China finalized its Internet Antitrust regulations in February 2021, just 3 months after releasing a draft law in November 2021. This move comes as the country aims to prevent monopolistic practices by giants corporations that deliberately drive smaller players to a certain demise.
The Need for Internet based Antitrust rules
China is home to some of the worlds biggest tech giants like the Alibaba corp. and Tencent. One of the best examples demonstrating the need for such rules is that of WeChat.
WeChat in China is essential for most people's daily lives. It may not be as well known globally and viewed as just another messaging app. But in China, it’s an all-in-one social media platform with other built-in functionality like digital Payments, online shopping, booking appointments, paying bills etc. It is also essential for businesses. The platform allows businesses to open their account and gain a following at zero cost. It basically allows the creation of mini-website and blog posts for promotion and direct customer connection to buy and sell products and services.
You get the idea, WeChat is a big deal in China, and so it holds a position such that it can establish rules so as to decrease consumer reach to its competitors. Since it is owned by Tencent, it can establish rules to decrease the visibility of Tencent’s competitors. Somesuch practices are that WeChat does not allow users to share links from the online shopping platform Taobao, owned by the Alibaba Group, or videos from the Duyoin video platform. There are also search result bias seen in searches from Baidu, a Chinese search engine.
Similar practices are seen among start-ups where the founders cannot accept investments from Alibaba if they accept from Tencent and vice-versa.
Consumers too previously accepted certain limitations as the services otherwise made their lives easier. Now even the public grows suspicious as these practices become increasingly common.
What will the rules accomplish
As per State Administration for Market Regulation (SAMR) on its website, the rules bar companies from a range of behaviour, including forcing merchants to choose between the country’s top internet players, a long-time practice in the market. SAMR said the latest guidelines would “stop monopolistic behaviours in the platform economy and protect fair competition in the market.” These rules also aim to stop companies from price-fixing, restricting technologies and using data and algorithms to manipulate the market.
In a Q&A accompanying the notice, SMAR said that the reports relating to internet-related anti-monopoly behaviour have been increasing. It also stated that data and algorithms are making it more difficult to determine such behaviours as they are becoming better concealed.
These rules would also require companies to rectify behaviours such as large corporations using their wealth to take out competitors, using data and algorithms to set discriminative prices and tax evasion.