Roger Zhang on Recent Regulatory Developments

In an interview conducted by Dr. Yujie Qian, a Senior Economist with Compass Lexecon, Dr. Roger Zhang, Vice President for Public Affairs at Tencent, discussed the recent regulatory developments concerning the digital economy worldwide and their potential implications on international platform companies. The dialogue primarily revolved around the diverse and evolving approaches to digital platforms across different jurisdictions and the intricacies of navigating such a dynamic regulatory landscape.

Roger Zhang introduced the recent changes in China’s merger filing guidelines and described some concrete compliance challenges facing legal counsel and tech companies in China. He underscored the heightened scrutiny of historical transactions, emphasizing the potential risks associated with acquisitions that led to significant growth of the target companies. A target company well below the turnover threshold for the filing requirement pre-transaction might still be subject to retrospective investigations if it grows continuously post-transaction. Zhang’s insights shed light on the complexities of interpreting the statute of limitations for failure-to-notify violations and the uncertainties that challenge internal compliance efforts.

When asked about the approaches to regulating the digital economy in major antitrust jurisdictions, Zhang delineated the differences between the EU’s Digital Markets Act (DMA) and China’s Anti-Monopoly Law (AML). While both legislative frameworks aim to foster fair competition and regulate certain anti-competitive behaviors of large platforms, Zhang noted the nuanced differences in scope, mechanisms, and analytical frameworks. In particular, the DMA introduces ex-ante obligations for gatekeepers, while China’s AML relies on an ex-post enforcement mechanism that requires case-by-case evaluations.

Zhang then offered a nuanced perspective on the impact of ex-ante versus ex-post enforcement on digital platform growth and innovation. He explained the merits and drawbacks of each approach, highlighting how ex-ante regulation fosters clarity and predictability but may inadvertently stifle innovation due to its rigidity. Conversely, ex-post enforcement acts as a deterrent while allowing flexibility for experimentation but may induce uncertainty and inhibit growth and innovation due to potential punishments.

Zhang’s analysis emphasized the importance of striking a delicate balance between providing clear regulatory guidelines and fostering flexibility to catalyze innovation while safeguarding competition and consumer welfare. In conclusion, the evolving regulatory landscape also makes it imperative for legal counsel and tech companies to adeptly navigate compliance challenges, leveraging insights from domestic legislation and international regulatory frameworks.