2021: China's anti-monopoly "big year"
Internet anti-monopoly penalties accounted for 75.42% of the total; the definition of monopoly behavior is still a problem
In 2021, China's anti-monopoly is being launched in a comprehensive and in-depth manner.
How to standardize the development of Internet companies has become a new proposition in the industry.
The Central Economic Work Conference held in December 2020 clearly listed “strengthening anti-monopoly and preventing the disorderly expansion of capital” as one of the eight key tasks in 2021, emphasizing that anti-monopoly and anti-unfair competition are the perfection of the socialist market economy The inherent requirements to promote high-quality development.
At the Central Economic Work Conference held this year, anti-monopoly and anti-unfair competition were again highlighted.
At the same time, it also emphasized the need to set "traffic lights" for capital, strengthen effective supervision of capital in accordance with the law, and prevent the brutal growth of capital.
In order to implement the anti-monopoly and anti-unfair competition work requirements of the central government, on November 18, 2021, the State Anti-Monopoly Bureau was officially listed, and the former bureau directly under the State Administration for Market Regulation was upgraded to a deputy ministerial-level national bureau.
This reflects the further improvement of the anti-monopoly system and mechanism.
While the top-level design has been perfected, the regulatory authorities have continuously strengthened anti-monopoly supervision measures for the Internet industry, and well-known Internet companies such as Alibaba, Meituan, and Tencent have received anti-monopoly penalties one after another.
Alibaba was fined 18.228 billion yuan for abusing its dominant market position; Meituan was fined 3.442 billion yuan for suspected monopolistic conduct of "choosing one of two"; Tencent, Jingdong and other administrative penalties for failing to declare the concentration of business operators in accordance with the law, a single case The top penalty is 500,000 yuan.
These events all show that this year is also a year of structural transformation in the Internet industry, and changes are everywhere.
As 2021 is about to pass, Xinjing Think Tank will conduct a year-end inventory summary with the theme of "anti-monopoly", analyze the characteristics of anti-monopoly events in the Internet industry over the past year, and further analyze the difficulties and trends of Internet anti-monopoly. And look forward to the future development of the Internet industry, how to return to the original aspiration, serve consumers, and achieve high-quality development.
An unprecedented year of regulation
2021 is an unprecedentedly active year for my country's anti-monopoly law enforcement. As a key industry, the Internet field has also experienced a year of strong supervision.
Regarding the anti-monopoly enforcement of concentrated business operators, from the entry into force of the Anti-Monopoly Law until November 2020, my country's anti-monopoly enforcement agencies have only disclosed 59 cases of non-declaration in accordance with the law, and none of them occurred in the Internet field.
The Xinjing Think Tank found that since December 14, 2020, the State Administration of Market Supervision has announced a large number of cases of undeclared concentration of operators in the Internet field after the first punishment on several major Internet platforms for the concentration of operators who did not declare in accordance with the law. .
From January 1, 2021 to December 14, 2021, the State Administration for Market Regulation issued a total of 118 anti-monopoly penalties during the year, 89 of which involved Internet companies, accounting for 75.42% of the total.
"In the past, high-level officials did not pay special attention to the anti-monopoly law, but it has clearly changed since 2020. Now anti-monopoly has risen to a strategic height and has become a very eye-catching and prominent feature in the country’s economic, social, and even political life. One of the problems." Professor Xu Guangyao of Nankai University Law School, who has been following China's anti-monopoly development for a long time, introduced to Xinjing Think Tank why the regulation has been unprecedentedly active this year.
Not only that, Xinjing Think Tank has observed that the active supervision is also reflected in the investigation and prosecution of a number of cases of Internet platform abuse of market dominance by my country’s anti-monopoly law enforcement agencies in 2021. The areas involved include e-commerce, food delivery, etc., and many Sky-high fines.
Among them, in the field of the Internet, the “choose one out of two” behavior has attracted the attention of law enforcement agencies.
