Judicial rulings define boundaries for livestreaming practices in China's digital economy

China's Supreme People's Court released details of five significant cases related to the platform economy on Monday, underscoring a judicial commitment to regulating the industry's healthy development while safeguarding consumers' legitimate rights.

The court emphasized that the platform economy is a vital component of the digital economy and a key driver of the country's economic growth, with rapidly expanding sectors such as e-commerce, livestreaming, and short-video platforms leading the way.

However, the court also pointed out various misconduct issues within these platforms, highlighting the necessity for clear development boundaries and competitive rules. "Misconduct not only harms consumers' legitimate rights but also disrupts market order," the court stated. Selling goods via livestreaming platforms has become a crucial entry point for small and medium-sized businesses to engage with the digital economy, making compliant marketing practices essential for sustainable growth.

Despite this, some livestreamers have been found providing biased or misleading product descriptions, leading to commercial defamation disputes. Additionally, some service providers have engaged in fake transactions to artificially boost merchants' performance data, undermining the credibility of platform-based credit rating systems. "These actions distort fair competition and increase compliance risks for businesses," the top court noted.

In one notable case involving a liquor company from Chongqing and a Beijing firm, a lower court clarified that livestream commerce constitutes a business operation, emphasizing that streamers promoting products on these platforms must adhere to high standards of care in their commercial remarks. If a streamer uses selective statements or inappropriate associations that mislead consumers about competing products, it is considered commercial defamation.

The top court highlighted this case, noting that the ruling helps delineate the line between legitimate commercial commentary and defamation in livestream marketing. This also provides clear behavioral guidelines for businesses operating in this space, promoting fair competition and protecting consumer interests.