China is considering reviewing the rules of the games after tech giants lost billions Technology news

A draft document outlining the restrictions caused a stir as technology stocks fell, sending investors into panic.

Chinese authorities said they may review newly drafted online gaming rules shortly after planned restrictions caused major tech companies to lose billions of dollars.

State broadcaster CCTV reported on Saturday that authorities had heard “the concerns and opinions raised by all parties,” adding that “the State Press and Publication Administration will carefully study them and review and improve them,” referring to the media regulatory body.

Authorities issued a draft on Friday that includes a wide range of rules and regulations aimed at limiting online spending and rewards in video games.

Its impact was immediate, dealing a huge blow to the world's largest gaming market. Investors went into disarray, wiping up to $80 billion off the market value of China's two largest companies, industry leaders Tencent Holdings and Netease.

According to the new rules, online games will be prohibited from giving players rewards if they log in every day, if they spend on a game for the first time, or if they spend multiple times on a game in a row. These are all common incentive mechanisms in online games.

Regulators may now change the wording of sections of the draft rules that limit the ability to encourage daily logins and wallet balance top-ups, CCTV reported.

China has become increasingly strict regarding video games over the years.

The first major move against the gaming sector came in 2021, when Beijing set strict gaming time limits for under-18s and suspended approvals for new video games for about eight months, citing concerns about gaming addiction.

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As a result of the crackdown, 2021 and 2022 were some of the most difficult years ever for the Chinese gaming industry as overall revenues shrank for the first time.

China revised its position last year and began approving new games again, but regulators continue to set their sights on limiting the time children play within the game and the amount of money they spend.

As part of Friday's draft, which marks the strictest limits yet, games are also prohibited from offering odds-based raffle features to minors, and from enabling the auction of virtual gaming items.

The new rules reflect Beijing's concerns about user data, requiring game publishers to store their servers inside China.

The draft comes as China's video game market returns to growth this year with domestic revenue rising 13 percent to 303 billion yuan ($42.6 billion), according to industry association CGIGC.

Given the sheer size and influence of Chinese gaming giants, the global video game market may also be affected in the long term.

Many video game developers in the United States and Europe saw their shares decline after Friday's announcement, but the losses were small compared to Tencent's 16 percent decline. Friday's news wiped about $54 billion off the value of the company's shares, according to Bloomberg News.

The administration is seeking public comment on the rules by Jan. 22.

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