In a significant development, Chinese technology shares experienced a sharp decline following a recommendation from the country’s cyberspace regulator to impose strict limits on smartphone usage among children under 18.
This move by the Cyberspace Administration of China (CAC) has sent shockwaves through the tech industry, impacting major players like Alibaba and Bilibili. The proposed law aims to address concerns regarding children’s screen time and its potential impact on their health and well-being. As the industry awaits public feedback on the proposal, concerns mount about its potential impact on tech giants’ responsibilities and the market’s outlook.
Limiting Screen Time for Children
The CAC’s proposal centers around restricting smartphone usage for children under 18, allowing them a maximum of two hours of screen time daily. Moreover, children would be prohibited from accessing the internet on mobile devices between 22:00 and 06:00 local time.
These stringent measures come four years after gaming restrictions were imposed on children in China, signaling the government’s continued commitment to safeguarding children’s interests in the rapidly growing technology-driven society.
“Minor Mode” Function and Varied Usage Limits
To enforce these usage limits effectively, the CAC has demanded that industry players, including mobile phone manufacturers, apps, and app stores, develop a “minor mode” function that sets usage limits based on the child’s age. For instance, children aged 16 to 18 would be allowed a two-hour daily screen time, while younger children under eight would only have eight minutes per day.
The nuanced approach intends to cater to different age groups’ needs while curbing excessive screen time and its potential consequences.
Responsibility of Tech Giants and Market Impact
Industry experts predict that technology giants like Alibaba and Bilibili may bear the responsibility of enforcing these rules, similar to how they were involved in the implementation of gaming restrictions in the past.
Ray Wang, the founder and CEO of Silicon Valley-based consultancy Constellation Research, believes that while workarounds are possible, the gaming restrictions have been reasonably well implemented so far. The potential enforcement role of tech giants raises questions about their operational challenges and possible market repercussions.
Shares of Alibaba and Bilibili Take a Hit
The news of the proposed smartphone usage restrictions caused immediate turmoil in the Chinese stock market. On Wednesday, shares of Alibaba closed over 3% lower in Hong Kong, while Bilibili witnessed a staggering 7% decline in the territory. The impact extended into Thursday’s trading session, with Alibaba trading around 2% lower and Bilibili down by 0.5%. Surprisingly, technology giant Tencent, which closed about 3% lower on Wednesday, saw a minor recovery with a 0.1% gain in Hong Kong.
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China’s Struggle Against Gaming Addiction
The CAC’s move to propose smartphone usage restrictions mirrors its earlier efforts to tackle video game addiction among children. In November 2019, China imposed a curfew on online gaming for minors, banning them from playing between 22:00 and 08:00. Additionally, they were limited to 90 minutes of gaming on weekdays and three hours on weekends and holidays.
Subsequently, children were banned from gaming for more than three hours a week. These measures were implemented due to concerns about gaming addiction’s adverse effects on children, but they also impacted China’s gaming market.
Market Impact and Global Competition
As China increased regulations on its gaming industry, the United States surpassed it to become the world’s largest gaming market by revenue, according to research firm Newzoo. The recent proposal to limit smartphone usage among children raises concerns about the potential market impact on Chinese technology companies and the broader tech sector. As the industry awaits further developments and public feedback on the proposed law, the fate of Chinese technology shares remains uncertain.
Conclusion
The Cyberspace Administration of China’s proposal to limit smartphone usage for children under 18 has sent shockwaves through the tech industry, resulting in significant declines in Chinese technology shares.
The proposed law aims to protect children’s health by setting usage limits through a “minor mode” function. Major technology companies like Alibaba and Bilibili face potential responsibilities in enforcing the regulations. As China grapples with the impact of such regulations on its tech market, the world watches closely to see how this move will shape the future of Chinese technology and its global competitiveness.
