Ji Yutong: Monopoly and Antitrust Regulation of Internet Giants

Since the rise of giants such as BAT, few companies in China's Internet industry have been able to develop independently in technology and business model innovation. Even some unicorn companies, such as Didi, public comment, etc., have the capital strength of BAT behind them. (Source: Network)

1. Anti-monopoly in the Internet field has become a global trend.

With the application of big data and artificial intelligence technology, a number of Internet platform companies such as Alibaba, Tencent, Google and Facebook have emerged in the Internet industry, operating bilateral or even multilateral markets. In the era of big data, this platform economy model dominated by internet oligarchs is making market competition show a reverse development trend of "accelerating competition" and "hardening" in different dimensions such as search engines, e-commerce and instant messaging. [ 1]

In the current environment, whether the traditional anti-monopoly law is still applicable to the digital economy era, what kind of damage will the Internet technology giant monopolize the platform data cause to the market competition, and how to maintain the long-term healthy and stable development of the Internet industry has become a social problem that needs to be solved urgently beyond a single country and a single legal part.

Among them, elizabeth warren, who participated in the 2020 presidential election, once said that if she was elected president of the United States, she would split Amazon, Google and Facebook to promote competition in the technology industry. Currently, she has served as the US Treasury Secretary.

In addition, two-thirds of Americans support splitting large technology companies by canceling the recent merger of small businesses, such as canceling Facebook's acquisition of Instagram, in order to ensure fuller competition in the future.

In Europe, since the successful implementation of Microsoft monopoly in 2007, the European Union has continuously strengthened the supervision of large-scale technology enterprises, the most striking of which is the investigation of large-scale Internet platforms, and imposed three antitrust fines of $9 billion on Google. On June 5438+February 65438+February 5, 2020, the European Commission announced two proposals, namely, the Digital Market Act and the Digital Service Scheme, which were a precise blow to the technology giants in the fields of digital antitrust and digital economic development.

In China, in recent ten years, data disputes, such as the incompatible case of Qihoo 360 and Tencent, the dispute between SF Express and Alibaba over the control of customer logistics information, and the dispute between Tencent WeChat and Huawei over data rights, have repeatedly shown that the data competition among major platforms is becoming increasingly fierce.

In this regard, the Anti-monopoly Bureau of China General Administration of Market Supervision also takes strengthening the anti-monopoly work in the Internet field as an important goal. In the post-epidemic era, with the in-depth application of Internet, big data, artificial intelligence and other technologies in China, "online and offline" deep integration is the future development trend, and China's Internet antitrust has also entered a new era.

On June 5438+065438+ 10, 2020, the State Administration of Markets issued the Anti-monopoly Guide for Platform Economy (Draft for Comment), which focused on online business and its use of data and algorithms, and made many regulations for Internet platform companies, among which "choose one from the other", big data killing, bundled trading, low-price dumping, and refusal to trade were troubled.

Second, the formation mechanism of Internet monopoly and its competitive damage

Different from traditional industry monopoly, the Internet industry itself has certain natural monopoly attributes, and their "scale effect" is very strong. The super-scale effect of this Internet giant, also known as the "network effect", is the key to the rapid growth and profitability of the Internet industry. For example, consumers are keen on shopping from Taobao because there are many merchants on Taobao Tmall platform, and merchants are willing to open stores on platforms with many users. More platform users will attract more businesses to settle in, and so on. Therefore, as the scale of the platform becomes larger, the free data obtained from buyers and sellers will be deposited on the platform, so that the platform can match buyers and sellers more accurately, so that the platform will have greater growth.

More importantly, the accumulation of these data will have a strong stickiness to the consumers of the platform. In the Internet industry, when consumers are used to accepting an Internet product or service, they will not easily switch from one system to another without much difference in price and convenience [2], because users need to pay the transfer cost when using new products, such as learning new operation methods, and only when the value brought by new products to consumers is greater than the transfer cost will users switch to new products.

Therefore, this internet phenomenon is also called "locking effect", which is based on the consideration of equipment cost and update cost, and the path dependence of internet products in the early stage, that is, "user viscosity". What is even more frightening is that once this first-Mover advantage is established, it will promote the emergence of the phenomenon of "the stronger the strong, the weaker the weak" in the Matthew effect, leaving no room for smaller competitors to intervene.

