China issues draft rules banning unfair competition on internet

IN its latest crackdown move on tech companies, China on Tuesday (17) issued a set of draft regulations for the internet sector, banning unfair competition and restricting the use of user data.

The Asian country has been tightening its grip on internet platforms, citing the risk of abusing market power to suppress competition, misuse of consumers' information and violation of consumer rights.

In recent months, China has issued hefty fines to companies including e-commerce giant Alibaba Group and social media company Tencent Holdings.

Internet operators "must not implement or assist in the implementation of unfair competition on the Internet, disrupt the order of market competition, affect fair transactions in the market," the State Administration for Market Regulation (SAMR) wrote in the draft, which it published on its website.

The Chinese regulator also stated that business operators should not use data or algorithms to hijack traffic or influence users' choices. They may also not use technical means to illegally use other business operators’ data.

As per the draft, companies would also be barred from spreading misleading information to damage the reputation of competitors and need to stop marketing practices like fake reviews and coupons or "red envelopes" used to entice positive ratings.

The draft rules also called for a ban on "two-choose-one," a practice e-commerce companies used to ban merchants from listing on rival platforms.

Currently, the draft rules are open to public feedback before a September 15 deadline.

SAMR has imposed various restrictions and punishments on tech giants to limit anti-competitive or monopolistic behaviour.

In April, SAMR fined Alibaba a record $2.5 billion (£1.8bn) for engaging in unfair competition.