Tech shares slid as China hints at new law

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Chinese tech stocks experienced a decline following a recommendation from the country’s cyberspace regulator to impose limits on smartphone usage for individuals under the age of 18. Notably, shares of companies such as Alibaba and video-sharing platform Bilibili saw declines on Wednesday, with further losses observed on Thursday.

The proposed regulations entail restricting children to a maximum of two hours of smartphone usage per day. This initiative comes four years after China implemented gaming restrictions for children in the world’s second-largest economy. The Cyberspace Administration of China (CAC) is behind these new rules, which also propose a ban on internet access via mobile devices from 22:00 to 06:00 local time.

Under the CAC’s proposal, key players in the industry, including mobile device manufacturers, apps, and app stores, are required to develop a “minor mode” function to enforce usage limits tailored to different age groups. For instance, teenagers aged 16 to 18 would be allowed a daily screen time of two hours, while those under the age of eight would have a limit of 40 minutes.

Although these measures are currently open for public feedback, technology giants are expected to play a significant role in enforcing these rules, akin to how gaming restrictions were implemented. Despite potential workarounds, the general consensus is that past gaming restrictions have been effectively implemented, according to industry expert Ray Wang.

In reaction to these developments, shares of Alibaba closed down more than 3% in Hong Kong on Wednesday, and Bilibili’s shares plummeted nearly 7% in the same region. By mid-day on Thursday, Alibaba’s shares were trading around 2% lower, and Bilibili’s were down by 0.5%. However, technology giant Tencent, which closed lower by around 3%, showed a slight increase of 0.1% in Hong Kong.

China has been taking various measures to combat video game addiction, with a history of imposing curfews and usage limits for minors. These regulatory actions have had an impact on Chinese tech companies, contributing to the shift of the world’s biggest gaming market by revenue from China to the US.