Beijing’s algorithm crackdown favors Chinese consumers


What happened: The Chinese Cyberspace Administration (CAC) is making headlines again, this time announcing that algorithms designed and used by tech companies should adhere to core socialist values ​​and that companies should put in place security systems and responsibility of algorithms, according to Reuters.

“A multidimensional regulatory system will be established to monitor algorithm security risks, records administration and illegal behavior,” said a statement posted on the CAC website.

The World time reports that the initiative was developed after the CAC solicited public input on a new set of regulations for the management of algorithms in late August, forcing algorithm service providers to ditch algorithms that block information, manipulate ranking lists and search results, control searches and selection, spoof likes and comments, or intentionally redirect online traffic.

CVC and the other eight ministries are expected to create the rules for the initiative over the next three years.

The Jing socket: The GIG economy has thrived over the past decade thanks to algorithms that collect user data. While customers initially looked forward to receiving targeted advertisements and products, this is no longer the case. In fact, a global backlash against the tech giants and their practice of collecting and using personal data has come to a head.

During the Trump administration, the White House issued Executive Order 13859, which encourages innovation in AI. However, the note mentions that the deployment of AI models should “improve safety, fairness, welfare, transparency and other social goals.”

In addition, the European Commission has proposed the Digital Services Act (DSA) and the Digital Markets Act (DMA). Both aim to create secure digital spaces that prioritize the protection of personal data. The EU has also been confronted with online platforms which use algorithmic systems manipulated to amplify bias and the spread of disinformation.

Clearly, China’s desire to design algorithmic moderation systems is not unique. However, we cannot minimize the impact of regulation on retail. Today, tech giants like Alibaba, and Tencent use AI-based algorithms to recommend products and services based on past purchases or personal preferences, largely affecting the luxury brands sold. on these platforms. And in doing so, they deliver personalized customer experiences and lower the overall cost of inventory management.

For obvious reasons, Beijing’s restrictions will also influence the brand’s efforts to attract online traffic and boost digital sales. This is especially true for the biggest ad spenders, who stay focused on their digital marketing strategy rather than their product development strategy. A mediocre product with plummeting sales needs increased exposure through targeted advertising to create a need for it.

Beijing’s decision will establish a more transparent and fairer relationship between brands and customers. Foreign companies will no longer rely on online algorithms to entice customers to connect to products and services. As such, they will be forced to create value through products with exceptional qualities.

The Jing socket reports on major news and presents our editorial team’s analysis of key implications for the luxury industry. In the recurring column, we analyze everything from product declines and mergers to heated debates popping up on Chinese social media.

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