Beijing's market regulator has issued a stern warning to China's tech giants, urging them to rein in "involutionary competition" as they escalate giveaway battles to promote AI services ahead of the Lunar New Year shopping rush.
The State Administration for Market Regulation (SAMR) "reminded" the platforms to "further regulate promotional activities" and avoid "all forms of involutionary competition," according to the statement, without specifying particular actions by the companies.
Companies were told to "uphold a fair and competitive" environment to "foster innovation and healthy development," the regulator emphasized. It added that the firms should "jointly uphold a fair and competitive market environment to foster innovation and healthy development within the platform economy."
The term "involution," or neijuan in Chinese, describes cutthroat, low-quality price competition that has plagued sectors from electric vehicles to food delivery. It has emerged as a buzzword in China over the past few years, with Beijing pledging to tackle the phenomenon due to its harmful impact on the economy.
China's tech giants have intensified their promotional giveaways in the lead-up to Lunar New Year, one of the year's most vital shopping periods, aiming to draw users to their services—particularly AI applications—in a fierce contest for market dominance.
The SAMR's intervention underscores ongoing regulatory efforts to promote sustainable growth in the platform economy, steering clear of the destructive price wars that characterize involution.
As promotional activities ramp up, the reminder serves as a caution to tech platforms to prioritize long-term innovation over short-term user acquisition tactics that could undermine industry health.
