Revelation: the analysis of 360 v tencent monopoly result interpretation

the author: zhao occupation (China university of political science and law of intellectual property rights center special researcher)

360 v tencent monopoly much attention from all walks of life, after last year on April 18, after hearing this morning, guangdong high court made the first-instance judgment: “a choice” and concluded that tencent to bind act doesn’t constitute abuse of dominant market position, and then reject all 360 of his claims.

this case first antitrust case is instant communication field, is also China’s whole Internet one of the few several antitrust case. Although China is not the case law countries, the outcome of the case for other cases not binding, but antitrust field, especially the Internet antitrust field, lack of targeted more detailed legislation, judicial practice experience is extremely scarce. To explore the case of judicial will be far-reaching to other classes as the case will have great significance.

this case involves the relevant market how to define whether, tencent has a dominant market position, “a choice”, and whether the binding behavior constitutes abuse of dominant market position and so on several big core issues. In this case before the trial, the author root according to the research of events in 3 q for a long time, once wrote three articles (” how to define the relevant market?” , tencent has a dominant market position? , “whether the” alternative “constitutes abuse of market dominant position?” ), has carried on the deep analysis of the problem. Now for the first-instance judgment result is analyzed.

one, the relevant market definition is reasonable?

the relevant market definition is whether that tencent constitute the premise of abuse of dominant market position. Relevant market, refers to the operator specific commodities competition range and regional scope. Therefore, the relevant market include related commodity market and regional market. The former refers to according to the characteristics, purpose and price of a commodity, the demanders thought to have a relatively close substitute of a group or class of commodity market, these products showed a greater competition. The latter refers to the demanders get goods with relatively close substitute relationship between geographical areas.

related commodity market about the case, the court has neither the view that 360, namely contains text, music, video integrated real-time communications market, also did not agree with tencent’s point of view, namely, instant messaging, social club website, weibo, email, phone calls, text messages, but a compromise approach, the QQ this comprehensive im and across a network of cross-platform instant communication tools, the single which has the function of text, audio or video instant messaging tools, microblog, SNS social networking is defined as related commodity market. The determination method of persuasion, also with the author’s point of view before.

Relevant geographic

about this case, the court did not support the plaintiff the view that China’s domestic market, but to support the idea, citing the Internet is open and across national borders, is defined as the global market. This view of persuasion is very poor, to this, the author also very don’t agree with you. Although QQ users around the world, but based on the Chinese language and culture background, the vast majority of users for Chinese users, and is located in the territory of China, even outside the existing users, but in a very small proportion of the total number of users. And, if according to this train of thought, and almost all Internet antitrust case should define a relevant geographic market into the global market, also a few enterprises have high market position. From past several Internet antitrust case, none of the court to define relevant geographic market into the global market.

2, tencent has a dominant market position?

Provided in article 17 of the

anti-monopoly law, “dominant market position” referred to in this law refers to the operators in the relevant market is able to control the commodity price, quantity or other trading conditions, or can block or affect other business operators into the relevant market position.”

according to the anti-monopoly law, the provisions of article 18 of dominant market position of the operator, you need to consider market share, competition situation and a variety of factors such as the ease of entry. Article 19 and rules on the presumption of dominant market position system, that is, a business operator in the relevant market share of the market of 50% can be presumed to have dominant market position, but allows operators to provide evidence to overturn. The ease of market entry is one of the most force contrary evidence.

first of all, the market share is determined whether the operator has a dominant market position to consider the primary factor, it has become the general recognition of developed countries anti-monopoly law practice. According to the practice of the United States, the European Union, the enterprise products market share in the relevant market is the most important factors in the law enforcement agencies to consider, but does not rule out other factors. At this point, the domestic law enforcement agencies, judicial institutions and academic circles also basic consensus.

in terms of the case, all the evidence submitted by 360 are based on the relevant goods market for integrated instant messaging market, relevant geographic market as the market in China, the definition of relevant market and the court than 360 master zhang many wide, resulting in 360 all of the evidence. And even if according to the method, the definition of relevant market “in 360 to submit new evidence in the second trial, are almost impossible to prove that QQ market share of 50% or more.

second, in terms of related to the difficulty of the market entry, 360 from the technology, capital, patents, network effects, user argument other enterprises to enter the lock-in effect, etc. The first-instance court rejected the view that im low barriers to entry such as funds, technology, etc., in the field of alternative products is not high, and the network effect and the user lock qualitative “customer stickiness” referred to in the (360) is not insurmountable barriers. The author shares the view that low into the door sill, but don’t agree with network effects and the user lock qualitative this view is not insurmountable barriers. The court in order to support their opinions, for example, a MSN instant messenger tools was the biggest market share in domestic, tencent, however, depend on its product characteristics to attract users, eventually more than MSN, to justify the network effect and the user of MSN lock-in effect is not insurmountable. The author thinks, this kind of practice is the spear shield. If front of the court has taken the relevant geographic market definition for the global market (whatever is appropriate), so, analyze the network effect and the user lock effect also should insist on this premise, in fact, in the global market, has never been beyond the MSN, QQ is just beyond the MSN in China market.

