Investing.com – Stocks of Chinese Internet and tech companies drifted lower in Tuesday’s premarket as the country’s antitrust regulator proposed sweeping changes to curb behavior it thinks harms competition.
ADRs of Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD) traded 3.5% lower each. Didi ADRs (NYSE:DIDI) fell 2.7% and Pinduoduo (NASDAQ:PDD) 4%. Tencent Holdings ADRs (OTC:TCEHY) fell 2.6%.
The new rules, proposed by State Administration for Market Regulation, seek to prevent unfair competition among Internet companies. If approved by the government, they could come into force this year.
The amendments propose strict penalties for submitting false data to mislead customers. Companies will no longer be able to get away with manipulating user feedback or product specifications.
The regulator also wants to ban "choosing one from two," in which companies tie up suppliers in exclusive agreements to prevent them from selling on rival platforms.
Regulators in China have been increasing scrutiny of their tech and education companies, worried they wield too much power in the marketplace that hurts competition and results in higher prices for consumers.
They are also worried about their handling of data of millions of Chinese citizens using their platforms. The draft also bans using customer data to anticipate or influence users' behavior.