On Wednesday, China introduced sweeping new regulations that prohibit major platforms, including Alibaba Group Holding Ltd., from forcing online merchants to participate in promotional activities. This is part of a broader set of measures designed to temper the rapidly escalating competition within the e-commerce sector.
The new guidelines, which are scheduled to take effect in February, come after a series of warnings from Beijing directed at Alibaba and its competitors, such as Meituan and JD.com Inc., against pressuring merchants into offering discounts and employing other tactics that are accused of upsetting market order. A separate set of rules, also issued by the State Administration for Market Regulation and the Cyberspace Administration of China, additionally bans online influencers from making false or misleading claims.
Alibaba's stock dropped by as much as 3.3% in Hong Kong trading on Wednesday, leading the decline among its peers, which included AI video platform Kuaishou, JD.com, and Meituan.
Since 2025, Beijing has intensified its oversight of the country's massive retail market, a move that gained momentum after Alibaba, JD.com, and Meituan began investing billions of dollars in subsidies and incentives in an attempt to dominate the meal delivery sector. Over the past year, regulators have specifically highlighted practices such as unconditional refunds and exclusivity arrangements, arguing that these harm smaller merchants.
While China already has an overarching e-commerce law to regulate the industry, many of the new regulations are crafted to specifically address misconduct by the platforms themselves—the online technology companies that facilitate transactions between buyers and sellers. The updated rules also mandate that these platforms safeguard consumer interests and user data, with violations potentially resulting in official warnings and financial penalties.
The widespread use of aggressive discounts and subsidies has also put significant pressure on profit margins across the entire e-commerce industry. In November, Meituan attributed its first quarterly loss in nearly three years to "irrational competition," highlighting the financial strain of its three-way battle with Alibaba and JD.com amid a sluggish Chinese consumer market.
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