China’s State Administration for Market Regulation (SAMR) said it wanted to prevent platforms from dominating the market or from adopting methods aimed at blocking fair competition. The definitions it provided for internet platforms mean the new rules could apply to e-commerce sites such as Alibaba’s Taobao and Tmall marketplaces or JD.com and payment services like Ant Group’s Alipay or Tencent Holding’s WeChat Pay. Food delivery platforms like Meituan could also be included. The draft rules would also consider whether a transaction treats different customer in different ways based on big data, payment ability, consumption preferences, and usage habits. A number of competitors and merchants have accused Alibaba of previously adopting such practices on its platforms. Last year, SAMR called more than 20 platforms to a meeting to ask them to stop requiring merchants to sign exclusive cooperation agreements.
China had previously avoided taking a hard line with its technology sector in order to help local tech giants grow and compete against U.S. rivals, most of whom have now been blocked from the country’s cyberspace. With the focus now turning to building up domestic capabilities, Beijing was moving to rein in these companies. SAMR and the tax authority had recently held a meeting with 27 internet companies including Meituan, TikTok owner ByteDance, Alibaba, JD.com and Trip.com, during which they discussed online economy practices. Shares in Hong Kong listed Tencent dropped 4.4% and Meituan plummeted 10.5% on Tuesday, while the benchmark Hang Seng index edged up 1.1%.