China’s telecoms watchdog on Aug 9 urged companies to regulate their collection and usage of customer data, amid a dispute involving the country’s leading smartphone maker Huawei Technologies Co Ltd and internet giant Tencent Holdings Ltd.

The Ministry of Industry and Information Technology said in a statement it is investigating claims that Huawei’s premium phones have been collecting user data via Tencent’s WeChat application, and urged the warring parties to come to a peaceful resolution.

Based on the Provisions on Protecting the Personal Information of Telecommunications and Internet Users, the ministry will “push companies to protect the lawful rights of consumers … and actively coordinate between the duo to settle the dispute”, the statement said.

The dispute, first reported by The Wall Street Journal, arose when Huawei’s desire to gather data from users of its Honor Magic phone took the form of reading users’ chat logs on WeChat.

Tencent, the owner of the WeChat application, was not pleased and reportedly sought the ministry’s assistance.

Huawei said in a statement that the Honor Magic lineup has passed tests devised by the ministry to show it is not infringing customer privacy. It further said it looks forward to an amicable resolution with all relevant parties “discussing plans for industry development and collaboration and rules of engagement”.

Tencent, without referring to the specific Huawei case, said it is committed to building a healthy ecosystem by working closely with stakeholders including telecom operators, handset manufacturers, app developers and regulators.

Customer privacy is a prickly topic in the age of artificial intelligence, when companies grapple for valuable data to beef up AI-driven functions. For instance, the Honor Magic model allows restaurant recommendations based on a user’s text messages.

The prerequisite for any company to obtain information legally is to get the consent of the users and promise that such information would be utilized only for proper business needs, said Ling Xiao, a Chengdu-based partner at Hui Ye Law Firm.

“If Huawei captures users’ WeChat correspondence without getting permission and applies that data in its own favor, chances are high that Huawei has a compliance issue,” Ling said.

With data being almost monopolized by big internet firms, the government should step up efforts to contain their power before the abuse of data becomes too dangerous and out of control, said Shaun Rein, managing director of China Market Research Group.