three, whether the “alternative” constitutes abuse of dominant market position?

that constitute the premise of abuse of dominant market position is to define the relevant market, and concluded that tencent has a dominant market position in the relevant market, and then to consider whether or not the “alternative” belong to “for no good reason”, whether constitute abuse of dominant market position.

because the court ruled that the scope of the relevant market is wide, than 360 advocated and 360 degree of difficulty in market share and market into two aspects, there is no evidence that tencent has a dominant market position, therefore, in this case the court also concluded that “alternative” does not constitute a abuse.

however, based on the case has the widespread social impact, the court on whether the behavior of the “alternative” has legitimacy also evaluated. Central ideas are: (1) the tencent’s behavior does not belong to help themselves, because the relief should be against the infringer to the plaintiff, and tencent for the user. (2) even if tencent think 360 “QQ bodyguards” belongs to unfair competition, infringes upon the lawful rights and interests, its should also relief through judicial way, which can be applied to court for “ban” before litigation. Tencent is directly take measures, and beyond the limits of necessity.

for “alternative” behavior nature, the author in the “alternative” constitute the abuse of dominant market position?” The article has carried on the thorough analysis. Central ideas are: tencent’s business interests are harmed, because: (1) business model are destroyed, commercial interests is damaged; (2) the user be prompted to backup data especially good friend relationship chain hit the core competitiveness of the QQ software; (3) the user’s information security is affected. However, the practice of “two choose a” suspected of infringement of the two rights of consumers: fair trading right and independent choice.

is the essence of the “alternative”, the company in order to avoid their business interests and user information (security) from the infringement, and a necessity measures, damage the interests of the users of other (fair trading right and independent option), the emergency actions should belong to help themselves. So, tencent whether the practice of “two choose a” exceeds the limits of necessity? This leads to two questions: tencent’s business interests and the user which more important? The user’s information security and justice of exchange, which is more important to choose? The author’s point of view is the user interests, tencent’s business interests in conflict, the two should choose the interest of the user. However, users of information security and justice of exchange, which is more important to choose between is difficult to determine. In general, “alternative” belongs to the self-help, but beyond the limits of necessity.

however, court of first instance think tencent “alternative” does not belong to help themselves, I can’t agree, because, first of all, tencent’s behalf is due to “QQ bodyguards are violated,” second, “a choice” for it is not only the users, especially the infringer or 360. Only the behavior of the “alternative” beyond the limits of necessity of self-help.

4, QQ bundle behavior constitute a sale?

360 v. tencent abuse of dominant market position for the other behavior is QQ software bundled QQ doctor, computer butler, think this behavior belongs to carried on the anti-monopoly law, and “no good reason”, belongs to the abuse With a dominant market position. To this, the first-instance court thinks, tencent does not limit the user’s choice, and provides the corresponding uninstall feature, 360 also didn’t provide the similar commodity market share decline or suffered by the so so evidence of damage on consumers, therefore does not constitute a sale.

about software bundles, this belongs to the behavior of the Internet industry is very common, almost all of the terminal software there are bound to other software or module. In terms of the case, install the QQ software along with QQ software management belongs to the software integration, the function of the QQ software management mainly serve the QQ software, the function of the software development is the trend of the development of the software itself, as instant communication tools such as QQ, according to the needs of users to expand the function of “capture”, this is not instant communication should have the original function, but the user’s requirements are constantly being discovered. As for bundling and QQ instant messaging function correlation is not big QQ doctor, computer butler, basically see whether to prompt the user, whether to give the user the option, including selection of unloading function. In addition, some software for free software, is not in conformity with the characteristics of bundling. Finally, similar cases is usually difficult to prove that damage to other products, users, therefore.

although the court decided that QQ no binding act constitutes a sale, but the case also for Internet industry great enlightenment, how the bundled software or other module is very important to respect the user’s choice, it is not just about the user experience, also relates to whether the enterprise will be considered for sale, and abuse of dominant market position of the legal responsibility.

five cases, forecast the trend of the

this case is the result of the 360 shellacking, the author thinks that the possibility of 360 appeal is very big. If 360 really appeal to the supreme people’s court, the results will be how?

based on the present situation of anti-monopoly legislation, as well as in the case of 360 many legal obstacles and difficulties, even if the appeal, the author thinks that the possibility of a change in the final recognition result is also very small. But will be accepted. The decisions of the court of first instance in some detail on the cognizance of inappropriate, persuasion is not enough, there may be a mistake, even still exists the possibility of the supreme people’s court for correction.

, for example, the first-instance court to define relevant geographic market as the global market, this is obviously not appropriate, were previously involved, here is no longer here. Again, for example, court of first instance of instant communications market network effect and the user lock effect is not difficult to catch, not only reason enough, the example of MSN, obvious contradiction. For example, that “alternative” behavior does not belong to the self-help behavior of tencent, the author also say a lack of convincing.

however, the author thinks that, in general, the case too much judgment on the legal flaws. And, in the case to the judicial practice in the field of Internet antitrust actively explore, for reference in the future the Internet antitrust case is very big, on the Internet in the field of perfect competition order, the adjustment of the business model will also play an important role.