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This article examines China’s massive regulatory enforcements on tech firms in 2020–21. Through 36 interviews with tech firms, regulatory officials, lawyers, and industry experts, we argue it is not simply statist campaign-style enforcement. Instead, evidence shows that regulatory officials hold a rationale of the regulatory pyramid. Regulators argue that slowly escalating enforcement in a traditional regulatory pyramid failed to exert adequate pressure on regulatees. They adapted the regulatory pyramid into targeted responsive campaigns by first applying a ‘zoom climb’ phase (targeting incapacitative sanctions on dominant firms), followed by a ‘water-down’ phase (offering restorative settlements to compliant regulatees). So, dominant firms surrender to voluntary overcompliance by introducing best practices more than regulatory requirements, non-dominant big players committed to over-competition to align with anti-monopoly, and emerging players and startups focused on tech innovation as modest compliance. Thus, this strategically combines incapacitative and restorative measures to balance punishment with incentives as agile governance for tech regulation. It advances understanding of agile governance in tech regulation, illustrating how enforcement evolves in dynamic interactions between regulators and regulatees through pressures and incentives. This contributes to regulatory theory by revealing how campaign-style enforcement incorporates a responsive pyramid in rapidly evolving tech industries.
Su et al. (Tue,) studied this question.