Jiang Xiaoxi  Judge  Shenzhen Intellectual Property Court

Internet platform governance is an advanced form of corporate governance. Platform companies provide basic functional services and complete the trading system through the Internet platform, gather traffic and matching information for the platform, promote traffic and information monetization, play an important role in providing valuable resources for the Internet platform ecosystem, and to promote value production in the system. Platform companies are not only the operators of the platform, but also the managers of the platform. Based on the dual nature and particularity of this role, when there are limitations on the management measures taken by the platform according to the rules of the platform or disputes arise from this, the judicial governance the supplementary protective effect of the platform needs to be exerted. This article discusses the application of China's "Anti-Unfair Competition Law" in platform governance.

The multiple roles and multilateral nature of the Internet platform cause the complexity of disputes

A successful Internet platform is a complete supply chain with customers as the pilot and destination, integrating application developers, upstream and downstream supply chains, and loyal users. Participants in the business ecosystem of the Internet platform, in addition to platform companies, also include platform operators, third-party service providers, and consumers. The Internet platform is essentially a multi-subject, complex and interactive network space. It is the linker, matcher and market designer in this space. [1] In the process of matching and exchanging information and data among all participants to realize values, the Internet platform has the dual identities of market participants and organizers, possesses the dual attributes of enterprises and markets, and acts as an information barrier breaker and the dual role of the reconstructor [2] Based on the increasingly subdivided business ecology of Internet platforms, Internet platforms have expanded from a pure relationship between platforms and users to multilateral relationships between Internet platforms and participants in the platforms, and between platforms.

The instinct of commercial competition will cause platform companies to repel horizontal competition, monopolize information, prevent user migration, and use the right to formulate platform rules to limit the interests of other participants in multilateral relations. However, as a member of the Internet world, Internet platform technology has low barriers to entry, low user migration costs, and multi-user ownership [3]. This phenomenon promotes competition between platforms and participants within the platform ecology, a certain amount of user attention and market demand has made it oppose the emergence of any platform that has absolute control and excludes competition. The natural characteristics of the Internet platform make it a complex of contradictions in the development process—both sharing and monopoly, both innovation and exclusion.

Limitations of platform rules in platform governance

Platform companies realize self-management of participants in all aspects of the platform by formulating platform rules, in order to form a robust business ecology. Platform rules are embodied in two aspects: technology and agreement. Among them, the technical rules are rooted in the software and hardware, and the corporate will is integrated into the technical design framework, which is the guide for shaping the Internet space [4]; the agreement rules are scattered in the user terms, service agreements, and operating specifications formulated by the platform companies, used to specifically regulate the platform use, operation, competition and other behaviors of platform ecosystem participants.

The limitations of the Platform Rules Authority are reflected in: first, the platform can take a single punishment measure, the platform governance focuses on taking technical measures to exclude or restrict market participants that have a negative impact on the platform ecosystem, and the punishment means is single; for market participants that have a negative impact on the platform ecosystem, platform companies can certainly govern through technical means, but there must be a process of continuous technological confrontation, which may not only accidentally hurt normal users in the platform ecosystem, but also the legality requirement of technical means limits the effectiveness of the platform's technical governance to a certain extent. In terms of governance effects, common misconducts cannot be generally prohibited, and governance effects and efficiency are low.

Platform companies use platform products to provide operators and consumers on the platform with basic functions or services that promote interaction. With the prosperity and development of the platform business ecosystem, platform companies gradually introduce third-party service providers through open platforms, and provide operators and consumers on the platform, and participate in the business ecosystem through professional services such as technology development and operation. The open operation of the platform allows some third-party service providers to cross the platform enterprises and directly connect with the operators on the platform. Although they participate in the platform business ecosystem, they have not been officially certified or licensed by the platform. The nature of the platform rules belongs to the consensus between the platform and the participants, which embodies the common code of conduct that both parties accept and promise to follow the agreed platform behavior. For some third-party service providers that directly connect with platform operators, they are not a party to the platform agreement, and the actions of platform participants may not all take place on the platform. Due to the relativity of the contract, platform companies cannot govern such ecological participants or behaviors that occur outside the platform by rules.

