China's New Regulations Could Scare Big Tech Users

Chinese lawmakers have passed a comprehensive regulation to restrict the use of mobile devices and services by people under 18, with the aim of creating "a cyberspace that is beneficial to the physical and mental health of minors and protects their legitimate rights and interests," according to a final draft issued by the State Council and published on a government website on Oct. 24.

China has spent years trying to combat internet and video game addiction among children. (Photo: Shutterstock)

The Regulation on the Protection of Minors on the Internet is the most comprehensive regulation to date, comprising 60 provisions that place various responsibilities on Chinese smart device manufacturers and mobile service providers, local governments, educational institutions and parents.

Device makers including Xiaomi, Huawei and Oppo must either pre-install protection software for minors or provide clear instructions on how to install it. Short video and gaming service operators including Tencent, ByteDance and NetEase must also provide a minor mode on their platforms.

As of 2021, according to the China Internet Network Information Center, the country has more than 181 million internet users under the age of 18. With the clampdown on internet use, analysts believe the impact on local Big Tech will be limited in the short term but will affect the user base over time.

“For most gaming and Internet companies, minors are not their target customers. Years of anti-Internet addiction regulations have left minors as a very small portion of the free or paid user base of China’s top gaming companies,” said Zhang Shule, an analyst at CBJ.

Zhang does not expect the implementation of the new regulation to impact the revenue of Chinese internet companies.

For Tencent, the world's largest video game company by revenue, minors contributed just 0.4% of total domestic gaming time and 0.7% of revenue in the first quarter of this year.

But the new rules will prevent companies from building certain user habits as children enter adulthood. That could have a ripple effect on the number of users of other Internet products and services, said Zhang Yi, founder and chief analyst at consultancy iiMedia. Big Tech could lose out on an opportunity to build its image with younger users.

Research from Sinolink Securities came to a similar conclusion. According to Sinolink, minors account for about 20% of China’s mobile gamers and 13% of users of Douyin, the Chinese version of TikTok. Restricting usage would hurt businesses in the future.

Beijing’s years-long battle against internet addiction has resulted in scattered, sometimes overlapping, regulations from multiple agencies, according to the SCMP . For example, in early 2023, the Cyberspace Administration of China proposed its own rules requiring device manufacturers, app store operators, and app developers to include a “minor mode” in their products.

Time limit setting is 40 minutes for users under 8 years old, one hour for users from 8 to 16 years old and two hours for users from 16 to 18 years old per day. If you want to watch more, you must get parental permission.

A 2021 video game regulation from the State Administration of Press and Publication only allows minors to play games for one hour on Fridays, Saturdays, Sundays and holidays.

(According to SCMP)

Children and the dangers of early exposure to AI Chatbots Children will face many risks in cyberspace if they are not well equipped with the necessary skills, including communication skills with AI Chatbots.

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