On August 2nd, China’s cyberspace regulator announced that children under 18 should not exceed a daily smartphone usage of two hours, resulting in a decline in tech company stocks. The Cyberspace Administration of China (CAC) expressed the need for smart device providers to implement “minor mode” programs, which would restrict users under 18 from accessing the internet on mobile devices between 10 p.m. and 6 a.m.
Proposed Reforms and Investor Response: Challenges for Chinese Tech Firms
As part of the proposed reforms, the CAC stated that providers would be required to set specific time limits. For users aged 16 to 18, the allowed daily usage would be two hours, while children aged eight to 16 would have one hour, and those under eight would be limited to eight minutes. However, the CAC also mentioned that service providers should offer parents the option to opt out of these time restrictions for their children. Despite this announcement, investors showed dissatisfaction as shares of Chinese tech firms mostly declined in Hong Kong’s afternoon trade after the CAC released its draft guidelines, which will remain open for public feedback until September 2.
Bilibili (9626.HK) and Kuaishou (1024.HK) experienced declines of 6.98% and 3.53% respectively, while Tencent Holdings (0700.HK), the operator of the social network app WeChat, closed 2.99% lower.
Xia Hailong, a lawyer at the Shanghai Shenlun law firm, pointed out that the newly proposed regulations pose substantial challenges for internet companies. He stressed that compliance would entail significant effort and additional costs, with a notable risk of non-compliance. As a result, he believes many internet companies may choose to directly restrict minors from accessing their services.
Addressing Youth Internet Concerns: China’s Tech Industry Faces Regulatory Changes
Over the past few years, authorities have become increasingly concerned about the growing prevalence of myopia and internet addiction among young individuals. In 2021, the government implemented a curfew for video game players under 18, which had a significant impact on major gaming companies like Tencent.
Starting from 2019, video-sharing platforms like Bilibili, Kuaishou, and ByteDance have introduced “teenage modes” to restrict users’ access to content and control the duration of usage. For instance, ByteDance’s Douyin, similar to TikTok, sets a limit of 40 minutes for teenagers’ usage.
The introduction of these proposed rules comes as a response to signals from Beijing, suggesting the end of a prolonged regulatory crackdown on the technology industry. The authorities have conveyed their commitment to backing the expansion of tech giants.
