Nine departments led by the National Development and Reform Commission jointly issued opinions on the standard, healthy and sustained development of the platform economy: develop and regulate in parallel, close the governance and supervision gaps, correct market failures, and give the sector a framework it can grow inside.
Getting the balance right means being clear about boundaries. Given the multiple relationships involved — platform and regulator, platform and platform, platform and merchant, platform and user — governance inside the platform ecosystem and outside it has to work together, within rules that are complete, competition that is orderly and rights that are protected.
Four relationships to fix
First, orderly competition between platforms. Competition is what makes markets work, and platforms can use data and algorithm advantages to lock in a market and choke off challengers. Strengthening the basic rules — antitrust among them — and opening the ecosystem up in good order is the answer.
Second, a fairer partnership between platforms and the merchants who operate on them. Merchants are partners, not assets, and they can leave. In practice some platforms use their data and algorithm leverage, and exemption clauses in service contracts, to treat merchants unequally — squeezing smaller firms over time. Platforms need joint mechanisms for making rules, multiple channels for merchants to be heard, and transparency in platform rules and key algorithms.
Third, better consumer protection between platform and user. Consumers trade their data for convenience; over-collection and unrestrained algorithm use threaten that data and privacy, and price discrimination costs them money. Data security and consumer protection are the red lines of platform governance.
Fourth, better coordination between platform and regulator. Platforms are both regulated and partners in regulation — supervision of such technical, multi-party systems often depends on platform cooperation. Rules must exist for supervision itself, so that oversight is lawful, proportionate and effective.
The institutional work
On basic rules: better linkage between laws (antitrust, data security, e-commerce), better linkage between the laws and their implementing rules — implementing rules for platform responsibilities under the data security and personal information protection laws, clear boundaries for data processing and sharing, interoperability standards for new infrastructure — and linkage between external rules and internal platform rules, with platform rules made publicly and, over time, rising into industry standards.
On responsibilities: classify platforms by type and size, and set the ‘digital gatekeeper’ duties of very large platforms so they cannot use their bottleneck position to favour some entrants over others; ban self-preferencing; guarantee interoperability with competing platforms; give quality small merchants traffic support; and clarify employment standards for gig workers.
On data and algorithms: refine data classification, build algorithm accountability, disclose the purpose, scope and use of algorithms without touching trade secrets, and let platforms self-assess under public scrutiny. Upgrade supervision itself with technology — monitoring, online enforcement, information disclosure — for a contactless regulatory mechanism.
On the framework: divide work clearly among regulators, avoid overlapping rounds of enforcement that chill innovation, use trigger-based and credit-based supervision, and let merchants and consumers play their part — complaint channels, public interest litigation — so that an effective market and a capable regulator pull in the same direction.
Republished for information. The original text has not been independently verified and does not necessarily reflect our views.
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