Chinese Platform Regulation

Anti-monopoly Guidelines for Platform Economy

In February 2021, the Anti-monopoly Commission of the State Council issued the Anti-monopoly Guidelines for the Platform Economy (Pingtai Jingji Fan Longduan Zhinan), marking a fundamental shift in China’s approach to digital platform regulation. The Guidelines addressed the application of the Antimonopoly Law (AML) to platform-specific conduct, including data-based abuses, algorithmic collusion, platform self-preferencing, and the acquisition of innovative start-ups.

The Guidelines recognise three categories of platform conduct that may violate the AML. Monopoly agreements in the platform context include algorithmic price coordination between competing platforms (renzhi tongmou), resale price maintenance imposed through platform-wide pricing algorithms, and information exchange through shared data infrastructure. Abuse of dominance includes self-preferencing (platform operators favouring their own products in rankings and recommendations), data-based discrimination, and refusal to grant data access. Merger control addresses the acquisition of nascent competitors (zhifu shichang xiangmu) and the accumulation of data assets through acquisition.

Alibaba Case (2021)

The Alibaba case, decided by SAMR in April 2021, was the defining enforcement action of China’s platform regulation campaign. SAMR found that Alibaba Group had abused its dominant position in the Chinese online retail platform market by implementing a “choose one from two” (er xuan yi) policy, requiring merchants selling on Alibaba’s Tmall platform to choose Tmall exclusively and not to list products on competing platforms, particularly JD.com and Pinduoduo.

SAMR imposed a record fine of RMB 18.28 billion (approximately USD 2.8 billion), calculated at 4% of Alibaba’s domestic revenue in 2019. The fine was accompanied by a comprehensive corrective order requiring Alibaba to cease its exclusive dealing practices, to publish its platform rules transparently, to establish a compliance department, and to submit annual compliance reports to SAMR for three years.

The Alibaba decision established several important precedents. SAMR defined the relevant market as the “online retail platform services market,” rejecting Alibaba’s argument that the market encompassed all retail (including offline retail). The decision found that Alibaba held a market share exceeding 50% in this market and that its exclusive dealing practices foreclosed competitors from a significant share of merchant supply. The decision also established that the 4% penalty rate (below the 10% maximum) reflected Alibaba’s cooperation with the investigation and its implementation of corrective measures.

Meituan Case

The Meituan case, decided by SAMR in October 2021, applied the Alibaba reasoning to the online food delivery platform market. SAMR found that Meituan had abused its dominant position by requiring restaurants to enter into exclusive agreements, penalising restaurants that also listed on the Ele.me platform by reducing their search ranking, increasing their commission rates, or removing them from the platform.

SAMR imposed a fine of RMB 3.442 billion (approximately USD 540 million), representing 3% of Meituan’s domestic revenue in 2020. The corrective order required Meituan to cease its exclusive dealing practices, to refund the exclusive cooperation deposits it had collected from restaurants, and to establish a compliance system.

Both the Alibaba and Meituan cases were part of a broader regulatory campaign against platform monopolistic conduct that began in late 2020 and continued through 2022. The campaign also included enforcement against Ele.me for similar exclusive dealing practices (fined RMB 3.22 million by the Shanghai Administration for Market Regulation) and investigations into Tencent’s music copyright practices (requiring Tencent to terminate its exclusive music copyright agreements with major record labels).

Data Monopolization

Chinese competition enforcement has addressed data-related abuse of dominance. The Rules on Prohibiting Abuse of Dominant Positions (2022), issued by SAMR, identify data as a factor in market power assessment and recognise data-based exclusionary conduct as a form of abuse. A platform that controls a unique or essential dataset may be found dominant if access to the data is necessary for competition in a downstream market and the platform refuses to grant access on reasonable terms.

The data monopolization theory was applied in SAMR’s investigation of Tencent’s social media platform ecosystem. Tencent’s control over WeChat’s social graph and user data was assessed as a potential barrier to entry for competing social media platforms. SAMR’s 2021 order requiring Tencent to cease music copyright exclusive dealing also addressed data-related concerns, as exclusive music licensing agreements prevented competing platforms from accessing user listening data.

Self-Preferencing

Self-preferencing — a platform operator favouring its own products or services in search rankings, recommendation algorithms, or platform policies — has been addressed under the AML and the Anti-Unfair Competition Law. The 2021 Guidelines for the Platform Economy identify self-preferencing as a potential abuse of dominance, adopting a framework comparable to the EU Digital Markets Act’s prohibition on self-preferencing.

The Alibaba case included self-preferencing elements beyond the exclusive dealing finding. SAMR found that Alibaba had manipulated search rankings and recommendation algorithms to favour its own products over those of third-party merchants. The Ele.me investigation similarly found that the platform had adjusted its search algorithm to prioritise restaurants in which Ele.me held an ownership interest.

“Choose One from Two” Cases

The exclusive dealing prohibition in the platform context has been extended beyond the Alibaba and Meituan cases to other platforms. JD.com filed a private antitrust action against Alibaba in the Beijing Higher People’s Court, alleging that Alibaba’s “choose one from two” policy caused JD.com to lose merchant supply. The case, filed in 2017, was eventually transferred to the Beijing High People’s Court and remains pending.

Pinduoduo also alleged that Alibaba’s exclusive dealing practices foreclosed merchants from its platform. Pinduoduo did not file a formal antitrust action but submitted evidence to SAMR during its investigation of Alibaba. The private damages actions following the SAMR decisions may yield significant compensation for injured competitors.

Conclusion

China’s platform regulation campaign represents the most aggressive antitrust enforcement against digital platforms globally. The Anti-monopoly Guidelines for the Platform Economy, the Alibaba and Meituan decisions, and the ongoing private litigation establish a comprehensive regulatory framework addressing exclusive dealing, data monopolization, algorithmic collusion, and self-preferencing. The enforcement actions have fundamentally altered the competitive landscape of China’s digital economy, terminating the dominant platforms’ use of exclusive dealing as a competitive strategy and signalling a new era of platform regulation under the 2022 AML revision.