Why Uber China Takes Legal Risks to Mega Millionaire Marketing Promotion?

uber(By You Yunting) Recently, Uber Shanghai carries out a marketing activity called Call for one hundred million by one button of Uber cooperated with 1qiaobao, an App owned by PINGAN INSURANCE GRP. According to the Uber’s official Weibo, users can use the Uber App to call the securicar provided by both Uber and 1qianbao, and anyone who is the winner of the caller can obtain all the financing earnings of one hundred million yuan, which is about ten thousand yuan. I think this activity has huge legal risks, therefore hereunder are the risks and its reason.

What’re the legal risks of Uber’s promotion?

The Anti-Unfair Competition Law requires that business operator shall not engage in sales with prizes in the form of lucky draws where the amount for the highest prize exceeds RMB 5,000, which means ten-thousand- yuan-prize of this activity has the risk of breaching the law. Although Uber will not charge the consumers during this activity, providing service is also applied to the article 13 of the Anti-Unfair Competition Law because it is included in the making sales with prize in accordance with the Certain Regulations on Prohibiting Unfair Competition in Prize-attached Sales (《关于禁止有奖销售活动中不正当竞争行为的若干规定》) and the Reply of Asking Whether the Prize Quiz of the Fujian Cable Television Public Channel is the Unfair Competition Behavior(关于福建有线电视公共频道有奖竞猜活动是否属于不正当竞争行为的请示》). This means no matter who you provide prize to, customers or any people involved, your action might be the making sales with prize if your aim is to sell products. That is why you might break the law if your aim is to promote the concerning app, even though there is no charge in the activity.

It is possible that Uber will excuse that each company burdens five thousand yuan due to this activity is held by Uber and 1qianbao, which means this activities shall be separated as two activities because there are two companies. However we can find above words in the marketing document of Uber: The lucky customer will have about ten thousand yuan profits comes from financial services of one hundred million yuan(The exact profits is decided by ten thousandth of corresponding money market fund’s profit of that day). http://tech.huanqiu.com/Enterprise/2015-07/6859619.html.  It shows clearly that the aim of the prize is about ten thousand yuan profits comes from financial services of one hundred million yuan, which is a profit from a activity. So even if each company pays five thousand yuan equally, there might be risk of breaching the law.

Maybe Uber has realized this problem. Therefore, the words have been changed to that “You will have all the profits of one hundred million yuan in twenty four hours! No matter one hundred million yuan or ten thousand yuan, we all want it!” Although the vision is ambiguous nowadays, the ten-thousand-yuan prize exists substantially.

Why would Uber like to take legal risk?

Generally speaking, legal department of foreigner-funding enterprises is relatively conservative and pays great attention to the legal risk about compliance. Besides, the plan of activity like this will ordinarily pass the legal department’s review of compliance. Why would Uber carry out Mega Millionaire marketing activity while the breaching law risk of this activity is not hard to notice? In my opinion, there are three reasons.

Firstly, it is forced by the dog-eat-dog market competition of Chinese Internet industry. Uber definitely is deeply impressed by the furious competition of Chinese Internet industry. For example, CAR Inc., the competitor of Uber, published a series of commercials which complained that Uber is unsafe, trustless and unreliable last month. Although, this series of commercials acted opposite functions, as a foreign company, Uber will certainly be impressive about the closest competition of the Chinese competitors regardless of legal risks. In this unusual cut-throat competition background, enterprises will do whatever they can do to expand the market in possible choices.

Secondly, Internet market develops fast and the profit period is short, so companies would like to obtain the competitive edge at the cost of breaking the law. When the media describes the development of Internet companies, the word, Savage Growth, is used frequently. Savage means the company just wants to grow rapidly and does not care about laws compliance. Such as the recent merger of Didi Dache and Kuaidi Dache, each of whom have spent billions on competitions with no regard of their costs last year, has knocked out many companies that have no or less subsidies within one year. If you were a participator of the market, when your rival breaches the law and makes you out in the end by virtue of your compliance, what will you choose?

Thirdly, it is the mechanism factor that made the cost of breaching the law very low. For the domestic Internet companies I contacted with, if they can build the competitive advantages in the fast developing market, they are willing to accept the punishment. However, what is behind this willingness is that the supervision of the government and the intensity of the court’s punishment cannot stop the trend of breaking the law. The reason why governments and courts, as the supervisor of market order, do not want to punish the law breakers hardly is that it is too late to supervise due to the fast development of Internet, besides it is the local government and court that are responsible for supervision, which is more important.

As Mr. Steven Ng-Sheong Cheung (张五常 in Chinese) said, the economy of China is the direct competition between different counties, which is the intergovernmental competition. Hence, which is more important than maintaining market order is that each local government and court has the responsibility to help the development of local economy. We cannot except that the government maintains the market order out of its jurisdiction at the cost of damaging local economic development, when the development of Internet enterprise, which pay local taxes, promotes local employment and makes money nationwide, concerns the economic competition with other districts directly.

Moreover, there is an unknown legal risk in its promotion document. I noticed that they wrote Call Cong to be your husband in one button (Chinese: 一键叫某聪当老公) with a picture of a person looks like Mr. Wang Sicong, the director of Wanda Group. I do not know whether they have the authorization of Mr. Wang Sicong. If not, although the form is obscure, there might be the legal risk of infringing Mr. Wang Sicong’s rights of personal name and portrait.

In the end, as a user enchanted by Uber recently, I like this company very much, so I want to remind them and analyze when they promote some indigenous marketing activities, hoping they can do better in the future.

Lawyer Contacts

You Yunting86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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