At the same time, the State Administration for Market Regulation and other regulatory agencies actively use administrative guidance to strengthen anti-monopoly supervision, issue administrative guidance documents while penalizing monopolistic behaviors, and convene administrative guidance meetings to strengthen corporate rectification and clarify the "second selection" that law enforcement agencies are concerned about. One", "pin-point mergers and acquisitions", "community group buying" and other hot issues.
In addition to penalizing actions that have not been reported in accordance with the law, the supervisory authority has also corrected transactions that have caused the consequences of eliminating and restricting competition, including the rare adoption of measures to prohibit concentration, and for the first time instructing operators to take relevant measures to “restore to the pre-concentration state” "It has sounded the alarm for M&A transactions of Internet companies.
Deng Zhisong is a senior partner and head of competition and antitrust practice at Dacheng Law Firm.
Deng Zhisong has gone through every stage of China's anti-monopoly law from incubation to research, from legislation to implementation.
He told Xinjing Think Tank that under the promotion of the central government, the State Administration for Market Regulation, the Ministry of Industry and Information Technology, and the Ministry of Commerce have frequently spoken out this year to continue to release policy signals to strengthen platform economy anti-monopoly and further promote fair competition.
In fact, from a global perspective, in the past year, a new wave of antitrust has also been set off globally.
According to statistics, in the first half of 2021 alone, the EU launched antitrust investigations on Google, Apple, Facebook, and Amazon in turn.
The Biden administration even issued an executive order to spin off Internet giants such as Google and Amazon.
"The motives of various countries for antitrust investigations on super digital platforms may vary, but some basic consensuses have been reached. These super platforms are too powerful and have endangered the fairness of the market and hindered technological innovation." Ouyang Rihui, deputy dean of the China Internet Economic Research Institute of the University of Finance and Economics, explained the reason.
Internet companies have been issued antitrust fines one after another
According to 89 anti-monopoly penalties issued by the State Administration for Market Regulation, Xinjing Think Tank found that the cumulative fines have exceeded 20 billion yuan.
Among them, the most important fine is that Alibaba, which lasted four months, was fined 18.228 billion yuan for its actions involving "choosing one of two".
This amount set a new record for China's anti-monopoly administrative penalties. It was almost three times the previous highest anti-monopoly fine in China, which is equivalent to 4% of Alibaba's total sales of 455.7 billion yuan in China in 2019.
Hou Liyang, a professor at the Kaiyuan Law School of Shanghai Jiaotong University, said in an interview with Xinjing Think Tank that for such large Internet monopoly companies, the main punishment is basically fines, and it is hoped that the competition mechanism can be restored through fines.
The European Union has fined Google more than 10 billion euros.
However, is the heavy penalty only as simple as restoring the competition mechanism?
"Some platforms only need a few years to achieve a large market share. This is the result that physical stores can take decades to make, and the growth of platforms is too rapid." Professor Tang at Zhejiang University of Finance and Economics According to important experts, the trend of "the strong get stronger and the weak get weaker" is not conducive to the healthy development of the entire industry.
It is worth noting that since Ali was punished with sky-high fines, the supervision of Internet companies has continued to increase.
On July 7, 2021, the State Administration for Market Regulation issued the "Administrative Punishment Decisions by the State Administration for Market Regulation on 22 Cases of Illegal Implementation of Concentration of Operators in the Internet Field", involving Didi, Ali, Tencent, Suning, and Meituan companies , Imposing a fine of 500,000 yuan on the companies involved in the case.
Immediately afterwards, on July 10, the State Administration of Market Supervision, pursuant to Article 28 of the Anti-Monopoly Law and Article 35 of the Interim Provisions on the Review of Concentration of Undertakings, prohibited Huya Company from merging with Douyu International Holdings Co., Ltd. in accordance with the law.
Some media pointed out that halting the merger of Douyu and Huya is of far-reaching significance to standardizing business operations. Tencent, as the leading party behind it, received the first administrative ban on “concentration of operators” by an Internet company.
The reason for this is that You Yunting, a senior partner at Shanghai Dabang Law Firm, believes that because Tencent has long been the boss in the game field, Tencent is now in the hands of popular games like Chicken and the King of Glory.