The internal rules of the platform are less binding on the external competition between platforms. The Internet platform ecology relies on the characteristics of rapid technological development, making it impossible to wait for the self-discipline of the industry that requires long-term cultivation to regulate the endless new competition between platforms.

Judicial needs of Internet platform governance

The emergence of new types of competitive behaviors on the Internet platform and the limitations of autonomous governance of platform rules, the absence of self-regulation in the Internet industry and the driving force of competition expansion, have prompted Internet platforms to choose litigation to seek unification of industry rules, and the norms of behavior between the platform and platform parties, put forward demands for judicial governance.

The new types of Internet platform competition behaviors include three categories: the first is platform and users, generally related to litigation triggered by the unilateral restrictions of the user's personal behavior by platform rules. The second is the behavior of the platform against third-party service providers that damages the overall interests of the platform. The third is competition between platforms.

Platforms and users

The attraction of the Internet platform to users is to increase user stickiness through effective information interworking to meet user needs, but user needs on the Internet platform are massive, and it is impossible to expect the platform to meet all the needs of each individual. The platform pays more attention to the maintenance of the overall competitive advantage of the platform to ensure the interests of the vast majority of participants. In order to allow all connected persons, matched parties, and most groups active in this “market” to have a good and lasting experience, many Internet platforms will punish some user behaviors that cause damage to other entities and market space. Facebook will punish anonymous users, users who post a variety of discriminatory and insulting language, ban or log off; Google will manipulate link rankings and mislead users to click pages, and exclude the first dozen pages of search pages for 90 consecutive days. [5]

Different from traditional user complaints about transactions on the platform, litigation between the new platform and users is more focused on the user’s management of the platform based on the purpose of maintaining the platform’s reputation and the requirements for reviewing user information. The litigation filed includes the review standards for information uploaded by users and the punishment measures that have been taken.

Platforms and third-party service providers

The quality of the products or services provided by the Internet platform determines the attractiveness of the Internet platform to users, including the user's loyalty to the platform and frequency of use. Therefore, the interdependence between Internet platforms and third-party service providers who provide services is higher than other relationships. The professional services that third-party service providers can provide to the operators on the platform bring positive value to the platform's business ecology, but they may also implement behaviors that affect the platform's ecological health. The characteristic of competition disputes between the platform and the third-party service provider is that although the technology implemented by the third-party service provider does not clearly damage a user or a certain platform operator, it uses the gaps in the platform rules to damage the entire platform through technical implementation. The behavior of reputation reduces the trust of other users on the platform's reputation. [6]

Platforms and platforms

Regardless of whether the Internet platforms adopt a multi-homing strategy, a single-homing strategy, or a competitive strategy that combines the two, the ultimate goal is still to attract as many consumers as possible. This is reflected in the platform economy, which is to maximize the "extend" to all potential customers in the market [7]. The platform makes use of the existing user scale and basic service interface to try to provide more services, compete with crossed user groups, and obtain traffic.

Traffic is one of the most important assets of the Internet platform, and users spend a certain amount of time on the Internet every day. Competing for user attention has naturally become the main competitive goal of the platform, including competition for the number of users and traffic, and restrictions of transfer of users or traffic through technical barriers. Access to existing networks to attract some of its users is an effective way to achieve the growth of its own ecosystem, especially for start-up platforms. Internet platforms use technology to restrict users’ right to know and choose to restrict users and traffic transfer; second, prevent access to other Internet platforms by technical means; third, ensure their own competitive advantages by protecting platform data and information, such as the "3Q" war between Tencent and Qihoo 360,Toutiao APP deep linking sued case, Dianping v. Baidu for grabbing user comment information, and Coomix sued Chelaile to destroy encryption measures and improperly crawling APP’s data, Taobao sued Meijing case, etc.

