Regulators clamp down on platform misdeeds

China will bar online platforms from using big data to engage in discriminatory pricing against consumers, as market regulators move to regulate the platform economy under new regulations released on Wednesday.

The State Administration for Market Regulation and the Cyberspace Administration of China released new measures on the supervision of online trading platforms. The latest rules aim to standardize the formulation, amendment and implementation of platform rules, safeguard online trading market order, and better protect the legitimate rights of merchants and consumers.

The measures target what regulators describe as a "critical minority" — online platform operators — and seek to further clarify and strengthen their responsibilities.

Under such measures, platforms are forbidden from utilizing so-called "big data kill-the-familiar" practices. It is a form of algorithm-driven price discrimination in which frequent or repeat users are charged higher prices than new customers.

Liu Jian, deputy head of the SAMR's first antitrust enforcement department, said at an earlier news conference that China's platform economy has distinct business models and involves complex, multisided interests, making it difficult to draw clear behavioral boundaries.

"Promoting algorithms for the public good is an important compliance objective," Liu said.

The measures also spell out more detailed requirements on data, information and network security, as well as on the protection of the lawful rights of merchants operating on platforms and of consumers.

In addition, platforms should follow stricter procedures when formulating or revising rules, including public disclosure, open consultations, reasonable transition periods and clearly defined appeal channels.

They are also required to establish consultation mechanisms for major rule changes and systems to resolve disputes arising from transactions conducted on their platforms.

The latest measures further set out detailed obligations on data, information and network security, as well as on the protection of the lawful rights of merchants and consumers.

Platforms must include clear data and information security provisions in their rules, define standards on how merchants handle personal data, and specify obligations related to online protections.

Crucially, the rules prohibit platforms from using internal regulations to impose unreasonable restrictions on merchants' independent operations, levy unjustified fees, or demand excessive penalties or compensation.

They also bar platforms from weakening or excluding consumer rights, shifting or waiving their own responsibilities, or unfairly increasing consumers' obligations.

Wang Xianlin, a member of the expert advisory group on the Anti-Monopoly Commission of the State Council — the nation's Cabinet — said, "Such efforts are expected to bring greater transparency and structure to the way online platforms operate, and will rebalance interests and rebuild a healthy platform ecosystem."