China’s top market regulator to classify internet platforms, improve risk management
Published: Oct 30, 2021 12:08 AM
Internet companies Illustration: VCG

Internet companies Illustration: VCG

China’s top market regulator will classify internet platforms into super, large, medium and small, based on their user scale, business type and capacity. Experts said the move indicates a new starting point for China's internet governance.

Public consultation for the draft of Guidelines for Classification of Internet Platforms was issued by the State Administration for Market Regulation on Friday, providing for the first time a clear definition of the internet industry players and the latest government efforts in strengthening risk management of the domestic internet industry.

The companies that are classified as super platforms should have no less than 500 million annual active users and a market value of at least 100 billion yuan in the previous year. They must also have a strong ability to help merchants reach users, the draft said. Large-scale platforms should have no less than 50 million annual active users.

In order to better identify the various risks that may be caused by internet platform services, with the new classification, differentiated assessments and responses can be carried out correspondingly, Liu Dingding, a veteran industry analyst told the Global Times on Friday.

“The purpose is to ensure the healthy development of the internet industry and maintain a fair and orderly competitive environment in the market,” Liu said.

While the classification is targeting companies with different scales, Liu said that the super platforms operated by companies such as Tencent, Alibaba and Bytedance would be the major focus, since they have greater dominance and influence on the market.

Earlier in October, Chinese food delivery platform Meituan was fined 3.44 billion yuan ($533.5 million), or 3 percent of its 2020 domestic revenue, for monopolist practices. 

The penalty for Meituan marked the second-biggest fine in the Chinese platform economy after Alibaba was slapped with a record $2.8 billion antitrust fine in April by regulators for exclusionary practices. The amount accounted for about 4 percent of the company's domestic sales in 2019.

In the future, similar refined management measures will be introduced one after another, Liu said.
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