Privacy & Information Security Law Blog

On June 27, 2025, the Amendment to the Anti-Unfair Competition Law of PRC (“AUCL“) was published. The AUCL will take effect on October 15, 2025. The AUCL, in part, responds to the rapid and widespread adoption of artificial intelligence (“AI”) tools (such as crawlers that support AI applications, algorithmic decision-making, and algorithm-driven content creation) and the increase in illegal use of these tools. The AUCL highlights for businesses operating within scope of PRC law that if they are using AI tools, they will need to comply with AI-specific laws, as well as competition and IP requirements. We have summarized below the key AI compliance-related requirements of the AUCL.

Data Source for AI Training

Business entities are prohibited from obtaining or using data by means of fraud, coercion, or circumvention, or by sabotaging technical or management measures that have been implemented. For example, if a business entity uses crawlers to circumvent or disrupt a mechanism implemented to protect data from being captured to feed AI applications, this data source violates the fair competition requirements of the AUCL. In the context of AI, The companies  providing AI service and/or AI service technical support (including both the developers and deployers) need to re-evaluate and ensure the lawfulness of data sources to avoid running afoul of the new law.

Misuse of Algorithm

Business entities cannot use data, algorithm, technology or platform rules to commit acts of unfair competition. Specifically, business entities are not permitted, and are not permitted to instruct others, to violate platform terms in order to directly carry out fictitious transactions, fabricate reviews, or initiate malicious product returns in manner designed to negatively impact third party businesses. In practice, algorithms cannot be used for performing fictitious transactions, fabricating reviews or initiating malicious product returns to suppress competitors by overly favoring products operated by the platform.

Misuse of AI-Related Technology

Business entities are prohibited under the AUCL from performing the following actions to obstruct or disrupt the normal operation of network products or services provided by other business entities:

• inserting links into, or forcibly redirecting users within, network products or services without their consent;
• misleading, deceiving, or coercing users into modifying, disabling, or uninstalling network products or services; and
• maliciously rendering network products or services incompatible.

In practice, this aspect of the AUCL is designed to address businesses who design AI plug-ins and applications to redirect users to specific webpages in an effort to maliciously block services provided by competitors. The companies  providing AI service and/or AI service technical support  (including both developers and deployers) should ensure its technology does not infringe the normal operation of other network products or services provided by other businesses through these unlawful means in developing its products.

Pricing

A business entity running an internet trading platform (“Platform Operator”) is prohibited by the AUCL from coercing, or coercing in disguise, the business entities using their platform to follow pricing rules requiring them to sell goods at prices lower than cost. In the context of AI, the AUCL is seeking to prevent Platform Operators from initiating price wars by relying on certain AI technologies.