Is personal data protection changing China's innovation ecosystem?

BY DR. JILI CHUNG

​In the past month, the Ministry of Industry and Information Technology (MIIT), (the regulation body for the internet in China) released notifications regarding user rights violations to dozens of apps.  

MIIT highlighted that these apps have collected personal information beyond the authorized scope and demanded rectification with the coming month.*

This notification is MIIT's continued effort to regulate use of personal information.  In recent months, this tightening control appears to have become a new norm in China's innovation ecosystem.

​Big Data is a Goldmine

Protection of personal information is important.  But how will such tightening regulations over personal information change China's innovation ecosystem?

AI and big data enterprises have seen aggressive growth in China.  They adopt novel business models that originated from countries in the west, improve them, and develop them into huge enterprises in the sizable domestic market.

International commentators consider lower protection for personal information providing a more friendly environment to these Chinese enterprises. They could iterate algorithms faster than their US or European counterparts because data is easier to collect.  Such iteration is crucial to AI model improvement.

The Formation of Sizable IP Pools

The increasing number of patent applications relating to AI and big data in financial technology (fintech) provides an example.  The developers of Fintech have used apps to collect users' personal information to analyze consumer behaviors.

Zhima Credit, a subsidiary of Alibaba's financial service group ANT, best illustrated such practice.  It generates an individual's credit report based on their internet purchases, activities on social media, conversations within friend circles, and participation in online gaming.  Alibaba then extended microloans to individuals with high "credit scores."
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As a result, China is now leading in patent applications and thriving in business innovations in the domain of AI and big data.  For example, more than three Chinese entities (i.e., PingAn, Alibaba, and Tencent) have all gained a strategic position through their patent portfolios for innovations relating to AI and big data applications in Fintech.

Using AI and Big Data to Facilitate Innovation
Their accumulated experience has become a common asset in China's innovation ecosystem.  Other enterprises have been applying such advantages in a broader range of innovative activities, including IP protection and utilization.

For example, AI combined with big data mining technologies may help conduct patent searches more efficiently.  A few years ago, preparing a citation map for a patent could take weeks. Now, it is only one-click away.

In other aspects, AI and big data technology can enhance, unlock, exploit, and facilitate the findings of IPs' intrinsic values, thus facilitating the underlying transactions for IP commercialization.

In addition, AI supervised learning can assist professional appraisers in determining the value of a patent more objectively and consistently. These improvements increase parties' confidence towards IP monetization deals and are increasing deal flows in the financial system.
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Dozens of startups in China are now building their business models around such AI applications in these new areas

The Seesaw Effect

MIIT's tightening regulation may slow down the speed of existing developers for AI and big data business models, yet this also makes room for business models built on fair use of personal data.

Such novel models aim to provide more transparency in data collection. They also design a set of rules (using blockchain) to distribute financial gains from the use or sale of personal data collected from users who voluntarily participate in the distribution.
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Interested in more stories about how emerging technology impact China’s innovation ecosystem?   View more insights by visiting our blog at  ICTiger2020.com or our Facebook @ICTiger2020 for related news updates.  Feel free to reach out by contacting the author at Jili_ICT@springip.com or scan the following WeChat QR code. 

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*https://www.dataguidance.com/news/china-miit-releases-notification-apps-violations-user

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