China Is Issuing New Regulations to Avoid Digital Network Monopolies

China’s State Market Regulation Administration (SAMR) released new rules on digital channels on Sunday. It is expected that these regulations would place pressure on major companies such as Taobao and online retailers, as well as payment services such as WeChat Pay and Alipay. A ban on merchants forcing retailers on their websites to select one payment method is included among the reforms in the new regulations, as opposed to offering support for all main platforms.

They noted that the increase of algorithms on major platforms poses a challenge in deciding whether price-fixing or other monopolistic activity is taking place in SAMR’s announcement of these new rule changes. This is discussed in Article 9 of the new laws, which provide that knowledge of monopoly conduct is necessary to break antitrust law. This raises the burden on platform operators to track any behaviour that could be anti-competitive on their platforms. Evidence that refutes any indirect evidence found by algorithms will also be provided by platform operators.These amendments to the regulation came after regulators postponed the IPO of Ant Group.

Alipay, one of China’s largest payment companies, is run by Ant Group, and its IPO was set at $37 billion. In December 2020, SAMR launched an investigation into Ant Community. Such rule changes and research represent a shift in China’s regulatory approach to technology platforms.

Historically, in creating monopolies in the platform economy, China has been hands-off. Their compliance will inevitably influence competition in this evolving marketplace when these new rules come into effect.

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