Personal data protection is changing China's innovation ecosystem?

This May, the Chinese internet regulator, the Ministry of Industry and Information Technology ('MIIT'), released notification to dozens of apps on user rights violations. 

MIIT highlighted that these apps have collected personal information beyond the authorized scope.  It demanded rectification with the month.[1]

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

Big Data is Goldmine

Protection of personal information is welcome.  But more interestingly, how will such regulatory actions change China's innovation ecosystem?

AI/big data enterprises have been growing aggressively in China.  They adopt novel business models that originated from the western countries, improve them, and develope them into huge businesses in the sizable domestic market.

International commentators consider lower protection for personal information providing a friendly environment to these Chinese enterpreises. 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) provide an example.  The developers of Fintech have used apps to collect users' personal information to analyze consumer behaviors.

Zhima Credit, a subsidiary under Alibaba's financial service group ANT, best illustrated such practice.  It generated individuals' credit reports based on their purchase on the internet, activities on social media, dialogs in friend circles, and participation in online gaming.  Alibaba then extended microloans to individuals with high "credit scores."

As a result, China is now leading in patent applications and thriving in business innovations in AI/Big data domain.  For example, more than three Chinese players (i.e., PingAn, Alibaba, and Tencent) have gained a strategic position through their patent portfolios for innovations relating to AI and big data applications in Fintech.

AI and Big Data Facilitating Innovation

Their accumulated experience has become common assets 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/big data technologies 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.

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 AI/big data business model developers.  However, the action 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.

Interested in more stories about how emerging technologies impact China’s innovation ecosystem? See more insights by visiting our blog at ICTiger2020.com or Facebook at ICTiger2020 for related news updates.  Contact author at Jili_ICT@springip.com.

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

Source：iprdaily.com

Author：Jili Chung

Editor：IPRdaily-Vapor