Li Daokui: Internet company supervision should be precise in order to sort out the relationship between successful development and regulation

Originally published in Chinese on April 20, 2021 by The Paper. Translated by ACCEPT.

Source: https://www.thepaper.cn/newsDetail_forward_12293290 

I suggest that the next phase of Internet company regulation and correction should be even more precise, seeking truth from facts, rather than generalized and expansive. We must keep in mind that platform enterprises are still in the process of development, and the relationship between development and regulation must be handled properly. For the current regulatory work, my observation is that the relevant departments, especially the regulatory authorities, have been issuing more precise measures. For example, the punishment of Alibaba clearly referenced the company’s ‘pick one of two’ practices.”

These remarks were made by David Daokui Li, a member of the Standing Committee of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC), Director of the Academic Center for Chinese Economic Practice and Thinking (ACCEPT) at Tsinghua University, and Co-president of the Society for the Analysis of Government and Economics (SAGE), in an interview with The Paper during the Boao Forum for Asia Annual Conference 2021 on April 20.

Platform companies are a sector in which the Chinese economy is leading globally, and they are a new area of competition between China and the United States, David Li said. There are many reasons for China to do a good job on platform enterprises and maintain a healthy development trend.

How can we ensure the healthy development of the platform economy? David Li suggested that first, we must make sure that platform enterprises can operate independently without major ups and downs.  Second, the platform economy must benefit stakeholders, including consumers as well as upstream and downstream enterprises. Both principles are very important, and cannot interrupt the operation of the platform economy’s platform enterprises themselves. On this basis, relevant parties will be able to develop.

On April 10, the State Administration for Market Regulation (SAMR) imposed an administrative penalty of 18.228 billion yuan on Alibaba Group for imposing a pick one of two monopoly. On April 13, SAMR, the Cyberspace Administration of China (CAC), and the State Taxation Administration held an administrative guidance meeting for Internet platform enterprises. The meeting targeted prominent problems in the platform economy, such as vendors being forced to choose between “one of two” platform rivals. The meeting also put forth “five strict precautions” and “five guarantees,” and explicitly requested that all Internet platform enterprises conduct a comprehensive self-examination and self-inspection within the next month, thoroughly rectifying each item. Subsequently, participating Internet platform enterprises centrally released their letters of commitment to operate in compliance with the law.

My suggestion is that we should strengthen research and propose precise regulatory policies on the basis of this research rather than generalizing regulation. There would be endless consequences for generalizing regulation, and the direct result would be self-defeating, which would harm the development of both China's economy as a whole and the platform economy specifically, said David Li. Therefore, I suggest the establishment of a Digital Economy Development and Supervision Committee at the national level to specifically manage the relationship between development and regulation, deepen research in all aspects, and use this research to put forth more precise regulatory policy.