On April 13 the State Administration for Market Regulation (the SAMR) of China together with the Central Cyberspace Administration and the State Taxation Administration organized an administrative guidance meeting for Chinese digital platforms.
The authorities confirmed the positive role of platform economy, but at the same time conducted analysis of its major issues and required the attendees to be alerted by recent penalty imposed on Alibaba and to respect relevant laws and regulations.
In respect to forced ‘either-or choice’ and other unlawful practices the regulators emphasized that platform companies must choose a correct path and clearly recognize their responsibilities, stay be the priority of national interests and ensure compliance with laws and regulations in course of their operation. The state representatives introduced a concept of five preventions and five guarantees:
• to prevent disorderly expansion of capital but to guarantee economic and social security;
• to prevent monopolistic chaos but to guarantee fair competition on the market;
• to prevent use of technologies to restraint but to guarantee innovative development of the industry;
• to prevent abuse of rules and algorithms but to guarantee legal interests of all parties;
• to prevent system’s closure but to guarantee open and accessible ecosystem.
The respective authorities gave digital platforms one month to conduct self-inspection and rectify all violations as well as to publish an Operation Compliance Commitment and to operate under social supervision. The SAMR would control the rectification process and impose severe penalties in regard to any unlawful practice, including forcing to ‘choose one of two’, detected after the said one-month period.
The meeting pointed out that the enforcement of regulation of ‘tech’ companies did not mean the State had abandoned its determination to support and encourage the development of platform economy.
34 digital companies participated in the guidance meeting, including Baidu, DiDi, JD.com, Meituan, Ctrip, Bytedance, Pinduoduo, Alibaba, VIP.com and Tencent.
Last Saturday the SAMR imposed a 2.78 bil USD fine on Alibaba Group for prohibiting vendors to operate on competitive platforms.
