Interpretation of the Platform Economy Antitrust Guidelines: Big Data will not pay off

  The anti-monopoly guidelines for the platform economy are officially released, and monopolistic activities in the Internet sector such as "sales below cost", "big data" and "restrictions on two options" will definitely be restricted.

  On February 7, the Anti-Monopoly Commission of the State Council formulated and issued the Anti-Monopoly Guidelines of the Anti-Monopoly Commission of the State Council on Platform Economy (hereinafter referred to as the "Guide"), which will become the guiding document for anti-monopoly compliance in the Internet industry.

  "The platform economy has played an important role in promoting my country’s economic development, and has grown from a child to a strong adult. At this stage, we need to further clarify the principles of anti-monopoly law enforcement in this field and propose targeted Detailed analysis of ideas and guidance for operators' compliance." said Zhong Gang, executive director of the Competition Law Center of East China University of Political Science and Law.

Clarify the key points of platform economy anti-monopoly

  In response to new problems in the field of Internet platforms, the guidelines specifically clarify monopolistic behaviors in the platform economy, such as "sell below cost", "algorithm-based differential treatment (big data)", and "choose one to restrict transactions".

  According to the guidelines, to analyze whether a restricted transaction constitutes a restricted transaction, the following two scenarios can be considered: One is the restriction imposed by the platform operator through punitive measures such as shielding stores, search rights reduction, traffic restrictions, technical barriers, and deduction of deposits. Competition and consumer interests have caused direct damage, which can generally be regarded as a restricted transaction.

Second, the restrictions imposed by platform operators through incentives such as subsidies, discounts, discounts, and traffic resource support may have a certain positive effect on the interests of operators and consumers on the platform, and the overall welfare of society. However, if there is evidence to prove that it is against market competition Produces obvious exclusions and restrictions, and may also be deemed to constitute restricted transactions.

  "The guidelines provide more specific conditions for restricted transactions. For example, blocking stores is an addition to the draft for comments. There are clearer expressions from refusal to transactions to restricted transactions, which is very conducive to actual law enforcement agencies. Confirmed." Zhong Gang said.

  On the same day that the guidelines were issued, the Beijing Intellectual Property Court formally opened a case for Douyin v. Tencent's monopoly dispute.

TikTok argues that Tencent restricts users from sharing content from TikTok through WeChat and QQ, which constitutes a “monopoly behavior that abuses market dominance and eliminates or restricts competition” prohibited by the anti-monopoly law.

  "To determine whether unreasonable restrictions or shielding are involved, it is necessary to consider various factors such as the identity of both parties and the rationality of their behavior. We cannot make a judgment on the case itself, but the proposal and advancement of such cases will benefit my country’s anti-monopoly The development of the law helps the general public to enhance their understanding of competition law and anti-monopoly law. Some specific rules of the anti-monopoly law also need to be continuously demonstrated and strengthened in the use of actual cases.” Zhong Gang said.

  "Big data kills familiarity" is a problem that consumers often encounter in online shopping and other behaviors.

In this regard, the guidelines have repeatedly mentioned that platform companies using big data and algorithms to form monopoly agreements, refuse transactions, and restrict transactions are all violations of the monopoly law.

  "Big data acquaintance will become an important consideration when anti-monopoly law enforcement agencies enforce the law on the platform. For platforms, the profit involved in big data acquaintance is obviously much smaller than the amount of penalties imposed by anti-monopoly law enforcement agencies. To a certain extent, the phenomenon of big data is curbed." said You Yunting, a senior partner and lawyer of Shanghai Dabang Law Firm.

  Using lower-cost competition, forming a monopoly position, and then increasing prices to grab monopoly profits is a common method used by Internet giants.

For this kind of behavior, the guidelines determine that "selling below cost" is a monopolistic behavior.

  You Yunting believes that Internet companies may have to re-examine their own development strategies and paths, or they should use ways of improving efficiency to win market competition, rather than using brutal low-price competition or competing against competitors. Malicious unscrupulous means to compete.

  "At the beginning of the implementation of the anti-monopoly law, people often heard a saying that the emerging industries should be carefully supervised and the anti-monopoly law should be kept modest, lest improper supervision itself will damage efficiency. Therefore, the Internet field has not been It has become the focus of investigation, but those reasons have now disappeared. Internet companies should strengthen the study of anti-monopoly laws and anti-unfair competition laws, judge the damage and consequences of their actions more accurately, strictly abide by the law, and correct past actions as soon as possible , Don’t be lucky.” said Xu Guangyao, a professor at Nankai University Law School.