The new types of competition disputes involving Internet platforms reflect three characteristics: First, the rights of the plaintiff to request protection, such as data information, and the establishment of technical barriers to other Internet service providers to protect competitive advantages, are all not belong to a civil right that has been clearly stipulated by law. Second, different from the traditional unfair competition, the business fields between competitors belong to the same or similar fields. In the new type of Internet platform competition, due to the characteristics of the Internet’s inter-chain sharing, the differences between platform competitors’ service boundaries are blurred. More and more Internet platforms have integrated a variety of different types of value-added services on their basic services, showing the characteristics of diversity and complexity. Therefore, the boundaries between platform competitors’ operations are more fuzzy than those in the traditional Internet industry. Third, various business rules in emerging markets such as the Internet are still being explored as a whole. Whether many new types of competition or business models violate business ethics, there is no consensus in the market community. [8]

The inevitability of the judicial protection path for platform governance based on the Anti-Unfair Competition Law

The particularity of new competition disputes in the platform ecosystem

The first is the particularity of "competitive relations". Ideally, platform companies try their best to maintain and create platform value to meet the needs of users by combining all participants. The prerequisite for achieving this goal is that the interests of the platform and the interests of all participants of the platform are consistent. But the reality is that the needs of users are not a unified goal. The behaviors of individual participants may meet the needs of a few users, but they damaged the ecological health of the platform (including platform reputation, platform innovation capabilities, etc.), thus violating the platform’s overall benefit. Therefore, the platform and the operators or third-party service providers on the platform as participants in the business ecosystem will also constitute a competitive relationship. The so-called competitive relationship generally refers to the business operators operating similar goods or services. Although their business operations are different, their behavior violates the competition principle stipulated in Article 2 of the Anti-Unfair Competition Law, and they can also be determined to have a competitive relationship [9]. Therefore, under the platform economy model, the extension of the "competitive relationship" needs to be further expanded. From the perspective of the impact of competition on the platform business ecology, the special competition relationship of the ecological significance of the existence of platform companies, platform operators, and third-party service providers on this issue needs to be defined in the Anti-Unfair Competition Law.

The second is that the new types of interests to be protected need to be determined by the Anti-Unfair Competition Law. The mutually beneficial and symbiotic Internet platform business ecology is a normal competitive relationship, and the health of the business ecology will affect the interests of all ecological participants. For platform companies, the way they participate in competition is not only the platform products they provide, but also the business ecosystem competition based on platform products. The value created by all parties on the platform and the competitive advantages emerging from it should be a cyclic, repeatable and feedback-driven process. Platform companies are the concentrated bearers of all the adverse consequences arising from damage to ecological health. Therefore, unfair competition behaviors that occur in the platform business ecosystem damage not only the rights and interests of other operators with direct competitions, but also the ecological competitive advantage of platform companies based on the health of the platform business ecosystem.

The third is that the legitimacy of "competitive behavior" needs to be determined by the Anti-Unfair Competition Law. Competitive behaviors of new types of Internet platforms often do not have a clear target of damage, but damage the overall competitive advantage of the platform through damage to the ecological health of the platform. The Internet platform introduces a two-way, real-time, open, continuous, and cumulative evaluation system, which greatly reduces information asymmetry, and rebuilds a set of credit systems that all participants jointly build, share, and continuously optimize [10]. The reputation of Internet platforms is mainly formed through user feedback and transmission. A favorable credit system is part of the ecological health of the Internet platform, and has built a competitive advantage in the Internet business ecosystem. Destruction of the credit system will inevitably harm the interests of the entire platform participants. For example, third-party service providers seek benefits by renting and hosting platform user accounts. Although such behaviors have not caused specific losses to operators or individual users on individual platforms in the short term, and even individual users use their technology to generate economic benefits, using platform user accounts to evaluate the information shared on the platform that is not the user’s true meaning will actually weaken the authenticity and accuracy of the information shared on the platform. If things go on like this, it will inevitably cause users to reduce their trust in the platform, which will actually detract from the reputation of the platform. However, since there is no clear victim and damage result, the determination of the impropriety of this type of behavior is different from the previous determination of technical unfair competitions.

The legislative design of the Anti-Unfair Competition Law provides a way for Internet platform governance

The "Anti-Unfair Competition Law" has the character of"economic law" that is different from the general civil law. It establishes multiple elements of the judgment of the legitimacy of competition behavior, as well as "market (competitive order)", "operator (legitimate rights and interests)", and "consumers" (legitimate rights and interests)" are three-dimensional protection goals, and consider whether to "disturb the order of market competition" is a priority for consideration. [11] Encourage and protect fair competition through regulation of unfair competition, which is essentially a special tort law that adjusts competition in the market.

