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Don't super-size me – China defines rules for 'super-large' platforms
Creates category to control what we call a superapp for antitrust behavior and more
China's antitrust watchdog, the State Administration for Market Regulation (SAMR) has issued new draft rules for internet platforms the organization considers "super-large" – including vague directives forbidding anticompetitive behavior and more.
It is seeking comment before the rules are finalised.
To fall into this "super-large" category, a platform must have more than 500 million annual active users, a valuation of over ¥1,000bn (about $150bn), employ a business model that restricts vendor access to consumers, and offer at least two core services.
A sampling of Chinese apps that would qualify for the proposed "super large" designation includes familiar names like WeChat, Taobao, Alipay, Meituan and Douyin.
The new rules will hold this large category of internet platforms to higher standards than smaller, less influential apps. Areas governed by the new rules include data security (the way personal information is managed as well as its cross-border flow), fair competition, open ecosystems that promote interoperability, internal governance, risk of fostering illegal content or behaviors, audits and reporting obligations and tax matters There's also a requirement to promote innovation.
The guidelines don't stop at defining super-large platforms. They also identify two other classifications: "large" and "small and medium". It is, at the very least, less confusing than the sizes at Starbucks.
According to the policy announcement, classifying internet platforms by size will keep the platform economy healthy, protect user rights and interests, maintain social and economic order, and protect national security.
"The size of various platforms, social influence and control of various subjects vary widely," wrote SAMR. "Under such circumstances, it would not be appropriate to adopt uniform standards and standardize the activities of the platform with a unified framework."
The elements of a super-large platform sound an awful lot like the description of a superapp – a technology of which China is the birth place.
SAMR seems particularly interested in keeping monopolies from forming in this new realm.
"For super-large platforms, emphasis is placed on the principal responsibility of leading fair competition," argued the watchdog. "This is of great significance to build a reasonable competitive order and open platform ecology in the field of platform economy."
It's also notable that SAMR is requiring "interoperability" of the internet platforms, since the growth of an app can depend on who is excluded. Opening too little means no one can use the product, while opening too much can cause lost revenues because of things like having to share costs and coordination.
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But the Middle Kingdom's regulators have recently gone further than defining who is allowed to be a vendor. In September, the Ministry of Industry and Information Technology (MIIT) ordered members of China's Big Tech community (like Alibaba and Tencent) to stop blocking links to each other – thus making them interoperable across platforms.
Holding platforms more responsible for the content they provide is also not new. Mounting censorship pressure caused LinkedIn to throw in the towel in the Middle Kingdom only a few weeks ago.
Chinese censorship undoubtedly remains an ongoing concern and when it comes to internet platforms and technology, it seems there's new regulation coming out of the nation's rulers at overwhelming speed.
However, KPMG's Singapore-based Head of Financial Services, Anton Ruddenklau, told The Register that he believes not all of the recent flood of laws is bad.
"I think a lot of the China regulation is quite proportionate and reasonable," said Ruddenklau, who explained that China needed to find the balance between legacy organizations and new industries.
"That's what China's started to think to do: how do we control the bubble, how do we give legacy and new industries fair playing field and how do we protect the rest of the financial and economic system of China?” He continued: "We are doing it in the West. No one talks about it the same way. It's the same thing."
SAMR is welcoming feedback "from the society" on its draft guidelines. All relevant units and individuals are welcome to submit their opinions and suggestions before November 8, 2021 online, via email, or by snail-mail to the address listed here. Although who qualifies as "society", much like the specifics of these regulations, is not entirely clear. ®