Algorithms vs. Regulators Battle Royale Kicks Off in China

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China is regulating algorithms. How this experiment goes could help Western regulators understand what to assume and what to avoid

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Broad-based regulations, if strictly enforced, could fundamentally shake up the business models of many successful Internet companies. For example, ByteDance, the owner of Tiktok, has achieved a great deal of success by recommending engaging content with the help of its powerful algorithm.

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Certainly, some aspects of China’s proposals have been explicitly targeted at maintaining government control. Internet watchdog guidelines state that algorithms should uphold core socialist values ​​and foster positive energy. Democratic societies are unlikely to accept such strictness, and even more benign rules may face court challenges.

But looking at how China’s moves work – and how big any collateral economic damage is ultimately – could still prove useful to other countries that are also grappling with the enormous social impact of Internet companies. The European Union proposed a bill in April to regulate artificial intelligence systems in some so-called high-risk uses such as critical infrastructure, college admissions and loan applications. In the US, Congress recently held a hearing on Facebook following Businesshala’s investigation into the social-media giant.

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The biggest problem with regulating algorithms is how opaque they are. This is becoming a bigger issue as more decisions are made by machines that learn by crunching large amounts of data. It is not easy, sometimes even for the creators of algorithms, to pinpoint the exact reason why artificial intelligence makes a particular decision. Inherent biases in training data can inadvertently seep into the decision-making process. And algorithms can also focus on certain objectives, such as increasing viral content, without considering other effects. In addition, they are also constantly updated, which makes regulation even more difficult.

This is also a big challenge for China, which has more powerful equipment. Another problem is how to make the algorithmic process more transparent and accountable, without the too broad brush that can stifle all innovation, especially in smaller companies. This is a huge risk that Beijing takes as a first mover – it could reap immediate benefits, as it sees it, in terms of enhanced social control and less ugly side effects like addiction and indebtedness. But it can also eliminate the potential emergence of any new Bytedances in the process.

Algorithms have become an integral part of everyday life. Regulations may need to catch on eventually – but how to go about it is a tough puzzle. Both investors and their detractors of US Internet companies should take a closer look at China’s experience.

Jackie Wong at [email protected]

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