment of the socialist spiritual civilization and the promotion of the excellent traditional culture of the Chinese nation”Said the State Administration of Market Regulation.

The proposed rules ask platform operators to establish a system for registering and reviewing advertisers and advertisements and that “monitor and inspect the content of the advertisements displayed and published by using their information services”.

The project also calls for the prohibition of advertisements directed at minors that promote medical treatments, cosmetics and online games “that are not conducive to the physical and mental health of minors”.

The proposed new rules are open to public comment until December 25, the regulator reported on its website.

Shares of Hong Kong-listed Tencent and delivery giant Meituan fell 0.5% and 1%, respectively, following the release of the draft rules.

In September, the Chinese cyberspace regulator published draft rules dictating how companies can use algorithmic recommendations, after previous rules regarding data use and unfair competition.

Prior to that, Chinese transportation giant Didi Chuxing was the subject of an investigation for alleged privacy violations days after listing in the United States, while e-commerce giant Alibaba Group Holding Ltd received a record $ 2.8 billion fine for anti-competitive behavior