(By You Yunting) Recently, China Internet giant enterprises generated an intense competition during their hand-to-hand combat, but this time the main character is the Tencent which successively block sharing link with Alipay, Xiami Music App and NetEase Cloud Music App on its WeChat platform. It means that WeChat users could not use the mobile applications to link the contents of Alipay Red Envelope Gifting, Xiami App and NetEase Cloud Music App on its WeChat platform.
Afterwards, Tencent implied externally that the act of sharing link with Alipay Red Envelope Gifting is a malicious marketing and promotion on its WeChat platform, even a shattering experience, and its blocking should have something done with the uninstallation of WeChat Payment on Alipay platform (Chinese Link: http://tech.techweb.com.cn/thread-642700-1-1.html) For cutting off link with Xiami App and NetEase Cloud Music App, Tencent implied to have relationship with its content piracy (Chinese Link: http://tech.sina.com.cn/i/2015-02-05/doc-ichmifpx7018268.shtml).
Therefore, in a legal WeChat group’s discussion, I thought that Tencent’s block had little justification, and their implication was an excuse to attack competitors. But another friend disagreed that “attacking competitors” indeed is the purpose of competition. He also claimed that it should not be blamed for its right of choice for which one to be opened and that it should be regulated by market despite of decreasing its platform’s value. This idea is on the ground of market economic theory that if Tencent, the owner of WeChat, aims to defeat competitors and will be willing to take a loss, of course this is his right.
I, however, did not take this view, on the grounds that Tencent’s act and its external statement are unacceptable both from the rationality and legitimacy. From the point of rationality, if a common user who both used the WeChat, Xiami App and NetEase Cloud Music App tried to share a music on the Friend Circle of WeChat but was blocked off by Tencent, and if you were the above common user, don’t you think the block is reasonable?
If you were an application developer who found that, in order to protect his products, Tencent cut off the sharing links with your services based on the excuse of malicious marketing but also did the same thing on the WeChat, don’t you feel reasonable?
If you were an operator of music application which spent hundreds of millions to purchase song copyrights but was blocked with reasoning of Tencent’s thought that there few unauthorized songs in your application suspecting of piracy, and if there were a same percent of pirated songs in Tencent’s QQ Music App, how dare you fee rational?
After hearing the previous examples, if you still thought, in the economic market which applies the theory of nature choice, that Tencent, the owner of WeChat, is entitled to take whatever he wants, next we will discuss the legitimacy. As the market economy is a complete free competitive one, its competition should also be under the laws and regulations. Therefore, Tencent’s liberty and rights should be on the prerequisite of no violation of laws, but Tencent’s right over cut sharing link with Alipay, Xiami.com and NetEase Cloud Music is actually violated many laws and regulations as to affect the legitimate rights and interests of millions individuals and enterprises.
1st Illegal Act: Millions of users’ rights are severely violated.
It is a service contract relationship that between WeChat user and Tencent. Since the user must click on agree on WeChat Terms of Services for the first time joining in the WeChat, this Terms of Services is indeed a service contract. Besides the service contract, their relation shall also be regulated by the Law on the Protection of Consumer Rights and Interests. The WeChat Terms of Services primarily set up many disclaimer clauses, but the Law on the Protection of Consumer Rights and Interests establishes many clauses on protection of consumers with higher effectiveness than the service contract.
Pursuant to Article 8, 9, 16 and 20 of the Law on the Protection of Consumer Rights and Interests, WeChat user as consumers shall have the right to obtain true information, to independently choose services, and to fair trading. However, what Tencent did be in question.
Tencent explained that its block lay on the security on the WeChat but externally stated that its block was due to their malicious marketing, Alipay’s unequal openness and pirated music. These inconsistent claims destroy the consumer’s right to learn the truth. What matters more is the lack of justification. The true intention of Tencent is to defeat competitors, as to unreasonably refuse to provide former services, attempting to force consumers only using the service of Tencent. This arose great inconvenience for users, suspected of infringing the consumer’s right to independently choose services and fair trading.
According to public information, Alipay has more than 200 million users and Xiami.com and NetEase Cloud Music App separately have tens of millions of users, while WeChat had more than 500 million users. According to my personal conservative estimation, WeChat may have 70 percent of users in the other three applications. Because of Tencent’s incompatible act, there are at least 100 million users that cannot use the sharing link functions reasonably and lawfully.
2nd Illegal Act: Its block may constitute unfair competition.
In order to defeat competitors, Tencent prohibiting users to use the sharing connection with competitors may be accused of violating the Internet information service market order Interim Measures for the Supervision and Administration (the “Interim Measures”) issued by the Ministry of Industry and Information Technology (the “MIIT”)
Pursuant to Article 6 of the Interim Measures, Internet information service provider shall not use the following unfair competition:
(2) Being unauthorized to have an incompatible implementation over others legal commodities or services without any justified reason; As to such incompatibility caused by non-artificial reason, having not actively make objective presentation, or cheating or inducing users to make a selection;
(3) Interrupting users to use other provider’s legal commodities or services, or revising other provider’s legal commodities or service, or capturing information of other provider’s legal commodities or services;
For the previous article, especially the second paragraph, Tencent is a repeat offender. This article is made by MIIT for incompatibility with 360 software in the dispute of 360 vs. QQ, which was repeatedly broke by Tencent. Moreover, Tencent also was violated the third paragraph from the textual meaning. The key point is that what Tencent did was unjustified because of its weak and inconsistent excuse.
