China issues new rules to prevent monopolies in digital platforms News
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China issues new rules to prevent monopolies in digital platforms

China’s State Administration for Market Regulation (SAMR) issued new rules Sunday concerning digital platforms. These rules are expected to put pressure on large companies like online retailers Taobao and JD.com, as well as payment providers like WeChat Pay and Alipay. Included among the changes in the new rules is a ban on merchants requiring retailers on their platforms to choose one payment platform, as opposed to providing support for both major platforms.

In SAMR’s announcement of these new rule changes, they observed that the rise in algorithms on major platforms creates a challenge in determining whether price-fixing or other monopolistic behavior is taking place. Article 9 of the new rules address this, providing that knowledge of monopolistic activity is sufficient to violate the antitrust law. This increases pressure on platform operators to monitor their platforms for any activity which may be anti-competitive. Platform operators will also be able to introduce evidence that rebuts any indirect evidence found by algorithms.

These rule changes come after regulators delayed Ant Group’s IPO. Ant Group operates Alipay, one of the largest payment providers in China, and their IPO was set at $37 billion. SAMR initiated an investigation into Ant Group in December of 2020. These rule changes and investigation mark a change in the regulatory approach of China to technology platforms. Historically, China has been hands-off in the development of monopolies in the platform economy. As these new rules come into effect, their enforcement manner will undoubtedly shape competition in this developing marketplace.

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