Douyu Huya is a live broadcast, but the content of the live broadcast is actually the e-sports competition itself, which not only has to achieve a monopoly on the game, but also the e-sports competition itself.
One is the largest antitrust ticket in domestic history, and the other is the first banned merger in the Internet field in China.
And involving the two largest domestic Internet companies, Ali and Tencent, these two incidents have to be said to be quite representative.
Even if the two giants were fined, the antitrust fines in the Internet field did not stop, and the fines were still over 100 million.
On August 30, the State Administration of Market Supervision stated that it had launched an investigation into Meituan’s failure to declare its acquisition of Mobike in accordance with the law.
On October 8, the State Administration of Market Supervision made an administrative penalty decision on Meituan’s “choice of two” monopolistic behavior in the online food delivery platform service market in China in accordance with the law.
Meituan was ordered to stop illegal activities, fully refunded the exclusive cooperation deposit of 1.289 billion yuan, and imposed a fine of 3% of its domestic sales in China of 114.748 billion yuan in 2020, totaling 3.442 billion yuan.
Continuous advancement of platform interconnection
In this year's "Double Eleven" and "Double Twelve", major Internet platforms did not have large screens for real-time announcement of turnover, no business reports deliberately advocating sales, and no consumers blatantly posting shopping lists.
Before "Double Eleven", Taobao launched the one-click sharing function of shopping cart to WeChat, and Taote's access to WeChat payment was regarded by the outside as a signal to break the wall between giants.
Ouyang Rihui, deputy dean and professor of the China Internet Economic Research Institute of Central University of Finance and Economics, said in an interview with Xinjing Think Tank, “After years of development, large Internet platforms have established their own walled gardens and continue to build their own ecological barriers. This is actually against the original intention of Internet development." He pointed out that for consumers, this is prone to a high degree of information cocoon effect.
From the perspective of the development of the entire Internet, if the platforms are not interconnected, it will cause greater harm to the development of the entire Internet economy or the development of the digital economy.
In fact, since the "3Q War", banning external links has once become a means for Internet companies to maintain their competitive position.
But this year, under the continuous promotion of relevant departments, the cancellation of external chain blocking was put on the agenda and important progress was made.
Since July this year, the policy level has frequently made deployments on platform interconnection and interoperability.
At the beginning of September, the Ministry of Industry and Information Technology held the "Administrative Guidance Meeting on Blocking Web Site Links", requiring that from September 17th, all platforms must be unblocked in accordance with the standards.
On September 13, at a press conference of the State Information Office, a spokesperson for the Ministry of Industry and Information Technology stated that web site blocking is one of the key rectification issues.
On October 29, the State Administration for Market Regulation issued the "Guidelines for Implementing Subject Responsibilities of Internet Platforms (Draft for Comment)", requiring platforms to enjoy equal rights and opportunities and must be open to stores on other platforms.
Since then, the major platforms have also responded to this.
Just in September, a large number of products under the Alibaba ecosystem, such as Hema, 1688, Cainiao Wrap, Taobao Ticket Movie, Youku Video, Gaode Taxi, Ele.me Takeaway, Flying Pig, Haro Travel, etc., have been launched on WeChat. Mini program, you can use this function directly through WeChat, and the payment method is WeChat Pay.
In response to this response between platforms, Liu Xiaochun, executive director of the Internet Rule of Law Research Center of the University of Chinese Academy of Social Sciences, told Xinjing Think Tank that the most direct manifestation of inter-platform interconnection is to open up the originally closed traffic between platforms, which will promote Traffic flows between different platforms.
After the traffic is opened, on the one hand, it will reduce the cost of data flow, and on the other hand, it will increase the possibility of successful transactions.
In Ouyang Rihui's view, platform openness and interconnection are not only the proposition of Internet anti-monopoly and the maintenance of market order, but also the issue of whether we can maximize the digital welfare of our society.
For the construction of a unified market, interconnection will open up traffic, which is beneficial to the improvement of the entire industrial chain and the level of the supply chain, and to the development of the digital economy.
