China drafts new rules to curb big data price gouging

On Saturday, China’s National Development and Reform Commission (NDRC) and two other ministries, the State Administration for Market Regulation and the Cyberspace Administration of China, proposed new internet pricing rules. The agencies claimed they wanted to encourage more equitable competition and promote openness in the digital economy.

Per their joint announcement, the draft regulations are intended to plug regulatory gaps in internet pricing, especially in price presentation, algorithm-driven adjustments, and dynamic promotions.

The draft calls on platforms to disclose fee charges, promotions, and subsidies clearly

The NDRC said the draft rules would ban online platforms from using unfair methods such as reducing store traffic or pulling products off shelves to squeeze the merchants’ pricing autonomy. It added that the regulation also sets behavior, accountability, and data use standards while encouraging cooperation among regulators, industry organizations, and platform operators.

According to the draft, without consumer knowledge, platforms may not use big-data profiling to alter prices or fees for the same product or service under identical conditions—based on factors like consumers’ willingness or ability to pay, preferences, or habits. Market platforms would also need to display prices and be more transparent on promotions, subsidies, price discrimination, variable quotas, and ranking systems.

Per the commission, all these rules would promote fair competition. It affirmed, “The platform economy involves many operators whose pricing behavior directly affects consumers. Refining these rules will help ensure orderly, fair competition and protect the rights of both businesses and consumers.” So far, the agency has also invited public comments on the proposal for a month.

China’s top regulator also proposed new rules in May

Vendors have long complained that leading platforms distorted prices to encourage sales, and consumers have raised issues about misleading pricing tactics. Alibaba, for example, was slapped with a record $2.75 billion fine in 2021 over antitrust violations, which the enterprise accepted.

Nonetheless, major e-commerce firms have since dismissed regulatory threats while intensifying competition in “instant retail.”

A few months ago, China’s top market regulator had proposed new rules to standardize commission fees on e-commerce platforms, promoting fairness and transparency. The announcement even prompted a decline in Meituan’s share price.

The Chinese government also ended the practice of e-commerce platforms enforcing customer refunds on behalf of buyers, as reported earlier by Cryptopolitan. Now only merchants will have the authority to initiate refunds, giving them greater control over transactions.

Previously, platforms could process refunds without merchant approval, allowing customers to receive reimbursements without returning goods. This approach, which began in 2021 with PDD Holdings leading the way, was intended to improve customer satisfaction and streamline disputes. However, the policy resulted in significant financial losses for merchants, who often lost both their products and revenue.

The newly announced guideline, titled Compliance Guide for Online Trading Platform Fees, was posted on the State Administration for Market Regulation’s website, to which the watchdog claimed it covered all internet platforms that provided online storefronts, facilitated deals, shared information, and delivered services. It further noted that the proposals would lessen the burdens on vendors and boost small and medium-sized businesses.

Per the draft, platforms would have to shoulder social responsibility during natural disasters or public health crises by cutting or waiving commissions and reducing other fees. It also called on platforms to set fair pricing structures grounded in factors such as operating costs, contractual agreements, transaction norms, consumer habits, and similar considerations. Furthermore, it stated that platforms should reinforce pre-compliance review structures to ensure charges remain fair.

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