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Politics

G-7 to impose disclosure rules on US and Chinese tech giants

Alibaba, Tencent and GAFA will need to show how data is being used

New rules will be applied to social media services such as Tencent's WeChat, which accumulates vast amounts of data from users around the world.   © Reuters

TOKYO -- Social media platforms and digital service providers around the world, led by American giants Facebook and Google, as well as China's Alibaba Group Holding and Tencent Holdings, are set to face tougher requirements for transparency, as the Group of Seven looks to devise industry-wide rules to protect consumers.

The G-7, which does not include China, aims to create an environment in which shoppers can make informed decisions based on clear information from popular e-commerce sites and large tech companies, which have grown by soaking up data from its users. Such digital business players increasingly come from China, whose influence in the field is growing.

The bloc plans to include the topic in their joint statement following the G-7 summit in August, based on an interim report from their finance ministers and central bank governors.

Complaints about digital companies include the use of secretive means to collect data and the failure to include key information in user contracts. Many consumers also enter agreements without reading the fine print -- which can include clauses allowing companies to change prices unilaterally -- fearing they will be frozen out of a service integral to their daily lives.

There is also concern that the algorithms behind search results and crowdsourced reviews are being used to influence consumers. The EU's European Commission is urging operators of these services to clearly disclose their methodology so that users may make informed decisions.

The U.K. has begun investigations into so-called influencers and key opinion leaders, who are paid by brands to promote products, for violations of consumer protection laws.

Antitrust regulators from each G-7 nation will discuss how to solve these issues through greater consumer protection and transparency in digital business.

The EU, Japan and the U.S., by taking the initiative on rule-making, hope to encourage other members of the Organization for Economic Cooperation and Development to update their competition laws.

European nations have been particularly aggressive. The EU's new privacy law emphasizes consumer rights. Enacted last year, the General Data Protection Regulation gives individuals greater control over their privacy including the right to be forgotten, which entitles people to erase their own data held by companies upon request.

Germany, which recently said that Facebook's data collection practices represent an abuse of its dominant market position, has called for the creation of competition rules to ensure fairness for consumers.

The U.S. is considering a massive fine for Facebook over the platform's privacy violations. Though Washington and Brussels squared off in 2018 over protectionist American trade policies, the two sides agree on consumer protections.

Japan also has begun to develop requirements for IT companies to improve the transparency of contracts and disclose their impact on privacy.

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