China’s 618 Festival: Regulators Target E-commerce as AI Reshapes Shopping
China’s annual “618” shopping festival has entered a new era this June, as regulators intensify efforts to standardize promotional practices and curb destructive competition, while artificial intelligence transforms how millions of consumers shop online. Together, these twin forces are reshaping the world’s largest e-commerce market from a subsidy-driven free-for-all into a more regulated, efficiency-oriented ecosystem.
Regulatory Crackdown Targets “Involution” Competition
On June 16, the State Administration for Market Regulation (SAMR) issued a “618 Compliance Reminder” to major e-commerce platforms, outlining six major compliance responsibilities covering merchant vetting, pricing, platform rules, product quality, advertising, and consumer rights, as reported by Xinhua News. The notice explicitly prohibits platforms from bundling “price comparison,” “price matching,” and “shipping insurance” with promotional activities.
Just days earlier, on June 11, the Beijing Municipal Market Regulation Bureau summoned five major platforms — Taobao (Tmall), JD.com, Pinduoduo, Douyin (TikTok China), and Xiaohongshu — to address issues including false advertising in “100 Billion Subsidy” programs and non-transparent rules, according to the 21st Century Business Herald. The Ministry of Industry and Information Technology also held a special meeting addressing app pop-up violations linked to the festival.
SAMR Spokesperson Wang Qiuping stated that the agency will “continue to monitor market order in the platform economy, keep a close watch on emerging and trending risks,” and carry out special actions to verify platform merchants’ qualifications.
A Shift in Regulatory Logic
Fu Yifu, a special researcher at Suning Bank, told Xinhua that the coordinated regulatory actions convey three layers of policy signals: the regulatory logic has shifted from controlling low prices to governing deep-seated industry “involution” (neijuan); the era of crude expansion in the online consumer market has ended; and the actions balance the rights of both operators and consumers.
The term “involution” — describing futile, excessive competition that benefits no one — is central to understanding the regulatory push. The Beijing municipal government explicitly directed platforms to shift “from competing on subsidies and prices to competing on innovation and service.”
China’s platform economy is vast. According to the iiMedia Research “2026-2027 China Platform Economy Development Research Report,” the market size was approximately 25.2 trillion yuan in 2024 and is projected to reach 37.3 trillion yuan by 2029, with over 900 million online consumers.
AI Transforms the Shopping Experience
Alongside the regulatory push, the 2026 “618” festival is the first where AI serves as a core competitive differentiator. Alibaba’s Qianwen (Tongyi Qianwen) has been fully integrated with Taobao, allowing users to search, compare, and purchase products through AI dialogue, while ByteDance’s Doubao has integrated with Douyin for in-app shopping, as Xinhua reported.
Approximately 70% of merchants on the Taobao/Tmall platform are already using AI tools to assist operations. JD.com has made over a dozen AI tools available for free to merchants, and its digital human “JoyStreamer” has served over 70,000 merchants.
“This year’s JD ‘618’ will be the first ‘618’ fully integrated with AI across all scenarios and industries,” said Cao Peng, Chairman of JD.com’s Technology Committee. “On the industrial side, AI technology will drive major innovations in cost and efficiency; on the user side, consumers will experience a comprehensive evolution in the shopping experience powered by AI.”
The New Competitive Frontier
Hong Yong, an associate researcher at the Chinese Academy of International Trade and Economic Cooperation (CAITEC) under the Ministry of Commerce, offered a forward-looking perspective: “In the long run, AI may shift the underlying logic of e-commerce competition from ‘traffic competition’ to ‘decision-making power competition.’ Whoever becomes the consumer’s first entry point before purchase may gain stronger distribution capabilities.”
Liu Bangzheng, General Manager of Brand Business at Alimama, explained that AI upgrades the traditional “keyword understanding” logic to “intent understanding,” helping merchants discover new customer segments in complex consumption environments and transform consumers’ “unspoken needs” into business growth.
Challenges Remain
Despite the promise, the technology has limitations. The Xinhua report honestly notes that AI customer service can only handle about 10% of after-sales issues and 20-30% of pre-sales queries. Data accuracy remains a concern, with merchants reporting that AI-generated insights often require manual verification.
Hong Yong cautioned that the future of AI in e-commerce depends on three factors: whether AI recommendations genuinely serve user needs rather than becoming a new paid advertising gateway; whether AI tools are accessible to small and medium merchants; and whether AI shopping can resolve trust issues around pricing, privacy, and algorithmic transparency.
What to Watch For
As China’s 618 festival enters its final days, the convergence of tighter regulation and AI-driven innovation signals a structural shift in the world’s largest e-commerce market. The winners in this new landscape will likely be those that can leverage AI to genuinely improve efficiency and customer experience — rather than simply cutting prices. Meanwhile, regulators will continue to monitor enforcement of the new compliance rules, with potential implications for future shopping festivals including Singles’ Day in November.