Among other things, it is made more difficult for companies to create user profiles from the collected data and to charge different prices for one and the same service on the basis of these profiles. The law is based on EU data protection regulations.
The shares of Tencent, Alibaba and other tech companies fell on Friday morning following the announcement of the new rules. Beijing had taken action against numerous companies in recent months because of the alleged misuse of customer data.
IPhone owners pay more
Price discrimination based on customer purchasing history has been a widespread phenomenon in China. For example, tens of thousands of iPhone owners complained to Chinese consumer protection agencies that using a transport service cost them more than it would for owners of cheaper smartphones. Travel tickets also cost more if the buyers are classified as business travelers.
“China’s new data protection regulation is one of the strictest in the world,” said Kendra Schaefer, partner at the Beijing-based consulting firm Trivium China. The law aims to “lay the foundations for the digital economy in the next 40 or 50 years”.
That should change from November
The law, which will come into force in November, also stipulates that the personal data of Chinese citizens cannot be transferred to countries with lower standards for data security than in China. That could be problematic for foreign companies.
Companies that fail to comply can be fined up to 50 million yuan or five percent of their annual sales.
Chinese security services are allowed to keep the data
While online companies will be able to collect less data in the future and also have to obtain the consent of the users for this, the Chinese security services will retain their access to the personal data of citizens. Beijing has long been accused of using its online companies to monitor and suppress people in Xinjiang Uyghur Province and elsewhere.
The whole country is covered with a dense network of surveillance cameras, some of which work with face recognition. In Xinjiang itself, according to human rights groups, residents have to install surveillance programs on their smartphones that give authorities access to location, pictures and messages.