Beijing: China has included the internet industry for the first time in an envisioned overhaul of its anti-monopoly laws, potentially giving regulators the power to rein in the country’s increasingly dominant technology giants.
Proposed revisions to the Anti-Monopoly Law, published last week, included language that accords regulators responsibility to monitor the impact that internet companies have on the online sector, their scale and their ability to control products and services. More broadly, any company found to have violated the law could be fined as much as 50 million yuan ($7.2 million), about 100 times the previous cap, according to the revised rules posted on the State Administration for Market Regulation’s website. The draft is currently open to public consultation.
China is home to some of the world’s largest corporations, from e-commerce giant Alibaba Group Holding Ltd. and WeChat-operator Tencent Holdings Ltd. to up-and-comers such as ByteDance Inc. A handful of players control swathes of online businesses from retail to social media, and their backing is often key to the success of newly emergent start-ups. It’s unclear what punishments regulators could mete out but the industry’s leaders have drawn criticism for years for over-aggressive competitive tactics.
“Online platforms and consumers don’t have equal bargaining powers, and platforms will tend to abuse their dominant positions in the market,” said Zhan Hao, managing partner with Beijing-based Anjie Law Firm. “Over the past years, China has encouraged innovation and development in the internet sector, going through a phase where regulators are more tolerant. There will be closer scrutiny going forward.”
China’s authorities took two decades to draft the anti-monopoly law before enacting it in 2008. Foreign governments and businesses have long urged China to enact clear laws and procedures for enforcing them. But critics say the antitrust crackdown is being enforced unevenly, and that the business environment for overseas companies is worsening as a result. The latest revisions appear to be targeted at domestic operators, Susan Ning, antitrust partner at King & Wood, wrote in a report published on the law firm’s social media account.
JD.com Inc., for instance, has accused bigger rival Alibaba of unfairly locking in exclusive agreements with merchants, which Alibaba has denied. Regulators have investigated the legality of ride-hailing leader Didi Chuxing’s acquisition of Uber Technologies Inc.’s Chinese business. And Tencent’s WeChat dominates many aspects of daily Chinese life from payments to gaming, though upstart ByteDance has in recent years begun to eat into its advertising business through video service Douyin and news platform Toutiao.
“This definitely casts a spotlight on the internet sector and how it does business,” Ning wrote. “As we understand it, singling out the internet sector signals a newfound focus on the industry’s unique characteristics and is intended to ensure room for its expansion. Also, it signals a renewed focus on the internet, and on internet platforms in particular.”