Beijing Regulator Summons Top 5 E-commerce Platforms Over 'Hundred Billion Subsidy' False Advertising

(Central News Agency, Reporter Zhang Shuling, Beijing 11th) Competition among Chinese e-commerce platforms is fierce, but false advertising is rampant, with claims of 'Hundred Billion Subsidies' being exaggerated. The Beijing Municipal Market Regulation Bureau summoned five e-commerce platforms—Taobao (Tmall), JD.com, Pinduoduo, Douyin, and Xiaohongshu—on the 11th, demanding they rectify their practices and avoid 'involution-style' competition.

As the '618' shopping festival approaches, according to a report by The Paper, the Beijing bureau summoned the five platforms to inform them of the second batch of typical problems found during a comprehensive rectification of 'involution-style' competition (excessive and inefficient competition). The main issues include false advertising in promotional activities, non-standard formulation and disclosure of promotion rules, and failure to disclose information about product sellers.

According to the problems disclosed by the authorities, the Taobao (Tmall) platform has been widely promoting its '6·18 Hundred Billion Subsidy' campaign since May. However, this is actually a long-term marketing activity, not a platform investment of 10 billion yuan to subsidize consumers during the '6·18' period. Furthermore, the platform repeatedly refused to disclose the actual subsidy amount invested during this '6·18' campaign and the contribution ratio between the platform and merchants.

Pinduoduo, which also offers a 'Hundred Billion Subsidy', also failed to specify the actual subsidy amount and the platform-merchant contribution ratio in its rules, nor did it provide supporting materials. Moreover, its promotion rules unilaterally exempted the platform from legal responsibility for product disputes.

Similar issues exist on the JD.com and Douyin platforms, which failed to clearly explain their promotion rules to consumers.

The Xiaohongshu platform launched a 'Points for Lucky Draw' activity but failed to clearly disclose core information such as winning probabilities and prize forfeiture rules. Its activity rules also stated that 'continued participation is deemed as consent', excluding consumers' right to negotiate.

The report quotes Liu Xiaochun, director of the Internet Rule of Law Research Center at the University of Chinese Academy of Social Sciences, who pointed out that irrational large-scale subsidies not only distort market pricing mechanisms but also, in some cases, platforms require merchants to bear the entire subsidy cost. This traps merchants in a dilemma of 'no traffic without price cuts, and losses with price cuts', making survival difficult.

The Beijing Municipal Market Regulation Bureau emphasized that all platforms must deeply understand the dangers of 'involution-style' competition and shift their focus from price competition to innovation and service. Platforms were instructed to immediately organize comprehensive self-inspections and quickly rectify non-compliant issues. The bureau stated it will continue dynamic monitoring of platform-related issues to maintain normal market order.

China's economy has been under pressure in recent years, with excessive price competition pushing many industries to the brink of low profitability and the economy shrouded in deflationary gloom. These factors are also contributing to overall sluggish consumption. In April, the State Administration for Market Regulation announced the implementation of 'Rules on Price Behavior of Internet Platforms', requiring online platform companies to ensure their subsidy practices comply with regulations, curb vicious price competition, and foster a healthy competitive market order. (Editor: Zhou Huiying) 1150611