Algorithm guideline issued for online trading platforms

Shanghai regulators have released a guideline on algorithms for online trading platforms to regulate the market.

"The application of algorithm technologies has played an important role in improving online consumption experiences and operation efficiency, but it has also led to problems such as overcharging long-time users and algorithm discrimination," said Li Hong, director of the online transaction and market regulation department of Shanghai Administration for Market Regulation.

"These practices have infringed consumers' legal rights and interests and affected a fair and competitive market order," said Li.

The guideline bans improper pricing on e-commerce platforms via algorithms which include fabrication of original prices and fake discounts, according to the Shanghai Administration for Market Regulation.

Platform operators should not implement differential or discriminatory pricing treatments for different consumers and trade conditions, and they should ensure the fairness of algorithm applications, the guideline states.

They should not cheat consumers via algorithms in lucky draws by manipulating the winning rate and results.

Interfering and damaging the normal operations or product supply of other online businesses via algorithms is also banned, the guideline says.

The guideline highlights the protection of vulnerable groups as it encourages platform operators to take protecting the disabled, seniors and minors into the application of algorithms.

Platform operators are encouraged to make public and transparent their algorithm principles and implementation rules to help the public understand.

They should also establish a complaints handling and compensation mechanism on their algorithm application, according to the guideline.

Authorities said they would order platform operators to establish reasonable management system for algorithm application based on the guideline.