Tech shares in China, encompassing significant corporations such as Alibaba and Bilibili, have experienced a downturn in response to the Cyberspace Administration of China’s (CAC) proposal to limit smartphone usage for individuals under 18.
The draft legislation proposes a daily maximum of two hours of phone usage for minors. This move comes four years after China, the globe’s second-largest economy, implemented restrictions on video gaming for children.
According to the CAC’s plan, mobile internet access for children should be banned from 10 PM to 6 AM local time. Additionally, the proposal mandates that tech industry stakeholders, such as mobile device manufacturers, app developers, and app stores, establish an age-based “minor mode” feature. For example, the daily screen time limit for individuals between 16 and 18 will be two hours, while children under eight will be granted only eight minutes.
The public is currently reviewing the proposed legislation. Ray Wang, founder and CEO of the Silicon Valley-based consulting firm Constellation Research, believes that tech giants are likely to be held accountable for adhering to these rules, similar to past gaming restrictions.
Shares of Alibaba and Bilibili in Hong Kong fell by over 3% and close to 7%, respectively. Mid-day Thursday trading saw Alibaba shares down by about 2%, while Bilibili shares had dipped by 0.5%. In contrast, initially down by 3%, Tencent shares marked a slight 0.1% recovery.
These restrictions result from China’s concerns over video game addiction and its detrimental effects on children’s health. In 2019, an online gaming curfew was imposed on minors, followed by a further restriction in 2021, limiting children to only three hours of gaming per week.
This strict regulatory environment poses significant challenges for Chinese tech firms. Intensified regulation allowed the US to overtake China as the leading global gaming market in revenue terms, according to the research firm Newzoo.
The initiative to regulate tech usage among minors is part of China’s broader efforts to control digital addiction and safeguard its younger population’s health and well-being. However, these actions could impact the nation’s tech industry economically, influencing domestic and international market dynamics. Tech giants and investors alike must prepare for potential shifts in the digital landscape as these new restrictions take effect.
