China’s Big Tech crackdown: Beijing’s targets ‘unfair competition’ online with new rules challenging internet platforms
- A new draft regulation expands the power local market regulators have over internet platforms operated by Big Tech companies like Alibaba, Tencent and Meituan
- The State Administration for Market Regulation is tightening its grip on cyberspace as tech stocks continue to be battered by China’s sweeping crackdown
China’s market regulator has issued a draft of new rules that are set to empower the agency’s bureaus across the country to target “unfair competition activities” in a fresh effort to rein in the country’s once freewheeling technology giants.
According to the draft, which the State Administration for Market Regulation (SAMR) released on Tuesday, the agency’s municipal and provincial branches are authorised to look into and discipline internet firms for inappropriate activities in cyberspace. Targeted practices include ones that have been widely used by Big Tech companies, such as faking traffic data and blocking links from competitors.
The SAMR had already been broadly empowered to crack down on anticompetitive behaviour according to China’s 1993 Anti-Unfair Competition Law. The draft signals that the agency now wants to apply those rules to the internet after years of largely leaving online activities alone, according to Zhai Wei, executive director of the Competition Law Research Centre at the East China University of Political Science and Law in Shanghai.
“Regulators are also encountering some new types of unfair competition behaviours and a lack of detailed standards,” Zhai said. “For internet platform companies, they may also lack a clear compliance guide. That’s why [regulators] made this rule.”
Under the rules, a market regulator would be able to initiate an investigation into an internet platform if it is located where the platform is registered, its management is based, its operations take place or misconduct is reported or spotted. The document is currently open to public feedback, and draft regulations are normally put into effect a few months after being published.
The new rules will further enhance the agency’s power in cyberspace, paving the way for any provincial or municipal bureau “above the county level” to show up at the doorstep of Big Tech companies for an investigation or to issue fines.