China is set to implement its latest set of regulations designed to further restrict internet use by minors, a move that reflects the government’s commitment to safeguarding the physical and mental well-being of young users. The new ordinance, known as the “Regulation on the Internet Protection of Minors,” passed by Chinese legislators, comes into effect on January 1. While the immediate impact on Big Tech firms appears limited, analysts suggest that these regulations could have long-term implications for the industry.
The Regulation on the Internet Protection of Minors is among the most comprehensive set of rules implemented in China to address concerns related to minors’ internet usage. With over 191 million internet users under the age of 18 in 2021, it was crucial for the government to create a framework conducive to the well-being of young users and to protect their legitimate rights and interests. This regulation introduces sixty articles that place varying responsibilities on smart device makers, mobile service providers, local governments, educational institutions, and parents.
Key provisions include requiring mobile device manufacturers to pre-install or clearly instruct users on how to install minor-protection software. Similarly, gaming and short video service operators must provide a “minor mode” on their platforms. These measures are aimed at controlling the amount of time minors spend online and curbing activities deemed detrimental to their well-being, particularly in the realm of online gaming.
Analysts note that in the short term, the impact on local Big Tech firms may be limited. Zhang Shule, an analyst at CBJ Think Tank, points out that for most internet and gaming companies, minors are not their primary customer base. Years of regulatory efforts against internet addiction have resulted in minors representing only a small fraction of free or paid users for top Chinese gaming companies. Tencent, the world’s largest video gaming company, reported that minors accounted for just 0.4% of total time spent on domestic games and 0.7% of gross receipts in the first quarter of the year.
While the immediate financial impact on these companies may be modest, there are concerns about the long-term effects of these regulations. Zhang Yi, founder and chief analyst at Guangdong-based consultancy iiMedia, suggests that the new rules could hinder companies from developing certain user habits among minors that could lead to stronger brand loyalty and engagement as they transition into adulthood. In essence, Big Tech firms may miss out on opportunities to build mindshare among young users, which could affect their user numbers in the long run.
Research from Sinolink Securities supports this view, noting that the immediate impact may be limited, but there’s a possibility of eroding usage time and the future user base of certain platforms. Minors make up a significant portion of the user base for Chinese mobile gamers and platforms like ByteDance’s Douyin (the domestic version of TikTok). Limiting their use could have adverse effects on these companies in the future.
The Chinese government’s ongoing battle against internet addiction has led to various agencies introducing overlapping and sometimes contradictory regulations. Earlier this year, the Cyberspace Administration of China proposed its own regulation requiring device makers, app store operators, and app developers to include a “minor mode” in their products. This mode would limit usage to 40 minutes per day for those under 8, one hour per day for those aged 8 to 16, and two hours for those aged 16 to 18, with additional time requiring parental intervention.
Additionally, a strict video gaming regulation in 2021 from the National Press and Publication Administration limited gaming time for minors to one hour on Fridays, Saturdays, Sundays, and statutory holidays.
(Source: Ben Jiang | South China Morning Post)
