If China Governs Its Internet, Why Does It Still Have a Big Tech Problem?
Imagine you run a shop on Amazon. While you are packing orders, a message pops up from your Amazon contact: to get your shop featured in our next big sale, you must remove your products from eBay. It also implies that if refuse, platform traffic and product visibility might be affected. You look at those packages around you. The stock is already paid for, and bills are due next week. Can you afford to say no?
The Amazon example is just hypothetical, but Alibaba’s “choose one of two” case in China did put real merchants in a similar spot. The Chinese government usually keeps a close watch on its internet companies, so how did Alibaba become powerful enough to decide where merchants sell?
The government could set rules, but sellers still relied on platform to reach customers. If refusing its demands meant losing sales, they had little room to say no. Regulation needs to give sellers a real choice: the freedom to sell without algorithm penalty.
Your shop, their rules
Alibaba owns Taobao and Tmall, two major Chinese e-commerce platforms. In 2019, Alibaba accounted for an estimated 55.9% of China’s retail ecommerce sales. Many sellers had spent years building a customer base and collecting reviews there. Switching platforms was no simple move: their customers and reviews would not automatically follow.
In April 2021, China’s market regulator, the State Administration for Market Regulation (SAMR), found that Alibaba had imposed “choose one of two” requirements since 2015. Merchants facing these demands were barred from opening stores or joining sales events on rival platforms. Those who refused could have their products pushed down search results or be excluded from Alibaba’s sales events.
On April 10, 2021, Alibaba was ordered to stop and fined RMB 18.228 billion, roughly US$2.8 billion at the time. The company also had to submit annual compliance reports to SAMR for three years, explaining the steps it had taken to fix the violations.
Try walking away when you need sales most
November is approaching. In China, that means Double Eleven. The date, 11 November, began as an informal celebration of being single, known as Singles’ Day. Starting in 2009, Alibaba gradually turned it into a global shopping festival, much like Black Friday.
Now imagine being an e-commerce merchant, preparing for the upcoming Double Eleven. You have ordered stock, planned discounts and perhaps hired extra help. Pulling out of Taobao and Tmall means losing sales at the worst possible time, but giving up other platforms also leads to missing out on potential customers.
“Just use another website” sounds easier than it is. Shoppers gravitate to sites with plenty of products; sellers follow the shoppers. A rival marketplace cannot build both sides overnight, merchant’s reviews and shop ratings do not travel with them either. This is platform dependence: the shop can move, but much of what makes it visible cannot.
Selling across several sites allows merchants to reach new customers without giving up the old ones. Alibaba’s “choose one of two” restriction blocked that option for affected sellers and left rival marketplaces with fewer products to attract shoppers. With less competition between sites, shoppers could face higher prices, fewer choices and poorer service.
The internet opened doors. Platforms control who gets seen.
An online shop can reach far beyond a local high street, but being online and being found are different things.
Search rankings and recommendations decide which products get attention. Software can set these rules without a manager ever sending an email. Even if a seller lists a product, it may still never appear in front of customers.
This is how platform governance works in everyday life. The company running the marketplace also shapes sellers’ chances of success.
When platforms limit sellers’ choices, trust can turn into frustration. Such frustration might lead to techlash: growing resistance to the power of big tech. People appreciate the convenience internet platforms offer and still expect them to treat sellers fairly.
Different internet models, familiar giants
The US is known for its market-driven approach to the internet, where private companies take the lead. In contrast, China emphasises cyber sovereignty, meaning authorities claim the right to govern the internet within its borders.
Those are general trends. The US still regulate companies, and China still relies on markets. Cyber sovereignty tells us who claims authority over the internet, but it does not tell us whether a seller can challenge a platform’s business rules.
China also had reasons to support its tech giants’ growth, since these companies did help boost commerce and technology. As their power grew, the government tightened oversight.
However, Alibaba’s merchants still depended on the platform to reach customers. The labels “government-led” and “market-led” may overlook how much power platforms hold over sellers.
Alibaba was not penalised simply for being big. The issue was using its dominant position to exclude competition. Breaking up a company is not the only solution; changing what it can require from sellers matters too. Otherwise, the debate becomes about which government regulates more, while merchants still face the same limited options.
Would a system that relies more on markets give sellers more freedom? The US offers an interesting comparison.
This should sound familiar to Amazon shoppers
In 2023, the US Federal Trade Commission filed an antitrust lawsuit against Amazon, claiming the company punished sellers who offered lower prices on other sites by burying their products in search results.
Although rules differed, both cases raise a similar concern: a platform can use search visibility to influence what sellers do on other sites. Alibaba’s exclusivity rule was found in a penalty decision; the claim about Amazon’s search rankings remains an allegation in a lawsuit. Amazon disputed the complaint, saying the challenged practices supported competition, lower prices and faster deliveries.
The consequences can reach both sellers and shoppers. For shoppers, that could mean fewer chances to find a lower price. For sellers, listing products or offering better prices on rival sites could put sales on the main platform at risk.
These cases do not prove that the problem is worse in one country than in another. But they do show the so-called “China problem” isn't just a distant issue.
A fine was only the beginning
The Chinese government did more than issue a penalty. In April 2021, SAMR and two other government agencies met with representatives from 34 internet platform companies. Enterprises were required to take corrective action against monopolistic behaviour, make public compliance commitments, and accept subsequent review. The agencies also highlighted forced exclusivity and the misuse of platform rules and algorithms.
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In August 2024, SAMR reported that Alibaba had ended the practice and finished its three-year rectification programme. The review also included a third-party assessment.
However, completing the programme does not answer every question about how the platform treats sellers. Merchants still depend on the platform to reach customers. Whether they can trade elsewhere freely requires evidence of how the platform’s rules work in practice.
What if the punishment disappears into the algorithm?
Return to our imagined seller. You are now free to open that eBay shop. A week later, your products drop in Amazon’s search results. Bad luck, tougher competition, or retaliation?
This is a hypothetical scenario, not a claim of new misconduct by either Alibaba or Amazon. China’s platform antitrust guidelines already identify search demotion and traffic rewards as tools that can enforce exclusivity.
A drop in views alone would not prove punishment. To find out what happened, regulators would need access to relevant ranking records and a way to compare how similar sellers were treated. Merchants need explanations they can question, and somewhere to complain without risking more penalties. Platforms should keep records explaining their ranking decisions so regulators can investigate complaints.
Of course, digital marketplaces need to rank products and remove bad sellers. No shop is owed a permanent place at the top. The question is whether a drop in visibility reflects normal ranking changes or retaliation for selling on a rival site.
Sellers should be free to trade elsewhere without a platform burying their business for doing so.
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AI declaration
OpenAI’s ChatGPT / Codex were used to assist with researching, outlining and revising this article. The two diagrams included in the article were also created using these tools. Grammarly was used to refine the language. Sources and factual claims were checked against their original publications, and links were verified. The final content was reviewed and edited by the author.
