UPDATE 1-China issues draft rules banning unfair competition in the internet sector

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(Recasts lede, adds detail on draft rules, background)

SHANGHAI, Aug 17 (Reuters) – Chinese regulators on Tuesday issued a lengthy set of draft regulations for the internet sector, banning unfair competition and restricting the use of user data, the latest move in a crackdown on the country’s powerful tech companies.

According to a document published on China’s State Administration for Market Regulation (SAMR) website, business operators should not use data, algorithms or other technical means to hijack traffic or influence users’ choices.

They may also not use technical means to illegally capture or use other business operators’ data.

The regulator also said firms cannot use technological means to maliciously impose incompatible barriers to other legal internet products and services.

It added that in cases involving violations, third-party institutions may be hired to audit data.

The proposed regulations come after SAMR imposed various restrictions and punishments on tech giants in an effort to restrict anti-competitive or monopolistic behaviour.

In April, following a months-long probe, SAMR fined e-commerce giant Alibaba Group Holding Ltd a record $2.5 billion for engaging in unfair competition..

In July, the regulator ordered social media company Tencent Holdings Ltd to end exclusive licenses for certain songs on its music streaming service, and also blocked a an merger between two game streaming companies Tencent had led.

The rules are currently open to public feedback before a September 15 deadline. (Reporting by Josh Horwitz and Brenda Goh in Shanghai, Yingzhi Yang in Beijing; Editing by Lincoln Feast.)

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