Debates over anti-competitive practices amongst China's internet firms resurface every year in the lead up to Singles' Day, a time when online retailers exhaust their resources and deploy sometimes sneaky tactics to attract vendors and shoppers. This year, just a day before the world's largest shopping festival was scheduled to fall on November 11, China's market regulator announced a set of draft rules that could rein in the monopolistic behavior of the country's top internet firms.
Over the years, e-commerce leaders Alibaba, JD.com and Pinduoduo, food delivery platform Meituan, social giant Tencent and other major industry players have been accused of unfair competition to various extent. Behavior targeted by Beijing's new proposal includes price discrimination among consumers, preferential treatment for merchants who sign exclusive agreements with platforms and compulsory collection of user data.
Some of China's largest tech companies saw their shares drop on Tuesday afternoon trading in Hong Kong: Alibaba by 5.1%, JD.com by 8.78%, Meituan by 10.5% and Tencent by 4.42%.
Meituan, JD.com and Pinduoduo declined to comment on the draft rules. Tencent and Alibaba cannot be immediately reached.
The aim of the regulatory proposal is "to prevent and stop monopolistic practices in internet platforms' economic activity, to lower compliance costs for law enforcers and business operators, to enhance and improve antitrust regulations on the platform economy, to protect market fairness, to ensure the interests of consumers and society, and to encourage the healthy and continuous development of the platform economy."
In other words, China wants to restore order in its sprawling internet industry, which has given rise to some of the world's most valuable companies today. Major laws it weighed in recent years targeting its tech darlings include the e-commerce law passed in 2018 and the data security draft law that was seeking comments earlier this year. Just a few days ago, Beijing abruptly called off Ant Group's highly anticipated initial public offering, a sign of the authorities' heightened oversight over the fintech industry.