Recently, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Administration for Market Regulation jointly issued the "Notice on Carrying Out the 'Clear and Bright - Governance of Typical Algorithm Problems on Internet Platforms' Special Action" (hereinafter referred to as the "Notice"). The Notice explicitly prohibits the use of algorithms to implement "big data price discrimination" and urges enterprises to conduct self-inspections and rectifications to further enhance algorithmic security capabilities.
In the digital information age, the "information cocoon" created by big data algorithms on e-commerce and online service platforms is quietly enveloping a vast number of users, causing consumers to unknowingly fall into the trap of "big data price discrimination." The transparency and fairness of algorithms have become key to maintaining fair market competition and protecting consumer rights.
Against this backdrop, Llinks Partner Nigel Zhu and Senior associate Susan Deng, who represented and participated in the widely reported "first case of big data price discrimination" (Ms. Hu's lawsuit against the Ctrip platform), were recently interviewed by Guancha.com on issues related to algorithmic compliance, including "big data price discrimination" (For more details on our representation in the "first case of big data price discrimination," please refer to "Reflections on the Second Instance Judgment of Hu v. Ctrip").
Firstly, drawing on his experience in the "first case of big data price discrimination," Lawyer Zhu analyzed the profound significance behind the plaintiff Ms. Hu's claims for Guancha.com. He stated that collecting and utilizing personal information unrelated to the services provided, creating detailed consumer profiles, and engaging in price discrimination against consumers exceed the scope permitted by law. Another significance of this case is that it clarifies the obligation of internet platforms to inform both operators within the platform and consumers about personal information in the context of the internet platform environment. Ms. Susan Deng, who also participated in the case, reminded consumers to be more cautious when authorizing personal information while registering as members or enjoying discounts, fully realizing the potential risks involved.
Regarding the issue of "algorithmic compliance," the complexity of algorithm settings and mechanisms often means that most employees within a company do not understand the full picture of the algorithms, let alone consumers outside the company. Therefore, it is nearly impossible to require the subjects of personal information to prove that algorithms have infringed upon their rights and the causal relationship involved. A positive development in this regard is the reinforcement of consumer rights protection by the "Personal Information Protection Law" (hereinafter referred to as the "PIPL") and the recently implemented "Regulations on the Implementation of the Consumer Rights Protection Law of the People's Republic of China." Llinks Partner Nigel Zhu specifically pointed out that under the PIPL, once consumers preliminarily prove that their personal information rights have been harmed, the burden of proof shifts to the operators. In the context of "big data price discrimination," operators must prove that their algorithms do not discriminate when processing personal information and ensure fairness and justice. This change will place consumers in a more advantageous position in litigation involving big data price discrimination. Mr. Nigel Zhu further explained other regulations issued by the Cyberspace Administration, which collectively require companies to provide sufficient evidence that their algorithm design and operation comply with personal information protection requirements and the fairness and transparency of algorithms. This also imposes higher requirements on corporate algorithmic compliance governance.
Another aspect of algorithmic compliance is that compliance must keep pace with technological development. Regulatory requirements call for "algorithms to be positive and benevolent," but algorithms themselves are neutral as a technology. Therefore, algorithmic compliance essentially requires companies to "be positive and benevolent." The widespread application of AI technology today makes "big data price discrimination" more concealed. Ms. Susan Deng specifically pointed out that most people may consider "exchange" to be harmless, such as following a public account, registering as a member, or submitting personal information in exchange for discounts when scanning codes to order meals. However, it is precisely this kind of exchange that may lead to the over-collection of personal information. To this end, Ms. Susan Deng suggested that before submitting personal information, consumers should carefully read the relevant terms and understand how their data will be collected and used. If they believe that the merchant's collection behavior exceeds the necessary scope for providing services, they should immediately stop providing information and may file complaints or reports against the operators' improper actions under the "Consumer Rights Protection Law" and the PIPL.
For the original interview by Guancha.com, please click here.
Llinks Compliance Team
Llinks compliance team began assisting companies with legal issues related to data and cybersecurity relatively early on, including cases involving offshore servers, network log storage and archiving, personal data collection and use, data integrity, centralized data processing, boundaries between trade secrets and state secrets, etc. Based on extensive practical experience, Llinks compliance team can provide clients with solutions that meet regulatory requirements and are practical and cost-effective.