Pursuant to Article 8 of the Interim Measures, Internet information service provider shall should not take the following to infringe user’s legal rights and interests in accordance with the Telecommunication Services Rules:
(1) With unjustified reason, unilaterally refusing, delaying or terminating the services for user;
(2) Restricting user to use a specified business In any means or limiting user to choose other provider’s commodities or services;
(3) Using false information to cheat, induce user to accept its unfair service clauses, or to choose specified business;
(4) Others which infringe user’s right to obtain true information and to independently choose services.
In my personal opinion, it is all the four paragraphs that Tencent is suspected of violation.
3rd Illegal Act: Blocking competitor’s software are suspected of monopoly and abuse of dominant market position.
Pursuant to the Anti-Monopoly Law, under the circumstance that the market share of one business operator accounts for 1/2 or more in the relevant market, the a business operator may be presumed to have a dominant market position. Business operators with a dominant market position are prohibited from refusing to trade with a trading party without any justifiable causes, Implementing tie-in sales or imposing other unreasonable trading conditions at the time of trading without any justifiable causes (“tie-in sale” refers to an unfair sale practice in which a business operator bundles other undesirable commodities with a hot-sale commodity – noted by the translator for clarification.)
If Tencent was deemed as more than 1/2 market share in the mobile social networking application, its block may be suspected of the violation of the Anti-Monopoly Law, on the grounds that using WeChat to block competitor’s services is to prop up its WeChat Payment, QQ Music and other self-products, a typical abuse of dominant market position.
However, the question of WeChat’s market share in social networking application was a controversial one. The court always sets up a strict burden of proof for the plaintiff when deciding whether the defendant has a dominant market position. In the case of abuse of dominant market position, it is without exception based on insufficient evidence to prove the dominant market share that the court rejected the claims of plaintiff two years before the Anti-Monopoly Law takes effect. However, the National Development and Reform Commission kept an open attitude to decide the dominant market position so that almost large-size enterprises may be determined as more than 1/2 market share in the relevant market.
Therefore, if this dispute entered the procedure of a lawsuit, professionally, it is very difficult to prove the Tencent’s violation of the Anti-Monopoly Law. But if the State Administration for Industry and Commerce starts an anti-monopoly investigation and makes punishments, in my opinion, it is in the clear that Tencent had a dominant market position. Isn’t that a bit of a contradiction? Yes, there are true controversies, but this is the current legal application situation of the Anti-Monopoly Law.
What can WeChat user do against these violations?
As for WeChat’s block, it is essentially firefight among giants. As Tencent, Alibaba and NetEase are large-sized listing companies, upon similar damaging consumers’ rights and interests, they all have had some troubled history. For example, Alibaba, owner of Xiami App, prohibited WeChat users from linking to Xiami music at an early stage, and still forbids Taobao user making sharing link in WeChat. NetEase refused user to watch NetEase’s game videos in video websites, directly forced out the user’s account. The user can see how giants compete with each other, but if the interests of the user were damaged, the user may take arms to protect their rights and interests in following methods.
- Protection approaches under the Law on the Protection of Consumer Rights and Interests
Pursuant to Article 39 of the Law on the Protection of Consumer Rights and Interests, in case of disputes with business operators over consumer rights and interests, consumers may settle the disputes through the following approaches: to consult and conciliate with business operators; to request to consumer associations for mediation; to appeal to relevant administrative departments; to apply to arbitral organs for arbitration in accordance with the arbitral agreements with business operators; to institute legal proceedings in the people’s court. Thus, WeChat user may complain to the consumer protection commission, and also may complain to the State Administration for Industry and Commerce or local industrial and commercial bureau where Tencent is located about Tencent infringing consumer’s right to obtain true information, to independently choose services, and to fair trading.
- Protection approaches under the Anti-Unfair Competition Law
Pursuant to the Interim Measures, in case of disputes with internet information service provider over user’s rights and interests, user may complain to the National Telecom User Complaint Settlement Center, and the telecom user complaint settlement institutions of all provinces, autonomous regions, and municipalities. The center for telecom subscriber complaints shall deal with the dispute in accordance with the Interim Measures for Settling the Complaints of Telecom Users.
Pursuant to the Interim Measures for Settling the Complaints of Telecom Users, “a telecom operator (in this dispute, it refers to Tencent) shall carefully handle the complaint filed by a user and shall give him a reply within 15 working days after it receives the complaint. If the user dissatisfies with the settlement result, or if the telecom operator fails to give him a reply within 15 working days, he may file a complaint with the complaint settlement institution. The user may complain to the telecom user complaint settlement institutions of all provinces, autonomous regions, and municipalities where the telecom operator is located. In case that there is no the telecom user complaint settlement institutions of all provinces, autonomous regions, and municipalities at the place where the telecom operator is located, the user may complain to the National Telecom User Complaint Settlement Center.
- Protection approaches under the Anti-Monopoly Law
Pursuant to Article 38 of the Anti-Monopoly Law, “Anti-monopoly law enforcement authorities shall lawfully investigate practices which are suspected to be monopolistic in nature. Any individual or entity may report suspected monopolistic practices to the anti-monopoly law enforcement authorities. The authorities shall keep the identity of reporting parties confidential. When a report is submitted in written form and includes relevant facts and evidence, the anti-monopoly law enforcement authorities shall lawfully carry out necessary investigations.” In this case, the competent authority shall be the State Administration for Industry and Commerce. Therefore, the user may report to the State Administration for Industry and Commerce about the suspected Tencent’s abuse of dominant market position which damaged the consumer’s rights and interests.