Prevent the disorderly expansion of Internet capital
Whether it is huge fines or interoperability between platforms, since the end of 2020, strengthening anti-monopoly, standardizing the development of the digital economy, and improving the digital economy governance system have all received continuous attention from the country.
So, what are the deep-seated reasons behind the anti-monopoly in the Internet field?
The disorderly expansion of capital is undoubtedly one of the most mentioned reasons.
In December 2020, the Central Economic Work Conference proposed to "strengthen anti-monopoly and prevent the disorderly expansion of capital" when analyzing and studying the economic work in 2021.
The Central Economic Work Conference in 2021 proposed to set "traffic lights" for capital to prevent the brutal growth of capital.
The outstanding performance is that as its own development grows, every Internet company is expanding into all areas where it can participate.
In fact, Google and Facebook in the United States, Tencent and Ali in China, none of them are doing a single business.
After large platforms have obtained a large amount of profits, they will use capital to penetrate other relevant markets and fields, and they will also have a stronger control over the entire economy and society.
Regarding the use of capital for unlimited expansion by giants, Ye Weiping, vice president of the Anti-Unfair Competition and Anti-monopoly Law Research Association of Guangdong Law Society, told Xinjing Think Tank that the digital industry's economies of scale and scope, and the cross-network externalities of digital platforms, etc. The characteristics determine that the market structure and market behavior in the digital economy are significantly different from those in the traditional economy.
Some giant platform companies in the digital economy have large scale, strong user stickiness, and widespread diversified operations, which will inevitably arouse more competition concerns.
Regarding how to suppress the disorderly expansion of capital, in Hou Liyang’s view, disorderly expansion has two aspects. One is the extension and expansion of the platform to the political field, and the other is the continuous penetration of the platform into various business segments. .
Hou Liyang said that the business ethics standards of platform companies are relatively low, lower than that of traditional companies.
Regarding the harm of the disorderly expansion of capital, Hou Liyang cited the headline party phenomenon that often appeared in the Internet on the self-media. Compared with the official media, the professional ethics of the self-media is easier to be controlled by capital.
Regarding how to prevent the disorderly expansion of capital, Ouyang Rihui told Xinjing Think Tank that in addition to investigating the investment on the surface through a certain data system, capital investment may also be in a curve or detour. Make investments.
Capital often has a certain degree of concealment. Relatively speaking, preventing the disorderly expansion of capital will be a long-term task.
Defining Internet monopoly behavior is still a problem
While anti-monopoly is being carried out in the Internet field, a reality cannot be ignored, that is, how to define monopoly. This is not only a hot topic in my country's academic and practical circles, but also a difficult problem that various jurisdictions around the world are exploring together.
The Xinjing Think Tank observed that at the end of 2020, the European Union issued the drafts of the Digital Service Law and the Digital Market Law, which clarified the responsibilities of digital service providers and proposed methods and obligations for the definition of “gatekeepers”.
The Antitrust Committee of the US Congress launched an antitrust investigation on several major Internet giants in 2019, and released an investigation report in October 2020. Google and Facebook have been sued for antitrust lawsuits, and the possibility of future splits is not ruled out.
On June 11, 2021, the Judiciary Committee of the U.S. House of Representatives announced five draft laws against technology giants, which also set standards for super-large Internet platforms and added strict obligations.
Among them, defining the scope of the super-large platform is a difficult step to circumvent.
The Xinjing Think Tank found that my country has also adopted a similar approach to Europe and the United States.
On October 29, 2021, the State Administration for Market Regulation issued the "Guidelines for Classification and Classification of Internet Platforms (Draft for Comments)" and "Guidelines for the Implementation of Subject Responsibilities for Internet Platforms (Draft for Comments)", which clarified the criteria for identifying super-large platforms and Very large platforms have established multiple obligations related to fair competition.
Deng Zhisong introduced to the Xinjing Think Tank that the new business models in the Internet field have brought new anti-monopoly issues, and have brought challenges to traditional anti-monopoly theories, systems, and implementation.
