China Bans Unfair Competition in the Internet Sector

China is stepping up its control over Internet platforms. Chinese regulators have unveiled a draft regulation of the Internet sector that restricts user data and prohibits unfair competition. At the same time, there are risks of consumer rights being violated and possible abuse of market power.

Following the publication of the rules, internet shares listed on Hong Kong shares fell. Alibaba, Tencent, and Meituan fell 2.6%, 3.5%, and 1.4%, respectively. Shares of Bilibili Inc. fell more than 5%.

China has imposed heavy fines on many companies in recent months, including Tencent Holdings and Alibaba Group.

The Project, published by the State Market Regulation Administration (SAMR), states that Internet operators have obligations to follow the rules of market competition, not to influence fair market transactions, and not to promote unfair competition.

Business operators face bans from using the data to influence the user’s choice or using any technical means to receive and use data from other business operators illegally.

Companies also became banned from recalling and disseminating misinformation to damage competitors’ reputations. In addition, China demands the discontinuation of marketing practices used to attract positive ratings.

The draft rules also prohibit the “choice of one to two” practice of e-commerce companies.

The Purpose and Expected Results of SAMR

SAMR has imposed various restrictions on hardware giants to limit its monopoly.

In April, SAMR fined Alibaba $ 2.5 billion for participating in unfair competition.

The rules are open to the public and their feedback until September 15th.

Also, in July, a regulator led by Tencent blocked a merger between the two gaming companies. Also, Tencent was ordered to terminate its exclusive license for some songs.

What will be the attitude of companies towards all this? New rules and restrictions may reduce many of them and drive them out of the market. While China opens up to feedback and prepares to hear opinions, it is unlikely that fundamental changes will occur. We wonder what the position of the people will be in this regard.

China seems to be protecting people from a monopoly market, but on the other hand, its influence is growing both in terms of data and market policy. We will find out over time for those who find it acceptable and those who do not. However, the number of fined companies is likely to increase.