China tightens e-commerce rules to curb platform competition and subsidy wars

China has rolled out a new set of e-commerce regulations aimed at controlling how its biggest online platforms compete, signalling a renewed push to stabilise a sector shaken by aggressive discounting and subsidy wars, said a Bloomberg report.

The measures, unveiled on Wednesday, target business practices by major platforms that regulators say have distorted market order and placed growing pressure on smaller merchants.

Coming amid heightened scrutiny since 2025, the rules reflect Beijing’s effort to recalibrate competition in a vast retail ecosystem that touches hundreds of millions of consumers.

New rules for platforms

The guidelines ban large e-commerce platforms from coercing online merchants into participating in promotions or discount campaigns.

Companies such as Alibaba Group Holding Ltd., JD.com Inc., and Meituan have previously been warned against practices that regulators say pressure sellers into price cuts or exclusive arrangements.

The rules are set to take effect in February and follow a series of notices from Beijing cautioning platforms against tactics accused of disrupting fair competition.

Authorities have argued that forcing merchants into platform-wide promotions weakens their bargaining power and undermines sustainable business practices across the sector.

Influencers under scrutiny

Alongside the platform-focused measures, regulators also introduced restrictions targeting online influencers.

A separate set of regulations, jointly published by the State Administration for Market Regulation and the Cyberspace Administration of China, prohibits influencers from making false or misleading claims while promoting products.

This move expands regulatory oversight beyond platforms themselves to the broader digital commerce chain, reflecting the growing role influencers play in driving sales.

Officials have increasingly linked misleading online promotions to consumer harm and market disorder, prompting closer supervision of content creators and livestream commerce.

Market reaction

The announcement weighed on share prices across the sector.

Alibaba’s stock slid as much as 4.2% in Hong Kong, leading declines among peers such as Kuaishou, JD, and Meituan.

The reaction highlighted investor concerns that tighter rules could curb growth strategies built around subsidies and heavy promotions.

China’s regulators have intensified oversight of the retail and e-commerce landscape since 2025, particularly after Alibaba, JD, and Meituan poured billions of dollars into incentives to gain an edge in meal delivery and online shopping.

Watchdogs have repeatedly criticised practices such as no-questions-asked refunds and exclusivity arrangements, arguing that they disadvantage smaller merchants and skew competition.

Pressure on profits

The regulatory push comes against a backdrop of eroding margins across the e-commerce industry. Rampant discounting and prolonged subsidy battles have taken a toll on profitability, especially as consumer demand remains subdued.

In November, Meituan pointed to what it described as irrational competition when it reported its first loss in almost three years, underscoring the financial strain of its three-way rivalry with Alibaba and JD.

China already has an e-commerce law in place, but the latest regulations are designed to directly address platform-specific misconduct.

They also reinforce obligations for companies to protect consumers and user data. Violations can result in warnings and fines, adding another layer of risk for firms that fail to adjust their practices.

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