Caixin
Nov 25, 2021 05:40 AM
BUSINESS

Tencent Barred From Releasing New Apps Over Data Breaches

The company has run afoul of regulators repeatedly during a clampdown on tech companies’ violations of data protection regulations
The company has run afoul of regulators repeatedly during a clampdown on tech companies’ violations of data protection regulations

China’s social media giant Tencent Holdings was suspended from releasing new mobile applications and updating existing ones without regulators’ approval after allegations that several of its products violated consumer interests.

The order is part of “temporary administrative guidance” against Tencent as regulators ramp up scrutiny of the country’s internet sector, state media reported Wednesday. The Ministry of Industry and Information Technology (MIIT) told app stores and platforms to carry out the order immediately.

Tencent, China’s most valuable tech company, operates dozens of apps including WeChat, which hosts 1.2 billion users worldwide. Existing apps remain functional and available for download, Tencent said.

The punishment is another blow to Tencent in China’s year-long tech crackdown, which has already taken a toll on businesses like gaming and advertising. The company reported slower-than-expected revenue growth in the September quarter amid regulatory headwinds.

Tencent is “continuously working to enhance user protection and also have regular cooperation with relevant government agencies to ensure regulatory compliance,” the company said in a statement.

The company has run afoul of regulators repeatedly during a clampdown on tech companies’ violations of data protection regulations. Nine Tencent apps including Tencent News and QQ Music were named by the MIIT on four separate lists of violators after the ministry started making regular disclosures of apps’ breaches of users’ rights.

In November last year, the company was also accused by senior MIIT official Lu Chuncong of repeated violations of personal information protection.

Companies with repeat violations will face severe punishment, one regulatory official told Caixin. According to rules published by the MIIT this year, companies found to have committed violations four times will be subject to relative administrative measures.

Under the latest order, the MIIT will conduct “technology testing” to ensure that Tencent’s apps meet standards before the company can offer them to users, according to state media. The order will be in place from Nov. 24 to Dec. 31, and each test may last about seven days.

Chinese tech giants including Tencent and its archrival Alibaba Group face greater compliance pressures after China rolled out the new Data Protection Law, which set stricter requirements on tech companies’ handling of users’ personal information.

The MIIT announced a five-month campaign Nov. 5 targeting data-related misconduct of apps and their developers.

All internet companies are scrambling to adjust their operations to comply with the new laws, a tech company’s legal department staffer said.

“For a long time, the internet industry has run businesses on the basis of abusing users’ information,” the person said. “There are so many things to be changed, and every company may run afoul of regulators in the face of the stricter laws.”

The new data protection law stipulates punishment of as much as 50 million yuan ($7.8 million), or as much as 5% of a company’s annual revenue. The MIIT is also drafting new industry rules for mobile apps which may lead to business suspension of apps that fail to comply.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (hello@caixin.com)

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