Author: M.V. Geethika Reddy, Alliance University
To the Point
As the state performing as both promoter and also the regulator, China has become the world leader in artificial intelligence industry. While AI is critical to achieving China’s strategic and economic objectives, unchecked innovation presents a greater threat of anti-competitive conduct, monopolistic conduct, and the exploitation of data. The Anti-Monopoly Law (AML), the Data Security Law (DSL), and the Personal Information Protection Law (PIPL) function as the three pillars of China’s digital competition regime, which provides a unique example of state-led, market-oriented regulation.
Use of Legal Jargon
Monopolistic Conduct: The conduct of AI-driven digital platforms that abuse their market dominance.
Algorithmic Collusion: A form of implicit collusion between competitors facilitated by machine learning algorithms.
Ex Ante Regulation: Preventative regulation conducted prior to the occurrence of harm, as opposed to ex post regulation.
The principle that data generated within China is subject to Chinese legislation is referred to as “data sovereignty.”
Platform Economy: A form of business in which AI-driven digital platforms act as intermediaries between buyers and sellers.
The Proof
Legislative Intent: In the 2022 revisions of the Anti-Monopoly Law, exclusionary conduct, including discriminatory practices driven by algorithms and the misuse of big data, was explicitly added as a form of anti-competitive conduct.
Regulatory Enforcement: The State Administration for Market Regulation (SAMR) has looked into AI-powered recommendation systems, particularly in the context of predatory pricing and price discrimination.
Judicial Precedents: Chinese courts, operating under unfair competition regulations, have upheld consumer protection actions against AI-enabled platforms.
Policy Integration: According to the 14th Five-Year Plan, governance of AI is integrated as a digital economy plan, and therefore, it is central to the strategic plan of China’s digital economy.
Abstract
This article offers a detailed critique of China’s digital competition policies on artificial intelligence. It looks at the implications of sector-specific regulations, the Anti-Monopoly Law (AML), and case law to show how AI complicates the enforcement of traditional competition laws. The article also examines regulatory rules and case law to show the proactive approach taken by China’s authorities to legislate against algorithmic collusion, discriminatory conduct, and data monopoly in the platform economy.
Case Laws
By exploiting algorithmic surveillance to enforce merchant exclusivity, Meituan was fined CNY 3.44 billion for abuse of market dominance under Article 17 of the AML in the 2021 Meituan Case.
In the 2021 Alibaba Case, the company was fined CNY 18.2 billion for “choosing one from two” in e-commerce, where AI-based merchant compliance tracking powered by algorithms was used. This case expanded the AML definition to exclusionary agreements powered by algorithms.
In Sankuai Technology v. JD.com (2020), the Beijing Intellectual Property Court held that “algorithmic bias” in search rankings is unfair competition under the AUCL.
In 2021, SAMR recognized the Price Discrimination by Algorithms as an anti-competition practice and issued administrative guidance prohibiting platforms from using AI and big data for differential pricing based on customer profiles.
Conclusion
One example of a hybrid regulatory system that combines state-centric control and market discipline is China’s framework for digital competition. By incorporating algorithmic regulation into its framework of competition law, China positions itself as a leader in AI governance. However, there are still issues:
Issues with Transparency: Because AI systems are often “black boxes,” it is more challenging to place blame.
Risks of Overregulation: Innovation and global competitiveness may be hampered by overzealous government intervention.
Extraterritorial Implications: If Chinese AI companies expand globally, there may be issues with cross-border enforcement and the law.
Therefore, the future depends on finding a balance between state sovereignty, innovation incentives, and consumer protection—even if China has created a sophisticated toolkit to counteract monopolistic AI behavior.
FAQS
1. How does China’s Anti-Monopoly Law apply to AI?
Among other abuses of market dominance, the AML prohibits algorithmic price discrimination, predatory pricing, and exclusionary agreements enabled by AI.
2. what does “algorithmic collusion” mean?
In the absence of explicit agreements, it describes clandestine cooperation between competitors using self-learning algorithms, which makes traditional cartel identification difficult.
3. Do Chinese regulations affect foreign AI companies?
Yes. The extraterritorial jurisdiction principle of the AML applies to foreign corporations whose activities restrict competition in the Chinese market.
4.How is consumer data protected by AI regulation?
Platforms are required by the Personal Information Protection Law (PIPL) to restrict data collection and ensure transparency in algorithmic decision-making.
5. Is China’s approach stricter than the US or EU’s?
Yes. While the US and EU rely on ex post antitrust enforcement and ex ante regulations, like the Digital Markets Act, China combines both strategies with direct state engagement.
