China is taking aim at its flourishing livestream e-commerce market with the introduction of new regulations released Friday from seven government agencies including the nation’s top cyberspace watchdog and market regulator.
Why it matters: The new rules are the latest in China’s tightening grip on the internet sector. Regulators have in recent months stepped up antitrust regulations on tech firms and halted fintech firm Ant Group’s mega dual listing.
- Livestreamed e-commerce has become essential to marketing in pandemic-era China. According to China’s Ministry of Commerce, more than 4 million e-commerce sessions were livestreamed in the first quarter of 2020.
- Major e-commerce and short-video platforms have tried combining the two markets, with Alibaba’s Taobao Live, Tencent-backed Kuaishou, and ByteDance’s Douyin emerging as leading players in the field.
Details: Central government agencies including the Cyberspace Administration of China, the Ministry of Public Security, and the commerce ministry rolled out on Friday new rules targeting the livestream e-commerce space that will go into effect on May 25.
- The regulations require livestream platforms to set up a system to internally rank users by metrics such as views and transactions.
- Platforms should also establish risk management systems to guard against suspicious or illegal marketing tactics, taking measures such as pop-up warnings, limiting traffic, and stopping the livestream, according to the new rules.
- Platforms must verify livestream the identity of livestream hosts prior to every session. Regulators also called for platforms to take the necessary steps to secure users’ personal information.
- The rules forbid minors under the age of 16 from hosting livestream e-commerce sessions.
Context: The State Administration for Market Regulation, China’s top market watchdog, previously introduced a set of rules governing livestream sales, misleading practices, and user data privacy on March 12 at the annual 315 consumer rights protection gala. These regulations were an important complement to the E-Commerce Law in 2019 as selling via livestream gained popularity.
- Taobao Live is one of the largest livestream platforms in terms of merchant size, user base, and sales volume, with an estimated 2019 gross merchandise value (GMV) of between RMB 200 billion and 250 billion ($30.5 billion to $38.5 billion).
- Kuaishou launched a livestream feature in 2017 and reportedly sold an estimated GMV of RMB 35 billion in 2019. Livestream e-commerce accounted for 19% of the company’s revenue that year.
- The China Advertising Association (CAA) issued the first livestream e-commerce code of conduct on June 24, detailing rules against false and misleading advertising on livestreams and requiring real-name registration from merchants and individual livestreamers.