The second article of the Anti-Unfair Competition Law is an authorization clause given to the judiciary by the legislature [12]. General clauses are usually applied to define unclassified acts of unfair competition. The significance of their existence is to provide solutions to new problems not foreseen by the legislation [13]. They not only supplement and verify the law, but also serve as a basis for interpreting the law. The legislative design of new types of competitive behaviors has a rising process from specific to general. For rights that are not clearly protected by the law, judges can "give new and dynamic meanings to the law in individual cases to bridge between the law and the changing reality of life" [14]. Through general clauses, judges, on the basis of comprehensive ethics, morality, social concepts and other value judgment standards, concretized the general clauses into judgment norms applicable to specific cases, supplemented and explained the application conditions of the general clauses, and clarified fair competition and the boundaries of unfair competition. This process of concretization is the process in which judges use legal interpretation methods to create laws. Similar cases were refined and generalized principles and standards were eventually elevated to law, achieved "legalization" and formed a specific transformation of general terms applicable to individual cases. The general terms act as an "incubator" for "possible new legal benefits", nurturing new types of intellectual property rights, and paved the way for the legislative protection of these new types of intellectual property rights. It is precisely because of the application of general terms in the protection of intellectual property rights that the legislation of new intellectual property rights can be smoothly formed. It can be said that general clauses play a key role in linking up and down typification, and at the same time it is also an important weight to ensure legal stability and predictability. [15]

The Internet platform is the most competitive field of various business forms. The complex patterns and rules in the competition practice and the absence of recognized business ethics have left a greater exploration space for the open and flexible general provisions of the Anti-Unfair Competition Law. Regarding the new types of competition disputes arising in the governance of Internet platforms, when the rights and interests requested by the parties have not yet risen to clear legal interests, whether they can receive legal support requires the judge to consider the order of market competition and the balance of multi-party interests in the case, dimensional evaluation, determine acceptable competitive behavior and maintain long-term overall interests.

The relief provided by the Anti-Unfair Competition Law can make up for the limitations of platforms taking self-relief measures in accordance with platform rules, and can also provide demonstrative precedents for Internet platform market participants and the legitimacy of various platforms, and guide the platform to conforms to the public interest, the user's interest, and promotes the orderly development of all platforms. The judiciary also uses the contextual interpretation of the adjudication to meet the constantly emerging market competition needs.

Judicial governance of Internet platforms should protect fair competitions

A fair market order is not about maintaining the existing balance of interests, but about determining the order in the protection of innovation and promoting efficiency, and determining the value orientation of the Internet platform behavior in the order of efficiency, innovation and competition. Competitions and innovations often occur at the same time, and it is inevitable to break and redistribute existing interests. The "Anti-Unfair Competition Law" maintains a dynamic and fair competition relationship. It protects normal competitions instead of eliminating competitions, and encourages the market to guide innovation. If we look at the trajectory of the market economy in an ideal state from the perspective of dynamic balance, it is a cyclical pattern that continuously causes a series of damages through continuous competitions. [16] Reducing the intensity of competition will limit the guiding role of Internet platforms in innovation and industry services. In the multilateral relationship and behavior judgment involving Internet platform participants, maintaining the order of market competition should be one of the most important criteria for judging whether the behavior is justified.

Technological development has brought new types of competitions on the Internet, and at the same time, it has also established new competition relationships and new damage targets. The judiciary's determination of competitions on new types of Internet platforms should avoid improper interference in normal market competition and innovation, and adhere to the principle of "non-public benefit must not interfere". The adjudication of competitive behavior in the Internet field should give the market sufficient time to dissolve competitive behavior, so as to avoid protecting short-term interests and harming the long-term welfare of multilateral participants. If the competition between the participants of the platform can be resolved through the rules of the platform, the judicial system shall intervene cautiously.

