China targets AI-powered price manipulation in new antitrust guidelines

China’s market regulator has moved to tackle the hidden risks of algorithm-driven price manipulation with newly proposed anti-monopoly guidelines for online shopping, food delivery and travel platforms.\nA draft of the “Anti-Monopoly Compliance Guidelines for Internet Platforms”, published over the weekend by the State Administration for Market Regulation (SAMR), focused heavily on the sophisticated, often opaque ways in which online platforms with significant market power can exploit technological advantages to exclude rivals and harm consumer interests.\nThe document identified eight “new risks”, including collusion among platforms through coordinated algorithms to fix pricing and commission fees, dominant players forcing merchants to sign exclusive contracts, and practices like excessive subsidies or unjustified refusals to allow merchants to operate stores.\nIt explicitly prohibited platforms with a dominant market position from “imposing application-layer or network-layer blockade or exclusion measures against transaction counterparties”. Chinese internet giants, including Alibaba Group Holding, Tencent Holdings and ByteDance, previously built “walled gardens” – like Alibaba’s Taobao not offering Tencent’s WeChat Pay, or WeChat not redirecting links of ByteDance’s Douyin short video app – but the restrictions started to ease last year. Alibaba owns the South China Morning Post.\n\nSAMR demanded that platform operators “conduct targeted screening and dynamic monitoring of core algorithmic models, including pricing algorithms, recommendation systems, ranking and advertising placement strategies.” It added that “particular attention should be paid to identifying discriminatory design, unfair transaction practices, excessive price adjustments, and uniform pricing promotions”.\nSAMR is soliciting public opinion on the draft regulation up to November 29.\n“Internet platforms commonly use algorithms to regulate two key factors in commercial operations and market competition: traffic and pricing,” Li Qiangzhi, an expert with the government-backed China Academy of Information and Communications Technology, said in an interpretation of the SAMR website on Sunday. But the new big data and AI-powered technologies “also carry the risk of being misused in scenarios involving collusive communication, information exchange and minimum price restriction”.\nLi said anti-monopoly “does not oppose price competition, but rather goes against excessive price competition”.\nEarlier this year, China’s top food delivery platform Meituan faced challenges from smaller rivals JD.com and Alibaba, which were locked in months-long price wars involving free meals and drinks. After the intervention of SAMR, all three pledged in August to stop irrational competition.\nAlgorithm-driven price manipulation has also drawn scrutiny from China’s internet watchdog, the Cyberspace Administration of China, which in November 2024 urged platforms to address “typical issues with algorithms” – including those that create “echo chambers” and induce addiction – as well as crack down on unfair pricing and discounts targeting different demographics.\nChina’s market regulator has since 2020 initiated a regulatory storm targeting Big Tech’s monopolistic practices. Alibaba, for example, was fined US$2.8 billion for abusing its market dominance by forcing online merchants to open stores or take part in promotions on its platforms. Meituan was fined 3.4 billion yuan (US$478 million) for a similar “picking one from two” strategy.\n