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Will Regulation Kill China’s App Market or Save It?

Yesterday, I wrote about MIIT’s plans to regulate China’s app markets and the mobile application industry at large (MITT is China’s Ministry of Industry and Information Technology). Since then, the story has garnered a lot of attention, and provoked some interesting debate. As I pointed out yesterday, there are plenty of app developers who aren’t too happy about this idea, but in poking around for a bit on Sina Weibo, I found there are also at least a few people who are in favor of the government getting more involved in the country’s app marketplaces.

Of course, this is a highly complex issue, but I think it’s worthwhile to take a look at some of the main arguments on both sides. Here’s are some of the main reasons some people oppose the idea:

  • Historically, MIIT’s regulation has led to delayed release dates in China, and delaying app releases could damage the industry’s development because it’s such a fast-moving field.
  • MIIT may not be capable of effectively regulating such a large and fast-changing market.
  • Requiring all apps to be officially approved opens the door to corruption, favoritism, protectionism, and other potential abuse by regulators and app developers.

And here are some of the reasons people support it:

  • China’s app marketplace is full of copycats and fraud, MIIT regulation could help clean this up.
  • Many apps in China are offered with no form of quality control oversight, and poorly- or maliciously-made apps can harm the phones of users who download them.
  • Controlling the development of the app market in an orderly and regulated manner could help promote the healthy development of the industry and perhaps stabilize it a bit.

To be quite frank, both sides have valid points. Personally, I tend to sympathize more with the opponents of regulation, because I’m not a fan of censorship (and I think that’s part of what MIIT is trying to do here) and also because MIIT really is pretty inefficient in its evaluations of hardware, and with so many apps out there, it’s difficult to see how MIIT could effectively and fairly regulate every app marketplace and all the apps therein without hiring an absolute army of people.

That said, though, any rational person would have to admit that China’s app marketplace can seem a bit like the Wild West sometimes, and regulation that effectively cut down on copycats, fraudulent apps, and poorly-made apps full of bugs and viruses would be welcomed by the vast majority of the developer and user communities, I expect. The fact that there has been so much backlash about this plan is probably a telling reflection of how little confidence people have in the government and in MIIT specifically to regulate effectively and efficiently, not how much people oppose government regulation of this industry as a general concept.

The other issue is that regulation of anything means toeing a pretty fine line. Regulate too much, and you risk stifling creativity or even completely smothering the industry. But regulate too little and things can get out of hand, leaving users in a situation where they have no idea what’s trustworthy and what isn’t, what works, and what doesn’t.

I have no confidence in MIIT’s ability to walk that line, but the regulation of the mobile industry falls under its purview, so there really isn’t much we can do about it aside from offer up suggestions and hope that someone is listening. Personally, I hope that regulators will focus more on third-party app stores and on eliminating fraud and plagiarism rather than rigidly forcing every single app that gets developed through a release-delaying review process. My suspicion is that such a process would only lead to more piracy and fraud, as users would look to unofficial sources to find the hottest apps (just as many Apple fans buy gray market iPhones instead of waiting for the official MIIT-approved domestic phones to be released).

So will MIIT regulation kill China’s app market or save it? A little bit of both, actually. Of course, what MIIT actually does remains to be seen, but I expect that two things will happen. First, MIIT regulators are likely to be easier on Chinese companies and domestic app markets than they are on foreign ones, so regulation will likely hurt foreign developers looking to sell their apps in China but help domestic developers. At the same time, the release delays and the restrictions MIIT is likely to impose on apps will hurt everyone from developers to users, as it likely means fewer apps and longer waits before apps are released to the public. The increased regulatory burden could even mean that MIIT’s hardware permitting processes are further delayed if the Ministry doesn’t do a lot of hiring to cover all the additional work app market oversight will require.

Of course, that’s all just speculation at this point. I hope that MIIT will aim for efficiency and focus on eliminating poorly-made apps rather than simply slowing the development process down for everyone by implementing a mandatory review system.

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