The application of the Anti-Unfair Competition Law to regulate the behavior of Internet platforms should conform to the multilateral nature of the platform. On the one hand, the judiciary regulates platform behavior to prevent monopoly and abuse of platform rules and competitive methods. On the other hand, it needs to pay attention to the multilateral symbiosis of the platform under the premise of platform competition. It needs to meet the special characteristics of mutual benefit and symbiosis of the platform business ecology. It is necessary to balance Internet platforms, consumers and public interests. When judging the legitimacy of competitive behavior in the platform ecosystem, the court may determine whether the relevant content of the platform rules is legal, fair, and objective, and regard it as the reference basis of business ethics that operators in the platform ecosystem should observe. [17]

The Internet platform is a virtual space that accommodates hundreds of millions of user groups. While competing, they are also jointly cultivating user habits, ripening new markets, breaking market barriers and administrative monopolies, exploring new rules, and fostering new social interaction methods and cultures. [18] The inherent damage of competitive behavior determines that the judgment of legitimacy must grasp the choice of order, interest and value, which makes the judgment standard highly relative. Judicial officials should be more tolerant of competitive behaviors, leave enough room for self-regulation in the market, and increase the intensity and breadth of market competitions. 

Reference:

1. Fang Jun, Cheng Mingxia, Xu Siyan, "Platform Era", Machinery Industry Press, 2019 edition, p. 220.

2. China Academy of Information and Communications Technology, "Internet Platform Governance Research Report (2019)", Chinese Internet Data Information Network, website http://www.199it.com/archives/843867.html.

3. User multi-homing means that Internet platform users can easily switch between competing platforms to find alternative options.

4. Guo Jianqiang and Chen Rongchang, "Network Platform Power Governance: The Dilemma of the Rule of Law and the Realistic Way Out", in Theoretical Exploration, Issue 4, 2019.

5. Fang Jun, Cheng Mingxia, Xu Siyan, "Platform Era", Machinery Industry Press, 2019 edition, p. 220.

6. Tencent Company sued Shenzhen Weishikong Company for unfair competition lawsuit, (2019) Guangdong 03 Minchu No.594.

7. Wang Yong and Rong Ke, "The Design, Operation and Supervision of Online Time of Platform Governance", CITIC Publishing Group, p. 283.

8. Jiang Xiaoxi, Lan Shiwen, "The Judicial Standards for the Judicial Determination of Unfair Competition for New Types of Competitive Behavior in the Internet Environment", published in China Intellectual Property, January 2020, Issue 156.

9. "Increase Intellectual Property Judicial Power and Standardize Market Competition Order According to Law-Speech at the National Courts Intellectual Property Trial Work Forum" (The speech content of Cao Jianming, the former Vice President of the Supreme People's Court, November 11, 2004).

10. Fang Jun, Cheng Mingxia, Xu Siyan, "Platform Era", Machinery Industry Press, 2019 edition, p. 215.

11. Kong Xiangjun, "The Anti-Unfair Competition Law" under the New Horizon of the General Principles of Civil Law, published in "Comparative Law Research", Issue 2, 2018.

12. Although some scholars believe that the application of general terms is a path taken by the judiciary itself, and it is a self-issue. However, from the formulation of the Anti-Unfair Competition Law to several revisions, the legislature still retains this clause, indicating that the legislature also knows and recognizes the application of the general clauses by the judiciary, so the author believes that it is essentially an authorization clause.

13. Lu Chunxin, The Application Position of the General Provisions of the Anti-Unfair Competition Law in the Protection of Intellectual Property Rights, published in Intellectual Property, Issue 1, 2017.

14. Kong Xiangjun, "The Innovative Application of the Anti-Unfair Competition Law", China Legal Publishing House, 2014 edition, p. 5.

15. Wang Liming, "Legal Methodology", Renmin University of China Press, 2011 edition, p.475.

16. Therefore, "The Pan-China Dilemma and Detours Applied to the General Provisions of the Anti-Unfair Competition Law-Taking the Reconstruction of the Standard of "Three-dimensional Target Superposition under Two-Dimensional Indications" as an Approach", in "Chinese Applied Law" The first issue of 2020.

17. In the Unfair Competition Case between Tencent Company and Qihoo Company [Supreme People's Court (2013) Min San Zhong Zi No. 5 Civil Judgment], the question of whether it is appropriate for the court to use the Ministry of Industry and Information Technology’s Several Provisions and the Internet Society’s Self-Discipline Convention "The argument: In the "Qihoo v. Tencent" unfair competition dispute case, the court referred to the industry self-discipline convention formulated by the Internet Industry Association to determine the specific content of business ethics recognized by the industry.

18. Fang Jun, Cheng Mingxia, Xu Siyan, "Platform Era", Machinery Industry Press, 2019 edition, p. 222.Publishing House, 2014 edition, p. 5.