He said that the services provided by the platform are innovative and diversified. The boundary between free services and paid services is blurred, and it is difficult to locate customer groups.
In addition, my country's Internet platform companies often have cross-border characteristics, making relevant market definition and market share calculation difficult.
The nature of the platform's two-sided market has led to disputes on how to assess the impact of competition.
Deng Zhisong believes that the strong technological nature of the Internet field makes monopolistic behavior in this field often intertwined with technical factors. For example, platforms may use algorithms to collude or discriminate against users.
The existence of technical factors makes monopolistic behaviors in the Internet field more concealed, and it also creates difficulties for law enforcement and judicial officials to understand and identify these behaviors.
Obviously, monopolistic behaviors in the digital economy are obviously more difficult to identify. For example, the business model of platform operation makes it necessary to consider the interaction between two or multilateral markets when defining the relevant market; rapid technological update iterations, competition among technologies, etc. The existence of this makes it more difficult to assess the potential impact of specific business behaviors, such as strangling mergers and acquisitions, on market competition; data is a key production element of digital platform companies and data itself can be used in different business application scenarios, making companies cross-border Operating conditions are widespread, and the possibility of market forces extending.
However, while it is difficult to determine the monopoly of the Internet industry, Hou Liyang also told Xinjing think tank that if a product is judged from the perspective of openness, the level of competition, or the impact of society is relatively good. It is more negative, and it has to be considered from the perspective of consumers.
Take Apple as an example. Apple’s interconnectivity should be the worst in all systems or products, but Apple has indeed made products that consumers like.
Anti-monopoly legislation is more institutionalized and law enforcement is more standardized
Over the past 20 years, the Internet industry has been the driving force of China’s economic growth. After just 20 to 30 years of development, digital companies have reached the center of the economy, and with the increase in the scale of digital companies’ operations and market concentration , The possible monopoly abuses in the field of digital economy have aroused widespread concern from legislative, law enforcement and judicial agencies, as well as the whole society.
Where will antitrust go in the future?
Regarding the future anti-monopoly trend of the Internet industry, Wang Hao, a professor of economics at the National Development Research Institute of Peking University, told Xinjing Think Tank that Internet-related industries are China's dominant industries, and the ultimate goal of anti-monopoly is to promote development.
He believes that from the current point of view, the future development trend is to strengthen supervision and ensure the development of Internet companies in compliance.
By strengthening prior supervision and avoiding waiting to take various supervisory measures when an accident occurs, it will be more conducive to fair competition and healthy development of the entire industry.
In Deng Zhisong's view, the advancement of anti-monopoly in the Internet field in my country will first need to be institutionalized and standardized in legislation.
At the legal level, it is necessary to revise the "Anti-Monopoly Law" to improve the existing shortcomings, and provide guidance for anti-monopoly supervision in different fields and industries without discrimination.
At the level of laws and regulations, it is necessary for relevant law enforcement agencies to extensively listen to opinions, learn from foreign experience, and clarify specific issues in the Internet field through various guidelines.
Secondly, in law enforcement and judicial technology, it is necessary to actively face and study new and difficult problems in the Internet field.
The "Guidelines for Anti-Monopoly in the Field of Platform Economy" have demonstrated the attitude of my country's law enforcement agencies to learn from the experience of various jurisdictions and pay attention to various new types of monopolistic behaviors.
Although the accumulated experience of anti-monopoly in the Internet field in our country is still based on the governance of "two-choice" behavior, in the future, there may also be new cases of governance experience involving algorithmic collusion, forced collection of user data, and big data.
Ouyang Rihui said, first of all, we should look at the anti-monopoly of the Internet industry from the global development trend, including the digital economy, the development trend of digital platforms and the development laws of digital platforms, and set us on the basis of fully grasping their development laws. Supervision and law enforcement.
Secondly, the goal of supervision is to promote development. It is necessary to guide digital platforms to form a good competitive attitude and cooperation situation in the entire Internet ecology and digital economy, that is, to achieve competition and cooperation.
Beijing News reporter Cha Zhiyuan Xiao Longping