In fact, the scale of Internet enterprises mentioned above is not directly related to the harm of Internet monopoly to consumers and monopoly violations, but only indirectly related. If Internet giants use their "massive" advantages to curb competition and stifle innovation, their role will be negative. Specifically, the competition damage caused by the monopoly of Internet giants mainly includes the following three aspects:

First, Internet giants use the advantages of big data technology to implement unfair pricing behaviors and harm consumer welfare. First of all, from the perspective of platform competition, through the cross application of various digital pricing algorithms, the dominant platform can warn and respond to the price threat before the price change of competitors occurs, thus forming a structural advantage in price competition based on data in the market, thus accurately implementing predatory pricing aimed at attacking competitors and forcing them to withdraw from the market.

Secondly, from the consumer's point of view, the pricing algorithm can make a multi-dimensional comprehensive judgment according to the consumer's historical browsing record, consumption and payment ability, browsing terminal category, and even gender, age, industry and so on. , and may provide different consumers with different prices of the same goods or services, which may form price discrimination, that is, "big data killing" in the popular sense. For example, Orbitz "manipulates" Apple OSX users to book more expensive hotels because the algorithm thinks that Apple users are richer than ordinary PC users. [4]

It can be seen that the algorithm setting of Internet giants limits the normal price competition among industries and directly harms the welfare of consumers.

Second, the lack of competitive pressure from start-ups by Internet giants will stifle the innovation and development capabilities of the Internet industry. Since the rise of giants such as BAT, few companies in China's Internet industry have been able to develop independently in technology and business model innovation. Even some unicorn companies, such as Didi and Public Comment, have the capital strength of BAT behind them. [5] According to statistics, in the whole year of 20 18, Baidu, Alibaba and Tencent invested1/kloc-0 billion yuan, 55.6 billion yuan and 152 billion yuan respectively, accounting for about15 of their total foreign investment.

BAT's entertainment investment landscape * * * covers 132 companies, covering media, film and television, comics, videos, literature, publishing and other fields, building a "big entertainment" ecology, and almost completely controlling the output channels in the information content field. Tencent Video, Baidu Iqiyi and Ali Youku, as the top three video platforms in China, almost monopolized the production and dissemination of online TV dramas, online movies and online variety shows. In the fierce market competition, some small enterprises make a series of pornographic and vulgar content to attract traffic in order to survive. It can be seen that the innovative culture caused by Internet monopoly is harmful to the development of Internet industry in China.

Third, the market crowding-out behavior of Internet giants reduces the competitiveness and vitality of the overall economy. Judging from the current competitive form of the platform market, the dominant platform can not only quickly lock in the dominant position of the new business market, but also try to squeeze competitors out of the competitive market by means of data interruption. In recent years, some e-commerce platforms with first-Mover advantages require platform users to conduct "two-in-one" compulsory incompatibility in order to monopolize consumer user data.

In addition, Internet platforms restrict cooperative businesses from trading with competitors. Because Google abused its dominant position in the field of online search advertising agency, it imposed restrictive clauses in contracts with third-party websites to prevent competitors from placing search advertisements on these third-party websites. 20 19 was fined by the European union about14.9 billion euros in March. [6] Apple's IOS mobile operating system prevented users from downloading applications from any source other than Apple's App Store, and it was also included in the antitrust investigation in the United States.

Third, the feasible path to deal with the monopoly of Internet giants.

1. Strengthen supervision from the law enforcement level and formulate practical anti-monopoly law enforcement strategies in the digital age.

At present, Internet companies such as BAT in China have penetrated into various commercial services vertically by virtue of their abundant capital and strong strength, and monopolistic abuses that undermine normal market competition and harm consumers' interests have occurred frequently. In this regard, China's anti-monopoly administrative law enforcement agencies need to act positively, respond to the problems reflected by all parties in time and actively investigate important monopoly risks, so as to keep the anti-monopoly law enforcement channels open and necessary deterrence, and understand the market competition, consumer welfare level, industry barriers and other aspects through investigation.

