Algorithmic Price Discrimination on Online Platforms and Antitrust Enforcement in China’s Digital Economy

Posted by Social Science Research Network

Algorithmic Price Discrimination on Online Platforms and Antitrust Enforcement in China’s Digital Economy

By Wei Han, Yajie Gao & Ai Deng

Antitrust issues in the digital economy, especially those concerning big data and algorithms, have attracted the attention of both scholars and practitioners all around the world. Against the backdrop of rapid development of China’s digital economy, many online platforms now have a largely data- or algorithm-driven business model. Concurrently, the antitrust issues in relation to data and algorithms have also triggered social concerns. For example, in early 2018, the so-called Shashu phenomenon became a hot topic in Chinese society. “Shashu” refers to algorithmic price discrimination by online platforms where longer-term customers are charged less favorable prices. Some observers hold that this type of price discrimination is against the Anti-Monopoly Law of the People’s Republic of China (AML), and ought to be investigated accordingly. This article explores the potential challenges of applying the AML to algorithmic price discrimination and offers some suggestions on how to structure the analysis, taking into consideration the unique characteristics of China’s digital economy and at the same time abiding by the “tolerant and prudent” principle. We note that although many of the discussions in this article apply to traditional off-line price discrimination as well, algorithmic price discrimination is unique in the sense that it is closely intertwined with online platforms and their ability to amass consumer information in a fashion unthinkable in traditional off-line marketplaces.

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