Cai Xin Net Covered an Article by Professor Hu Ling of SHUFE

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By Alicia, November 2, 2014.

On October 20, 2014, Cai Xin Net covered an article on “How legislation accommodates the developments of Internet Industry”, which was written by Hu Ling who is the vice professor of SHUFE. Professor Hu specializes in the fields of Internet Governance, Cyber Law and Judicial System.

In the opening of the article, the writer introduced the battle between 360 and Tencent on anti-monopoly. The Supreme People’s Court gave an interpretation on that in detail, which defines instant-message market and whether Tencent had abused market dominant position. As a result, the court affirmed the judgment made by the first trial. The final decree indicated that anti-monopoly law should be under judicial restraint when facing the high-tech corporate disputes. It could be more effective by taking measures of supervising unfair competitions to improve the order of Internet development. At the meantime, some disputes still need to be solved through innovation.

The article analyzed the thought of the decision made by the Supreme People’s Court. At first, the article stated instant-message market quoting a large part of the judgment, which illustrates relative markets are not equal to the global market. Then it analyzed through lots of respects whether Tencent had dominant status in the market. What’s more, it affirmed that although Tencent did have a high share in the market, it did not threaten users. In author’s opinion, the Supreme People’s Court’s judgment not only focused on market segmenting ways of the particular case in depth, but also gave a general thought to judge the monopoly of the internet enterprises.

In the following, the writer reviewed logical thinking of the case and simplified the dispute to two questions:

1. How to conduct a competition (include fair & unfair) on an open and unconstrained desktop.

2. Whether it has an influence on innovation and consumers’ welfare.

Maybe concentrating more on the cross effects between the law and the characteristic of the internet industry conduces to understand the reason why the legislation could accommodate the developments of the mode and formation of the internet companies. The author discussed that in the following.

Firstly, the essence of the 3-Q battle was struggling for the protective supremacy in an insecure information environment. Whereas this kind of question can only be evaded through a powerful secure system, such as iOS, which can deal the relationships among the software on it.

Secondly, the business model of the platform became a more and more popular target for internet enterprises to pursue. PanSSO was necessarily needed to analyze the data of users precisely. Most of the services were free. A lot of services were aimed at potential defensive strategy with small market shares except mainly basic services. On these grounds, the Supreme Court affirmed that the integrated behavior of Tencent would neither cause decreasing of the secure software market shares nor limit or even eliminate the competition. This kind of analysis was equally applied to other internet corporations. Meanwhile, Hu also mentioned, as a new competitive pattern, the platform appeared inevitably, which deserved further researches on its legal issues.

Thirdly, the writer says, in the Supreme Court’s view, such kind of chatting software like QQ was not necessary for users. People can still keep in touch with each other through other communication tools instead of QQ. Thus, it illustrated the existence of fierce competition in this field. Actually, Professor Hu reminded us that, for individual, the cost of replacement of instant-messaging software could be rather expensive. The circles of friendships were hardly to realize collective moves. He also drew a conclusion that innovation reversed the former services unexpectedly, finally succeed would take the place of the former. There is no need to apply legal interference.

In the end, Hu said that when it came to innovation, a crucial problem “whether the gradually formed platform would affect the innovation” would appear. And he thought that an elementary platform would contribute to a large margin of innovation and employment. What’s more, bi-market was the main feature to identify the Internet economy and the traditional economy. The Internet attracted users by advertisements or free bonus news. Although the platforms are competitive, what is for sure is that consumers benefit from the fierce competition actually and platform companies merely make the competition more efficiency.

All in all, it would be better not applying law interference like anti-monopoly law in such a rapidly developing industry. Contrarily, the courts should take more responsibility on post-supervision of unfair competition, which has crucial effects to the disordered Chinese internet market. It also requires the court to have a deep understanding on the substance of platform competition and the core of new economy—the data of production datum.

(Professor Hu’s article: http://opinion.caixin.com/2014-10-20/100740213.html)

Published：2014-11-02 Hit：395