In order to effectively curb the behavior of “big data-enabled price discrimination against existing customers”, it is necessary to further improve market regulations in the existing forms of supervision such as admonishment meetings, punishment and rectification, etc.

Recently, in order to effectively govern the behavior of “big data-enabled price discrimination against existing customers”, the regulatory authorities have cracked down on it. On August 17, the Personal Information Protection Law (draft) was submitted to the Standing Committee of the National People’s Congress (NPC) for its third deliberation. In this draft, the specific provisions about the behavior of “big data-enabled price discrimination against existing customers” have been made. On the same day, the Regulations on Prohibiting Unfair Online Competition Behaviors (draft for public comments) was released by the State Administration for Market Regulation, which aimed to regulate the behavior of “big data-enabled price discrimination against existing customers” by targeting at unfair online competition behaviors. Prior to this, it has proposed in the Regulation of Shenzhen Special Economic Zone on Data (draft for comments) that heavy penalties for the behavior of “big data-enabled price discrimination against existing customers” should be imposed and serious cases could be fined up to RMB 50 million yuan.

In fact, since the phenomenon of “big data-enabled price discrimination against existing customers” came into the public eye, many departments have been involved in governance. The voice of consumers’ questioning, complaints and lawsuits also appear from time to time. But at present, although the regulatory authorities continue to punish and regulate the behavior of “big data-enabled price discrimination against existing customers”, it is still difficult to effectively curb this behavior. In essence, the phenomenon of “big data-enabled price discrimination against existing customers” is the abuse of data rights and interests, algorithmic power and market dominance of enterprises. To effectively curb the phenomenon of “big data-enabled price discrimination against existing customers”, market regulations need to be further improved in the existing forms of supervision, such as admonishment meetings, punishment and rectification, etc.

The Nature of “big data-enabled price discrimination against existing customers”: Three “Abuses”

The nature of “big data-enabled price discrimination against existing customers” can be summarized as three “abuses”: abuse of data rights and interests, abuse of algorithmic power and abuse of dominant market position.

At first, from the perspective of data dimension, the phenomenon of “big data-enabled price discrimination against existing customers” refers to the contention and abuse of data ownership by the operators. In the process of consumption on Internet platforms, consumers will generate personal information, purchase product information, commodity circulation information and other data. Relevant data is generated by consumers’ purchase behavior, and consumers should have the ownership of the data. However, in practice, consumption data is often controlled by the enterprise because it is stored in the platform’s systems and servers. The behavior of “big data-enabled price discrimination against existing customers” is based on the misuse of relevant data by the enterprises to obtain personal portraits of consumers, and implement the differentiated pricing to discriminate against existing customers. At present, there are no clear legal provisions on the standardized use of consumption data by the enterprises at the national level. Driven by the lack of regulations and commercial interests, some enterprises unscrupulously analyze and abuse data.

Secondly, from the perspective of algorithm dimension, the behavior of “big data-enabled price discrimination against existing customers” is the misuse of algorithms and technologies by the operators. The optimization of algorithms and technological advances are supposed to provide consumers with more accurate and efficient services. But in the Internet world, some operators take advantage of the high technology and high concealment of the algorithm, and infringe consumers’ rights and interests by using discriminatory algorithm matching. However, as consumers are unable to know the algorithm used by the Internet platform and its purpose, etc., the initiative to explain the algorithm is in the hands of the platform, and the users are in a passive position.

Thirdly, from the perspective of market position, the phenomenon of “big data-enabled price discrimination against existing customers” refers to the unequal transaction set up by the operators abusing their dominant market position. At present, the platforms that have already experienced the phenomenon of “big data-enabled price discrimination against existing customers” mostly have occupied a large share in the market, and have relative advantages in some specific service industries. Based on big data and algorithmic technology, by relying on their market position, the commercial platforms set unequal trading terms and treat consumers differently. In February, 2021, the Anti-monopoly Guidelines of the Anti-monopoly Commission of the State Council on Platform Economy clearly defined the behavior of “big data-enabled price discrimination against existing customers” as abuse of dominant market position.

Perfecting the regulation is the key to control the phenomenon of “big data-enabled price discrimination against existing customers”.

In order to effectively control the phenomenon of “big data-enabled price discrimination against existing customers”, it can be restrained by clarifying the boundary of data rights and interests, promoting the transparent mechanism of algorithms, and curbing market dominance, etc.

At first, it is to clarify the boundary of data rights and interests. There have been many discussions on the issue of data rights and interests, but in the face of data chaos, the formulation of new regulations can not always be in the exploratory stage, and it is urgent to speed up the pace. Specifically, the operators may be required to clearly inform users and regulatory authorities of the purpose, means, scope and use, etc. of the platform for collecting user data so as to expand the scope of users’ right to know, and especially specify whether the data will be used for pricing. In terms of the use of data rights and interests, Shanghai is preparing to introduce relevant regulations in advance. Recently, ZHU Zongyao, head of Shanghai Data Legislation Drafting Group and Director of Shanghai Municipal Big Data Center, has revealed to the media that, in the upcoming Regulations of Shanghai Municipality on Data (Tentative Name), it is stipulated that the enterprises have the right to manage, profit from and transfer the data generated and collected by themselves, as well as the data products and services developed under the condition that they do not violate the prohibitive provisions of laws and administrative regulations. In the third draft of the Personal Information Protection Law (draft), it is also emphasized that no organization or individual shall use personal information to make automatic decisions, and shall not impose unreasonable differential treatment on individuals in terms of transaction prices and other transaction conditions.

Secondly, it is to promote algorithm transparency mechanism. At present, there is no effective algorithmic power governance mechanism in China, and many European and American countries have explored and practiced in this aspect. For example, in 2017, the U.S. Public Policy Committee of the Association for Computing Machinery released six governance guidelines for enterprise algorithms, and pointed out that the specific content of algorithm transparency included the operating principle of the algorithm, decision results, data sources, etc. By promoting the algorithm transparency mechanism, the algorithm running process and decision-making basis of enterprises can be understood, so as to distinguish whether they make reasonable use of technology, which is of great significance to standardize the operation behavior of Internet enterprises and reduce unfair competition in the market. At the same time, the enterprises should be guided to internalize algorithm ethics as enterprise standards and establish their own internal algorithm control system to fundamentally alleviate the problem of algorithm power abuse.

Thirdly, it is to curb market dominance. Anti -monopoly issue has always been one of the focal points regulating Internet platforms. Under normal circumstances, for the commercial platform that implements the behavior of “big data-enabled price discrimination against existing customers”, the consumers can choose another commercial platform after perceiving its behavior. However, once the enterprise that has implemented the behavior of “big data-enabled price discrimination against existing customers” has established a dominant market position, consumers have no choice but to continue using their products or services. At present, the unfair price behavior, restricted trading, “big data-enabled price discrimination against existing customers” and other situations in the Anti-monopoly Guidelines of the Anti-monopoly Commission of the State Council on Platform Economy. This means that the market regulator will further curb the market dominance of Internet platforms, and control the phenomenon of “big data-enabled price discrimination against existing customers”.