Industry Tries to Figure Out Whether China Just Banned Ad-Blocking

A New Regulation Is Vague, and There's Debate About What It Means

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Women in Zhuhai, Guangdong province. China.
Women in Zhuhai, Guangdong province. China. Credit: Brent Lewin/Bloomberg
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Ad blocking is a high-stakes issue in China, which has 688 million people online. And it's already widespread. That's partly because a web browser popular in China -- UC Browser, owned by Alibaba Group – has it built in as a default; it promises users they can browse faster and save data. By one estimate, at least 159 million people in China use mobile browsers that block ads.

Will all that change? With new regulations announced this month, China seems to be cracking down on online ad-blocking, or possibly just certain forms of it. The language of the rule is ambiguous, causing some debate among experts about what is being targeted, and how much ad-blocking might actually be affected.

New guidelines mentioning ad-blocking were buried in Article 16 of interim online advertising regulations released about two weeks ago by the State Administration for Industry and Commerce. They didn't draw much notice until Adblock Plus wrote a blog post saying China had banned blockers, labeling the country a "bully."

"The concept of ad blocking has always been about putting power back into the hands of the consumer, so this robs them of what has become a basic right," said the post by Ben Williams of Adblock Plus, which makes ad-blocking extensions.

So what do China's rules actually say?

The new regulations, which go into effect Sept. 1, say in part that anyone using the internet for advertising activities can't provide or use applications, hardware, etc. to block, filter, cover, fast forward, limit, etc. other people's legitimate ads.

But different lawyers have a different understanding of what it might mean – though all point out that the regulation is vague:

-- Eugene Low, a partner at the Hong Kong office of law firm Hogan Lovells, said he thinks it does ban ad-blocking. That wasn't a surprise, he added, because there was a similar article in a draft version a year ago, and because there have been legal cases on blocking under China's Anti-Unfair Competition Law.

-- But Justina Zhang of TransAsia Lawyers, who is a member of the Global Advertising Lawyers Alliance, said in an email that "we do not believe this particular article prohibits all ad-blocking services."

-- Steve Dickinson, an attorney with Harris Moure, pointed out after an initial read that the article appears to be targeted at those involved in online advertising.

"The regulation does not mention users, and it does not purport to restrict the right of users to block some or all ads," he wrote in an email, adding that more research into legislative history would be needed to confirm that.

"Only 'participants in online advertising activity' are mentioned," he wrote. "Is a 'user' a 'participant? I don't know, but I don't think so."

Mr. Dickinson said the rule "seems to be directed at a real issue in China. Companies will force the downloading of software that blocks the ads of other companies." He declined to cite specific examples.

Would the new rule apply to web browsers that block ads served by rival companies? That question brings to mind a past legal dispute between two big Chinese internet companies. Qihoo 360 put out software promising to remove ads from rival Tencent's QQ service and "protect" users from viruses on QQ. The courts ruled largely in Tencent's favor, saying that was unfair competition.

Because the Chinese browser market is so competitive, many Chinese tech giants offer browsers that block some ads, according to AdMaster, a marketing data technology company that helps brands measure the effectiveness of their digital investments. They can be selective about what's blocked by default, AdMaster has said.

Internet giant Alibaba makes much of its revenue from advertising space sold within its e-commerce ecosystem. In 2014 it bought UC Web, whose browser filters out ads on the web. UC Browser and Alibaba didn't immediately respond to a request for comment.

"The first big question is what this means for Alibaba," said Johnny Ryan, head of ecosystem for PageFair, which sells publishers technology to serve ads that can't be circumvented by blockers.

PageFair has said blocking in China is widespread, with 159 million people in China using mobile ad-blocking browsers as of March. The company believes China's new regulations do prohibit blocking.

"We anticipate that the new Chinese regulation will have an impact on UC Browser's growth, and may even make some impact on parent company Alibaba," Mr. Ryan said in an email.

Putting things in perspective, he added: "In effect, the largest market in the world has just made illegal the key feature of one of the largest mobile browsers, which is itself owned by the largest e-commerce company in the world."

Contributing: Chen Wu