China is planning to tighten regulations for apps that comes bundled with smartphones, and its proposed legislation will help mature the market and make it more transparent, industry observers say. Phonemakers may experience reduced margins though.
The Ministry of Industry and Information Technology (MIIT) issued the memorandum on strengthening mobile intelligent terminal network access management on Jun. 1 this year, hoping to tighten access management for mobile intelligent terminals, or smartphones and tablets.
The proposed measures include forbidding manufacturers from shipping devices preinstalled with apps that: contain malicious code; collect or alter user data without clearly notifying and getting approval from users; incur data or subscription charges or leaking user data without notifying; illegal content under the country's laws; and infringing on users' personal data security and other legal interests, it stated.
The window for public feedback closed on Jun. 30.
Market maturing process
Commenting on the proposed regulations, Ben Cavender, associate principal at China Market Research, said these were unlikely to slow down China's mobile industry. Rather, the regulations will help "force" the market to mature and become more transparent.
"Consumers will still have access to new phones and new technology and, if anything, [these devices] will be more secure in downloading or purchasing applications so users do not have to worry about data security or unwanted charges," Cavender said.
It would also compel phonemakers to build a strong app ecosystem that puts security at the forefront, which means not approving apps that make use of consumers' personal information without first letting them know. This, he added, is a good thing for potential buyers.
That said, while the new regulations will not increase their time-to-market, handset manufacturers may experience reduced margins to some extent if they have to give up bundling software that they or their software partners have found lucrative in the past, the CMR analyst noted.
The Wall Street Journal had earlier pointed out the draft law could also force mobile industry leaders to censor what applications they offer, build phones with China-mandated security requirements, and include features that would help the government identify users.
When quizzed, a Lenovo spokesperson issued this statement: "As a responsible corporate entity and ranking as one of the top three smartphone makers in China, Lenovo will continue to comply with the law and regulations of the countries we operate in and monitor the situation as it evolves."
Huawei Technologies, too, declined to comment on the proposed regulations since it had yet to be enacted, saying it would be "premature" for the company to say more. "We are keeping our eyes on the development of this regulation," said Tang Siew Wai, marketing director of Huawei Device for the South Pacific region.
Mobile developer MoboTap reiterated Cavender's observations of the draft legislation, saying it is a "good thing" that the government and the industry are now paying more attention to mobile security.
Edith Yeung, MoboTap's head of marketing, noted the policy restricting phonemakers from bundling flawed apps is good in that it encourages vendors to be more aware and careful of the software they include in their devices.
"I don't think any handset maker would ever want to preinstall anything their users don't like. It's more expensive for device makers or carriers to deal with returns. Trust is the most important thing for any company wanting to build a long-lasting brand," Yeung pointed out.
She added that since MoboTap's Dolphin browser is the first and only browser certified by Truste--an online privacy service provider--it is ready for China's move toward stricter regulations of mobile applications.