On August 17, 2021, the SAMR issued the Provisions on Preventing Online Unfair Competition (Draft for Public Comments), which prohibits business operators from using data, algorithms, and other technical means to commit traffic hijacking, interference, malicious incompatibility, and other improprieties to influence user choices or hinder or damage the normal operation of network products or services offered by other business operators. As of the date of this annual report, the aforesaid provisions have not been formally adopted, and due to the lack of further clarification, uncertainties remain as to the interpretation and implementation of such provisions.
On March 16, 2022, the Supreme People’s Court promulgated the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Anti-unfair Competition Law, which came into effect on March 20, 2022, setting out more detailed standards to apply the Anti-unfair Competition Law.
On November 22, 2022, the SAMR released the Anti-unfair Competition Law (Revised Draft for Comments), which intends to set out more detailed rules on regulating anti-unfair competition within digital economy and strengthen the requirements of anti-unfair competition. The period for which the SAMR solicited comments on this draft ended on December 22, 2022, but there is no timetable as to when this draft will be enacted.
Regulations Relating to Advertising
The PRC government regulates advertising, including online advertising, principally through the SAMR. The PRC Advertising Law, as promulgated on October 27, 1994 and most recently amended on April 29, 2021 by the Standing Committee of NPC, outlines the general regulatory framework for advertising. According to the Advertising Law, advertisers, advertising service providers, and advertising publishers are required to ensure that the contents of the advertisements they prepare or distribute are true and in full compliance with applicable laws and regulations. For example, advertisements must not contain terms such as “the state-level,” “the highest grade,” “the best,” or such similar wording. In addition, the use of internet to distribute advertisements must not affect the normal use of the internet by users. Where internet information service providers are aware or ought to be aware that illegal advertisements are being published or distributed using their services, they are obliged to prevent such distribution.
The Interim Measures for Administration of Internet Advertising, which was promulgated by the State Administration for Industry and Commerce on July 4, 2016 and took into effect on September 1, 2016, set forth certain compliance requirements for online advertising businesses. The Interim Measures for Administration of Internet Advertising regulate any advertisement published on the internet, including without limitation, through websites, webpage, and APPs, in the form of word, picture, audio, and video. Advertising operators and distributors of internet advertisement must examine, verify, and record identity information for advertisers including name, address, and contact information, and maintain a verification record that is updated on a regular basis. Moreover, advertising operators and advertising distributors must examine the supporting documentation provided by advertisers and verify the contents of the advertisements against supporting documents before publishing. If the contents of advertisements are inconsistent with the supporting documents, or the supporting documents are incomplete, advertising operators and distributors must refrain from providing design, production, agency, or publishing services.
On February 25, 2023, the SAMR published the Administrative Measures for Internet Advertising, or the Internet Advertising Measures, which will come into effect on May 1, 2023 and simultaneously supersede and replace the Interim Measures for Administration of Internet Advertising that have been in effect since September 2016. The Internet Advertising Measures aim to regulate various kinds of commercial advertising activities conducted within the territory of China to directly or indirectly promote a product or service through text, images, audio, video, or any other form, using any website, web page, web application, or other online media. According to the Internet Advertising Measures, internet advertising operators and publishers shall establish, improve, and implement systems for receipt, registration, review, and filing management of the internet advertising businesses according to the relevant regulations, and shall examine, verify, and register the identity information of advertisers, such as their names, addresses, and valid contact details, set up registration files and check and update them on a regular basis. Relevant files shall be kept for no less than three years from the date of termination of the advertisement release. Internet advertising operators and publishers are required to have advertisement reviewers who are familiar with advertising laws and regulations or establish a special department responsible for the review of internet advertisements. Where an internet advertisement is published by means such as algorithmic recommendation, the relevant rules and records of such algorithmic recommendation shall be included in the advertising files. In addition, the advertisers and advertising publishers are required to set prominent buttons in the internet advertisements, including the pop-up advertisements, to ensure the closure of such advertisements can be done by one click. The Internet Advertising Measures further clarify that product sellers or service providers promoting products or services through online live streaming that constitutes commercial advertisements shall assume the responsibilities and obligations of an advertiser.
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