In fact, the EU has proposed that the current framework of anti-monopoly law is sufficient to provide a flexible basis for law enforcement, but the established concepts, theories and methodologies in these laws need to be explained and improved by strengthening market law enforcement investigations. [7]

2. Set up consumer reporting procedures in the anti-monopoly system, and at the same time enhance the right to speak of innovative enterprises in the anti-monopoly investigation.

First of all, China should establish a consumer reporting mechanism, popularize the propaganda of the necessity of anti-monopoly, educate consumers how to report and defend their rights against monopolistic behavior, and improve the probability of success of consumers in bringing anti-monopoly cases against businesses. China can further improve the unified reporting channels, so that Internet consumers can report through the Internet, telephone, SMS and other channels. The online reporting window is established on the portal of the National Development and Reform Commission, and consumers can report their problems to the relevant authorities by clicking on the relevant links set on the portal of the National Development and Reform Commission.

Secondly, because the Internet giants occupying a monopoly position may make use of their media advantages, they may make statements in favor of their monopoly position in public opinion fields and expert seminars, and even interfere with relevant anti-monopoly and anti-unfair competition investigations. Therefore, in the future, China should listen to the opinions of small and medium-sized Internet enterprises, especially enhance the right to speak of innovative enterprises damaged by monopoly in anti-monopoly and anti-unfair competition investigations, so as to better measure the harm of Internet giants' market monopoly.

American antitrust agencies attach great importance to listening to the opinions of enterprises damaged by monopoly. In 20 19, the Judiciary Committee of the House of Representatives has sent information requests to many companies that may be harmed by technology giants. The Committee will decide whether to issue a subpoena according to how many companies voluntarily respond to the request.

3. Optimize the data flow sharing mechanism and use the "data portability right" to incite the data flow between enterprises.

The anti-monopoly law regulates the abuse of market dominance by Internet platforms after the fact, which is usually lagging behind. Therefore, China can learn from the relevant provisions of the EU General Data Protection Regulations (GDPR) on data resource intervention and supervision. GDPR of the European Union thinks that "data portability" is an important rule of platform data management. The original intention of portability is to weaken the "first-Mover advantage" of the current platform. By enhancing data portability, we will increase the competitive weight for the new platform, so that the excellent new platform will have the opportunity to win the favor of customers, which will play a certain role in promoting market competition.

It is worth noting that in the context of China, it is necessary to apply different types and degrees of data portability rights to enterprises and public departments in combination with specific scenarios. Because the realization of data portability requires a certain cost to establish a common data transmission format, if it is implemented across the whole industry, the compliance cost will be higher for smaller enterprises, which may still lead to their competitive disadvantage. [8] Therefore, it is possible to truly benefit citizens' rights and interests and industrial development by investigating the market concentration of related industries in advance and implementing the principle of data portability.

References:

[1][3] Hao Yuan. Legal Regulation of Internet Platform Data Monopoly from the Perspective of Emerging Rights [J]. Journal of Northwest University for Nationalities (Philosophy and Social Sciences Edition) 2020 (5): 8 1-9 1.

[2] Wang He. Research on Anti-monopoly Regulation of Internet Platform Enterprises' Abuse of Market Dominance [J]. Journal of Heilongjiang Institute of Political Science and Law Management, 2020, (6): 77-83.

[Is the ticket hotel bought on OTA necessarily cheap? [EB/OL]。 /article/ 1234726.html，20 17-4- 10。

[5] Fang Xingdong and Yan Feng. Complexity, Harmfulness and Countermeasures of Internet Monopoly in China [J]. Journal of Shantou University (Humanities and Social Sciences Edition), 20 17 (3): 49-54.

[6] Ioanes Cocheres. Google case in EU: Is there a case? No.2, Volume 62, Anti-monopoly Bulletin, May 20 17, pp.313-333.

[7] or so. Algorithm Anti-monopoly Law Regulation * * * [J]. Law, 2020 (1):40-59.

[8] Yang Dong. Who should have personal data? [EB/OL]。 /article/9CaKrnKlaMc，20 19-6-27。

This article is the exclusive manuscript of IPP.

Author: Ji Yutong, research assistant and policy analyst, Institute of Public Policy, South China University of Technology.