SOURCE / ECONOMY
China issues anti-monopoly guidelines on platform economy
Regulators likely to conduct frequent scrutiny on internet platforms
Published: Feb 07, 2021 06:35 PM

Photo: VCG

The Anti-Monopoly Committee of the State Council, China's cabinet, introduced a thorough guideline to regulate anti-monopoly practices on Sunday, encouraging business operators in the online platform economy to report any monopolistic moves. It also said that authorities will waive or mitigate penalties if the operators meet certain standards.

The committee did not identify any specific people or companies, but it said that the guideline applies to all industries and treats all types of market entities equally, and the online platform-based economy is no exception.

Monopolistic practices have increasingly become rife in the platform economy, according to the committee. These practices include offering varied prices for the same product or service to different consumers, and limiting or even excluding transactions in certain merchandise. 

An industry observer who declined to be identified told the Global Times that the committee's move is a warning to all of China's giant internet-based platforms, including e-commerce, food delivery and express delivery, to strictly abide by the new law. These companies will be placed under constant supervision and scrutiny by the regulators.

For example, if the lucrative online lending business of Ant Group is not scrutinized on a regular basis, the rising debt risks generated on the platform may one day make it a "too big to fail" financial beast, the kind that will need a government bailout if it encounters severe problems, the observer continued. 

Ant Group's dual IPO plan was suspended late last year, and it is impossible for the company to be listed in 2021 because it is unable to handle macro risks, Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times on Sunday, suggesting Ant Group should rectify and reform its practices in light of financial data regulation and protection, as user information held by Alipay is highly related to the privacy of most Chinese people.

Apart from Ant Group, other companies in the platform economy from various sectors have also been involved in anti-monopoly disputes. Last week, ByteDance, the parent company of Douyin - the Chinese version of TikTok, sued China's internet giant Tencent for monopolistic practices, including blocking Douyin's links on Tencent. 

The case also marked the first clash among China's internet titans after the introduction of a new regulation governing internet platforms' monopolistic behavior. Analysts said that the case will set a precedent for future rulings and have an industry-wide impact.

Vipshop, one of the biggest e-commerce companies in China, also came under the scrutiny of market regulators for anti-competitive practices, such as engaging in pricing irregularities. 

Other e-commerce platforms such as JD.com and Tmall faced similar allegations last year. 

"China's anti-monopoly regulations have been formulated to protect fair competition in the market, which should not be interpreted as a crackdown on the tech giants," Pan Helin, executive director with the digital economy research institute under the Zhongnan University of Economics and Law, told the Global Times on Sunday, adding the country still encourages the platform economy to grow. 

Compared with previous anti-monopoly regulations, Pan pointed out, the current Chinese guidelines are more systematic and institutionalized, but there are still some difficulties in obtaining evidence, given the murky boundaries. 

Monopolies are a challenge for many countries. Pan said China's regulations on anti-monopoly issues tend to give more weight to the market force, like the US, and suggested the regulations should not be as harsh as those of the EU. Doing otherwise may hurt the development of China's digital economy, he noted. 

Monopoly risks have been growing among the world's most powerful technology giants. The US has been trying to curb the power of tech giants such as Facebook, Google, and Amazon, and the US Congress has been urged to pass laws to control those companies' manipulative acts, especially on users' data. 


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