China Tightens Rules on Platform Pricing Power, Targeting Forced Discounts and Algorithmic Discrimination

China Tightens Rules on Platform Pricing Power, Targeting Forced Discounts and Algorithmic Discrimination

Key Takeaways

• New 29-article regulation bans platforms from pressuring merchants into “lowest price” deals or algorithm-driven discounts.
• Rules prohibit differential pricing based on user data without explicit consent.
• E-commerce operators must clearly label estimated and final prices to eliminate deceptive “price traps.”

China has rolled out one of its most detailed attempts yet to curb aggressive pricing tactics in e-commerce, issuing a 29-article regulation that directly targets business behaviors that have long frustrated both merchants and consumers. The rules—jointly released by the National Development and Reform Commission, the State Administration for Market Regulation (SAMR), and the Cyberspace Administration of China—take aim at the power imbalance between massive online platforms and the merchants that rely on them.

For B2B leaders observing China’s digital marketplace, the policy lands at a critical moment. Merchants have spent years contending with “lowest price” mandates, algorithmic penalties, and opaque pricing displays that effectively force them into price wars they never wanted. Now regulators are spelling out, in relatively granular terms, what platforms can no longer do.

At the center of the regulation is a ban on coercive discounting. Platforms are prohibited from using their scale, traffic algorithms, or ranking systems to pressure sellers into offering the lowest price on the market. That includes traffic throttling, demoting a shop in search results, or applying behind-the-scenes algorithmic penalties if a merchant doesn’t participate in a platform’s preferred promotional strategy. It might sound like an operational footnote, but it’s one that has shaped how online retail competition has worked for years.

Merchants have argued—quietly, most of the time—that they often had little real autonomy in pricing. This rule attempts to restore it. And yet it raises an obvious question: how will platforms recalibrate their promotional engines if they can’t lean on implied algorithmic consequences?

Another major focus is differential pricing. Regulators explicitly forbid platforms from setting different prices or charging differently for the same goods or services based on user demographics or behavioral data unless the user has given consent. The prohibited data points aren’t vague; they include willingness or ability to pay, consumption preferences, and consumption habits. In practice, that means the kinds of segmentation models that personalize pricing—sometimes controversially—now sit under tighter scrutiny.

This is an area where B2B operators should pause for a moment. Differential pricing isn’t illegal in most markets, but China is signaling that consent, transparency, and fairness matter more than the conversion uplift those models can deliver. Companies building or deploying pricing algorithms will need to recalibrate, not only to stay compliant but to avoid the reputational risk that comes with being perceived as exploiting behavioral data. A small thing, perhaps, but it suggests a shift in regulator expectations around algorithmic governance more broadly.

The rules also address “price traps,” a term Chinese regulators regularly use to describe pricing displays that mislead consumers. Platforms must clearly label estimated prices versus final settlement prices. They are also prohibited from flashing lower promotional prices on homepages or prominent placement areas if those prices don’t match what appears on the product detail page. Anyone who has worked with e-commerce UX teams knows how often homepage and detail page prices drift apart during large-scale promotions. Still, under the new guidelines, that design ambiguity becomes a compliance risk.

It’s worth noting that the regulation isn’t just a generic crackdown; it is pointed at practices that became widespread as platform competition intensified. The fact that three of China’s most influential economic and digital regulators jointly issued the rules underscores that the government sees pricing behavior as a systemic market issue. A similar dynamic played out in the antitrust actions of 2021, which focused heavily on exclusivity agreements and the practice known as “pick one from two.” The new rules stop short of revisiting those policies but sit firmly within the same policy logic: platforms shouldn’t use structural advantages to force participation in strategies that benefit the platform more than the merchant or the consumer.

The compliance implications for platform operators are extensive. Algorithm teams may need to rewrite ranking logic to avoid any perception of punitive demotion. Merchant management teams will need new playbooks that don’t rely on implied pressure. Pricing, operations, and legal teams will have to work together—more than they typically do—to ensure labelling and promotional workflows line up with the rules.

And then there’s the issue of consent. Requiring explicit user consent for differential pricing based on behavioral data forces platforms to rethink how they communicate pricing logic. It also introduces friction, something most product teams try hard to avoid. Even so, the alternative—non‑compliance—comes with substantially greater risks. Under China’s existing regulatory frameworks, especially those administered by SAMR, penalties for unfair pricing can be significant, and enforcement has historically been both high‑profile and fast-moving.

For merchants, the changes may bring a measure of relief. Many have grown tired of promotional calendars seemingly dictated by platform incentives rather than actual demand. There is an undercurrent here that the regulation acknowledges, even if indirectly: sustainable merchant economics matter to the health of China’s e-commerce ecosystem.

Still, the real outcomes depend on execution. Platforms will interpret the boundaries differently, and some will likely test the edges of what “pressure” or “consent” means. Others may shift their strategies toward loyalty programs or bundled promotions—areas not explicitly addressed in the current rule set. That is where it gets tricky for B2B operators trying to navigate the new environment. The regulation is clear, but the competitive battlefield it governs remains fluid.

The underlying message is straightforward enough. China’s regulators want pricing power to be fairer, clearer, and less driven by opaque algorithmic leverage. For companies operating in or adjacent to China’s digital economy, adapting to that expectation is no longer optional.