big data and competition - lingnan university · determination on unfair competition •...

Big Data and Competition—A Practitioner’s Observations

Ken Dai, Partner of Dentons Shanghai

Co-Chair, Antitrust & Competition Team of Dentons China

Lingnan Competition Policy Forum

December 16th, 2017, Hong Kong

Dentons 2

Big data is the new oil for

future social development.

——Big Data R&D Initiative（2013）

Dentons 3

Outline

3 Observation and Looking Forward

2 Big Data and Unfair Competition

1 Big Data and Abuse of Market Dominance

Dentons 4

Big Data and Abuse of

Market Dominance

Dentons 5

I. “Cainiao” Data Standoff

A. Background

May, 2017

Cainiao required its

cooperation partner to

provide consumers’ data,

but was rejected.

May 27

Cainiao notified

proposed close of data

interface in the name of

data security.June 1

Cainiao closed the data

interface, and excluded

the option of its partner’s

service on Ali’s platform.

June 3

Cainiao reconciled with

its partner under the

intervention of the

regulatory authority.

Dentons 6


B. Market Dominant Position Determination

• Almost 100% market share in the express networking platform market within China.

Market Share

Market Power

• More than 50% parcels are handled on Cainiao’s

platform, with a number of 16.7 billion in 2016.

• Cainiao has certain control over its downstream

express couriers.

Entry Barriers

• Costs and risks are high for the market entry.

Cainiao53.5%

Others46.5%

Dentons 7


C. Abuse of Market Dominant Position?

Applying Unreasonable Trading Conditions

Refusing to Grant Access to Data

Requiring Exclusive Trading with Designated Counterparty

• Cainiao required the information of all the parcels to be handled on the platform of Cainiao.

• Cainiao required that it should be the only channel to inform users of parcels.

• Cainiao’s close of data interface may constitute refusal to deal.

• Cainiao excluded the option of its partner’s service on Ali’s

platform, thereby users can only choose the express couriers

designated by Cainiao.

Dentons 8


D. Data Security as “Valid Justification （正当理由）”？

Considerations

• Actual and potential adverse impacts on market competition.

• Personal information protection required by law.

• Necessity for providing services.

• Limits of necessity for providing primaryservices.

Dentons 9

Big Data and

Unfair Competition

Dentons 10

Business operators shall, in market

transactions, follow the principles of

voluntariness, equality, fairness, good

faith and observe the generally

recognized business ethics.

Article 2 of the Anti-Unfair Competition Law

Dentons 11

I. Sina Weibo vs. Maimai (2016)

A. Factual Information

In cooperation period After cooperation period

• Crawling massive Sina users’ data

beyond the contract.

• Matching users of Maimai with users

of Sina for marketing purpose.

• Continuing to use

Sina users’ data

without both Sina and

users’ consent.

• Decision of the first-instance: Maimai’s conducts have violated Art. 2 of the

AUCL, Maimai should compensate Sina RMB 2 million (USD302,576).

• Decision of the second-instance upheld the original judgment.

Dentons 12


B. Highlights of Court’s Decision

Determination on Competition Relationship

Regardless of the specific service models, both Sina Weibo and Maimai provide social-

networking services with overlaps on user groups, business modes and business scopes.

• Sina Weibo provides social media platform for users to create, share and

query information; and has both web and mobile clients.

• Maimai is a social networking application especially for employment and

working; and maimai only has mobile clients.

Dentons 13



Determination on Unfair Competition

• Data resource has been an important competitive advantage

with huge commercial value for Internet enterprises.

• Maimai’s crawling of Sina users’ data without consent has

violated business ethics, and harmed the interests of both

Sina and its users.

• Maimai’s matching of data is unjustified and does not

covered by common practice in the Internet sector.

• Impact on consumers’ interests is also an important

consideration for the determination of unfair competition.

Dentons 14

II. Dianping vs. Baidu (2016)

A. Factual Information

• Dianping provides Internet users with information about catering and other

service providers, consumers’ comments, and coupons etc. Users can get

the location and the route to the service providers with the website’s support.

• When Internet users searching catering or other service providers on Baidu

Map or Baidu Zhidao, Baidu would provide them with the information in a full

text crawled from Dianping’s website.

• Decision of the first-instance: Baidu’s conducts have violated Art. 2 of the AUCL, Baidu

should compensate Dianping RMB 3 million (USD453,864).

• Decision of the second-instance upheld the original judgment.

Dentons 15



Determination on Competition Relationship

• The determination of competition relationship shall not be limited to the same industry or sector.

The essence of competition is competing for trading counterparties / consumers.

Application of Art 2. of the AUCL

• There is no specific provision on such conduct by laws and regulations.

• Other business operators have suffered actual damage due to such conduct.

• Such conduct is unfair and should be held accountable due to its violation of the principles

of good faith, as well as the generally recognized business ethics.

Dentons 16



Determination on Unfair Competition

• Dianping’s interests is harmed

Users’ comments are one of the most important core competences for Dianping. Baidu’s

providing on its websites has diminished users’ accessing on Dianping’s websites.

• Baidu’s conduct is unfair

——Users’ comments on Dianping’s websites are collected by Dianping with huge input,

therefore Dianping enjoys rights over such comments.

——Baidu’s full-text use of data exceeds the limits of necessity.

——Baidu’s compliance with the Robots Protocol does not justify its improper use of data.

Dentons 17

Observation and

Looking Forward

Dentons 18

• Data becomes more and more important competition factorin the era of DT

• Competition for Data will become more intensified

• Data vs. Market Definition or Competition Relationship

• Data vs. Market Power or Market Dominant Position

• Data vs. Essential Facility

• Data Access vs. Data Security

• More Novel Cases Coming

Dentons 19

Thank you !

Ken Dai

| Vice Chair of Antitrust Committee of Shanghai Bar Association

Adjunct Professor of Jiaotong University

Councilor of Asia Competition Association

Columnist of Forbes China

| Mobile: 139 1611 3437

| E-mail: [email protected]

| WeChat: kenamour

big data and competition - lingnan university · determination on unfair competition •...

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