Antitrust needs to strengthen understanding in practice

  Compared with the "Guidelines (Draft for Comment)" released on November 10, 2020, what are the major differences between the officially released guidelines?

  Zhong Gang believes that the guidelines do not make stricter regulations on the identification of "relevant markets", which is the main difference.

Judging from the current situation, the guidelines have returned to the earliest law enforcement calibre, and the issues related to market identification have been handed over to the law enforcement agencies again, requiring the law enforcement agencies to determine in actual cases in accordance with the anti-monopoly law or law enforcement practices.

  Investigating monopoly agreements in the economic field of the platform, cases of abuse of market dominance, and conducting anti-monopoly reviews of operator concentration usually require the definition of the relevant market.

  In terms of the definition of relevant markets, the guide distinguishes between relevant commodity markets and relevant geographic markets.

The guidelines require that the principle of case analysis is adhered to. Different types of monopoly cases have different actual needs for the definition of relevant markets.

  "In actual law enforcement, law enforcement agencies often encounter some difficulties related to market identification. These difficulties have not yet formed a unified and mature solution. The guideline formulation agency may believe that it is not suitable for the guideline. To directly make detailed regulations on the definition of the relevant market, it will still take a certain amount of time to form the actual rules. I think this will definitely be a case-by-case analysis approach." Zhong Gang told the CBN reporter.

  Xu Guangyao believes that in the face of some new features in the platform economy, we should first rely more closely on the basic rules and theories of the antitrust law for analysis.

For example, under the bilateral market transaction model in the Internet industry, the definition of relevant markets should still follow the demand substitution standard, but because there are two types of demand in a transaction, two markets should be defined.

  Take the 3Q case of Tencent and Qihoo as an example. Qihoo uses its product 360 to meet users’ needs for security software, thereby obtaining the number of users, and then use this number to meet advertisers’ needs for the number of users. Two markets are defined, namely the security software market and the Internet advertising market.

Tencent is involved in the instant messaging market and Internet advertising market.

Therefore, three relevant markets should be defined in this case.

The next steps in determining the dominant position and examining the effects of competition need to be carried out across markets.

  "This case provides high-quality specific analysis objects and carriers, and has become the focus of worldwide antitrust law research. Through the study of this case, it can be found that the resolution of some new problems requires a deepening of the understanding of traditional rules and theories. "Xu Guangyao said.

  There are three types of monopolistic behavior, namely, monopoly agreement, abuse of dominant position, and concentration of operators.

Zhong Gang believes that in addition to traditional horizontal and vertical monopoly agreements, the guidelines also propose hub-and-spoke agreements based on the characteristics of the Internet platform economy.

  According to the guidelines, a hub and spoke agreement means that operators within a competing platform may use the vertical relationship with the platform operator, or be organized and coordinated by the platform operator to reach a hub and spoke agreement with the effect of a horizontal monopoly agreement.

Analyze whether the agreement is a monopoly agreement regulated by Article 13 and Article 14 of the Anti-Monopoly Law, and consider whether the operators on the competitive platform use technical means, platform rules, data and algorithms, etc. Reach and implement monopoly agreements to eliminate and restrict relevant market competition.

  The "U.S. Apple's e-book monopoly case", which lasted for four years, is a classic case of hub and spoke agreement.

  Apple has signed sales agreements for e-books with five of the six largest publishers in the United States. Apple does not participate in the pricing of e-books. The publishers will charge a certain fee after setting the price and sell them in its e-book mall. The corresponding mobile client software can be used by consumers on the company's iPad (tablet computer).

  In response to this phenomenon, the US judicial department filed an antitrust lawsuit against Apple and related publishers in 2012.

The court held that the separate agreements between the publishers and Apple stipulated the highest prices for the same tier and the highly concentrated market share in the e-book market. These additional factors contributed to the horizontal monopoly between publishers. , So the Supreme Court finally rejected Apple’s appeal.

  "As a special type, hub-and-spoke agreements will appear in the platform economy. Because the operators of the competitive relationship rely on a vertical relationship with the platform operators, or it may be organized by the platform, the horizontal The competitive effect of monopoly. The guidelines specifically provide for it, which is conducive to anti-monopoly law enforcement in the field of Internet platforms." Zhong Gang said.

  Author: Sun Weiwei