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Big data-enabled price discrimination is now in the regulatory crosshairs, with draft penalty rules unveiled by China's top market regulator on Friday, proposing fines of up to 0.5 percent of the offender's annual sales revenue, in the latest sign that the country's internet regulations are toughening.

The State Administration for Market Regulation (SAMR) is seeking public comment on the draft rules through August 2.  

SAMR made crystal clear the penalty criteria for violations of laws and regulations when it comes to pricing in new business models. That is, e-commerce platform operators would be subject to fines of between 0.1 percent and 0.5 percent of their sales income from the preceding year if they take advantage of big data analysis, among other technological means, to set different prices for the same product, per the draft rules. 

The draft regulations are expected to serve as a deterrent against discrimination in terms of the price offering of the same product or service, a practice commonly used in ride-hailing, ticket and travel booking platforms, Fang Xingdong, founder of Beijing-based technology think tank ChinaLabs, told the Global Times on Friday.

Without self-regulatory mechanisms whereby these platform operators or their associations are supposed to align themselves with, it is the announcement of such draft rules which increase the cost of violations that would genuinely protect consumers' interests and rein in the unchecked expansion of platform firms, he said.

The draft rules also stipulate that businesses in violation of the country's Price Law, dumping products at low prices to exclude competitors or monopolize the market, will have their illegal gains confiscated as well as face a fine of no more than five times their unlawful earnings.

The Guangdong Administration for Market Regulation also recently said in a response letter to Ye Liyan, a lawmaker in Guangdong who called for tougher rules on the internet economy, that law-enforcement will be strengthened against the forced choice of one out of two platforms, big data-powered price discrimination, among other activities prevailing in big internet platforms.

Global Times