The Beijing techlash ‘against China’s greatest internet champions

The Beijing techlash ‘against China’s greatest internet champions
The Beijing techlash ‘against China’s greatest internet champions

During 2021, the Chinese government issued two groundbreaking laws governing the country’s digital economy. That data security law (ADSL) and private act (PIPL) was introduced throughout H1 and implemented in H2. Both parts of the legislation were part of a broader crackdown on private-sector internet giants, whose power and influence China’s leaders said had been exaggerated.

Both DSL and PIPL imply strong new restrictions on the collection, storage and use of personal data. The rules have created massive challenges for ad technology service providers and digital ad publishers when previous standard practices for data collection and ad targeting were suddenly made illegal.

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During the first half of 2021, before most of the new rules were fully circulated, China’s largest technology companies reported strong growth in their advertising business. Everything changed in H2 when the broader “techlash” was inserted:

  • Ali Baba reported 24.0% YoY growth in customer management revenue in the first half and then 0.6% in the second half.
  • Baidu so the growth of revenue in online marketing falls from 21.9% to 2.1% in the same period.
  • Tencent had a 23.1% growth in revenue from online advertising in the first half. However, in the 3rd quarter it fell to 5.4% and the company reported a drop of 12.7% year-on-year in the 4th quarter.
  • a director of ByteDance’s douyin Chinese media told Jiemian News that Douyin’s advertising business had not grown at all in the second half of 2021.
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To further complicate matters, China’s antitrust market regulator is developing new guidelines designed specifically to rein in digital advertising. Though Internet Advertising Management Measures Not yet fully released, they are expected to further limit the operational flexibility of China’s largest digital ad publishers.