Nigel Zhu, Partner
Mr. Nigel Zhu graduated from the Law School at Shanghai Jiao Tong University and the University of Wisconsin Law School, obtaining a Master of Laws and an LLM degree. Mr. Nigel Zhu joined Llinks Law Offices in March 2018. He is qualified to practice law in both China and New York State, USA, and has over ten years of legal practice experience. Before joining Llinks Law Offices, Mr. Nigel Zhu worked for several years at a well-known US law firm, primarily providing cybersecurity and data compliance, antitrust compliance services to multinational corporations, and also has extensive experience in cross-border mergers and acquisitions and foreign investment. Since joining Llinks, Mr. Nigel Zhu has mainly provided professional legal services to clients in the fields of cybersecurity and data compliance, antitrust, anti-corruption, export control, and ESG.
In the field of cybersecurity and data compliance, Mr. Nigel Zhu has extensive experience in consumer goods, automotive, pharmaceutical, internet, finance, chemical, energy, and other industries. He is skilled at providing comprehensive and actionable cybersecurity and data compliance services for clients. Mr. Nigel Zhu can offer a variety of cybersecurity and data compliance services, including data compliance audits, digital marketing compliance, cybersecurity and data compliance for connected products, consumer personal information compliance, internet architecture compliance, cybersecurity incident response, identification of critical information infrastructure, important data identification, cross-border data transfer compliance, etc. He holds a CISSP certification.
In the field of antitrust and competition law, Mr. Nigel Zhu has rich experience in merger control filings. His clients for merger control filing services include the leading home decoration and furniture retail company in the national market, the leading new energy battery manufacturing company in the national market, the leading new energy battery cathode material manufacturing company in the national market, as well as state-owned, private, and foreign-funded enterprises in other retail, manufacturing, energy, and high-tech industries. In addition to this, Mr. Nigel Zhu is skilled at providing antitrust compliance analysis, antitrust compliance system construction, responding to antitrust administrative inspections, antitrust civil litigation, administrative reconsideration, and administrative litigation services for clients.
In the field of anti-corruption, Mr. Nigel Zhu has years of experience and provides comprehensive anti-corruption legal services for clients before, during, and after incidents. Pre-incident services include the construction of anti-corruption compliance systems and corporate anti-corruption compliance training; during-incident services include participating in corporate anti-corruption compliance investigations and responding to government anti-corruption investigations; post-incident services include handling personnel matters of employees suspected of corruption and assisting companies in reporting and filing complaints.
Mr. Nigel Zhu has been recognized as one of the "Top 15 Client-Preferred Compliance Lawyers" by LEGALBAND in 2024, "Rising Star" by China Business Law Journal in 2023, and has been constantly recommended by The Legal 500 in the fields of compliance, antitrust, and data compliance.
Ms. Susan Deng, Senior Associate
Ms. Susan Deng graduated from East China University of Political Science and Law with a Bachelor of Laws degree and later obtained a Master of Laws degree from the London School of Economics and Political Science, specializing in International Business Law. Ms. Susan Deng is qualified to practice law in China and has passed the CIPP/E (Certified Information Privacy Professional/Europe) exam. She has been recognized as a "Recommended Lawyer for Data Protection in Greater China" by The Legal 500 and participated in drafting the group standard "Guidelines for the Compliance Application of Generative AI Data".
Since 2017, Ms. Susan Deng has focused on the field of cybersecurity and data compliance, accumulating rich experience in specialized services and maintaining a long-term observation and in-depth understanding of the legal evolution, regulatory trends, and industry dynamics in the field. Her clients cover a wide range of industries, including medical devices, pharmaceutical nutrition, e-commerce, multimedia, mobile internet, fintech, hospitality, industrial manufacturing, fast-moving consumer goods, luxury goods, food, automotive, logistics parks, and chemicals. She has served many Fortune 500 companies and industry leaders.
Based on this practical experience, Ms. Susan Deng is skilled at providing solutions that meet regulatory requirements and are practical and cost-effective. She is particularly adept at offering comprehensive legal services to traditional internet companies and those in the pharmaceutical, e-commerce, manufacturing, and consumer goods industries seeking digital transformation. These services include cybersecurity and data compliance check-ups, personal information compliance audits, cybersecurity and data compliance projects in financing scenarios, membership system construction, internal data integration within companies, compliance analysis of digital marketing plans, data security and privacy system construction, compliance with human genetic resources, cross-border data transfer.
