China's new rules could see Big Tech users decline

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 October 24.

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

The Regulations on the Protection of Minors on the Internet are the most comprehensive to date, containing 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 pre-install protection software for minors or provide clear instructions on how to install it. Short video and game 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,” said Zhang Shule, an analyst with CBJ. “Years of anti-addiction regulations have left minors as a very small part of the free or paid user base of China’s top gaming companies,” he said.

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. This 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 the opportunity to build its image with young users.

Research from Sinolink Securities has come 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. Limiting 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 makers, app marketplace operators, and app developers to include a “minor mode” in their products.

Time limits are set to 40 minutes for users under 8, one hour for users 8-16, and two hours for users 16-18 per day. Parental permission is required for additional viewing.

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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