Being fined for violating antitrust laws, what exactly is antitrust that makes Internet giants tremble?

Just today, in accordance with the provisions of the Anti-Monopoly Law, the State Administration for Market Regulation issued a We investigated three cases of illegal concentration of business operators that failed to declare in accordance with the law, including the equity of Li Media Holdings Co., Ltd. and Shenzhen Fengchao Network Technology Co., Ltd.’s acquisition of the equity of China Post Zhidi Technology Co., Ltd., and investigated Alibaba Investment Co., Ltd., China Literature The group and Shenzhen Fengchao Network Technology Co., Ltd. were each imposed administrative penalties of RMB 500,000.

This may indicate that the era of strong Internet antitrust supervision has arrived.

A few years ago, HBO filmed a TV series "Silicon Valley". In the play, "rising stars" in the Internet industry have two fates: either they actively "sell themselves" to "big companies" or they are swallowed up by the latter. Behind the seemingly fictional plot are real-life stories of giants such as Amazon, Facebook, Google, and Apple in recent years. This year, these four giants were summoned by the US Congress to participate in hearings on suspicion of monopoly.

A few months ago, the Wall Street Journal reported that Amazon had used sales data from third-party sellers on the platform to develop its own products and then compete with third-party sellers. For example, in 2016, Amazon's venture capital institution invested in Nucleus, which produces home video equipment; eight months later, Amazon launched an almost identical product, resulting in a sharp decline in Nucleus sales.

A third-party merchant on the Amazon platform said: "We call Amazon 'heroin'. It makes you addicted and eventually makes you fall into the abyss."

As for the face of another giant Book, according to S&P International, has acquired more than 90 "budding competitors" in the past 15 years. The Wall Street Journal stated that Facebook has a relevant "warning system" internally. Once it believes that a small company in the market has posed a "threat", it will either buy the company or "copy" its flagship product and use its scale and The status advantage completely destroyed it.

The practices of international giants are also imitated in China. With the rapid development of the Internet industry, many consumers and businesses have personal experience of some platform companies' "big data acquisition", forced "choose one", acquisition of consumer data and formation of data monopoly, etc., and even because of their status, Inequality and the cost of safeguarding rights are too high and people “dare to be angry but dare not speak out”.

In this draft of the State Administration for Market Regulation, there are a large number of binding regulations targeting Internet monopoly behavior in the market.

In addition, the current "Anti-Monopoly Law" lacks basis for the declaration and review of VIE structured enterprises, and it is easy to create gaps in supervision. The so-called VIE structure refers to a company operating structure in which the parent company is registered overseas and the operating entity is domestic, and the overall control of the enterprise is achieved through agreement. This structure is commonly used by large Internet companies.

According to statistics from Liu Xu, a researcher at the Intellectual Property and Competition Law Research Center of Tongji University Law School, of the 46 Internet operator concentration cases that occurred between 2012 and 2019, none of the operators made a prior declaration, and none was Open cases for investigation and punishment.

This trend is worrying. There are many investments and mergers in the Internet field, but the trend of consolidation has become increasingly obvious. Several giants have obvious say in the matter and are competing on similar tracks. Their strong first-mover advantage forces late-entry SMEs to engage in “line-up” competition.

At present, in China’s Internet field, almost all leading vertical companies have received investment from several major Internet giants. If things go on like this, it will not only easily lead to the deterioration of the market environment and stifle latecomer innovation, but will also harm the interests of consumers and society.

As stated by the State Administration for Market Regulation, the purpose of launching the "Anti-Monopoly Guidelines" is to "prevent and stop monopolistic behavior in the Internet platform economy and promote the sustainable and healthy development of the platform economy."

Let’s first look at the definition of “Internet platform” in the Antitrust Guidelines: “Through network information technology, interdependent multilateral entities interact under the rules and matching provided by specific carriers, in order to** *Business organization form that creates value. "The so-called "platform economy" refers to: "an economic form in which the allocation of resources is coordinated and organized by the Internet platform."

From the specific content, anti-monopoly. The Guidelines define monopoly phenomena in four aspects: monopoly agreements, abuse of market dominance, concentration of operators, and abuse of administrative power to eliminate and restrict competition.

This means that the development logic of the Internet has shifted from prioritizing efficiency to focusing on fairness and justice, paying more attention to sustainable development, and paying more attention to the quality of development. The bigger and more influential a company is, the more respect it should have for laws and rules, rather than doing whatever it wants. This kind of Internet development ecology is what we expect to see.

Former Finance Minister Lou Jiwei said at a seminar in September: "Although Internet platforms are operated by the private sector, they are quasi-public. Monopoly brings high user costs and even market losses." Barriers to entry. "

This means that the prosperity of the Internet economy should be caused by a hundred schools of thought contending and thousands of flowers blooming, rather than the good-looking data of a few giants. The super prosperity of the giants hinders the sustainable and healthy development of the entire industry. , then the "Antitrust Guidelines" are inevitable.

As for the "choose one" phenomenon in the field of platform economy, while analyzing whether it constitutes the relevant factors for restricting transaction behavior, the draft also stipulates two key situations to consider when determining whether it constitutes restricting transactions. The first is when the platform operator implements restrictions through punitive measures, thereby causing direct damage; the second is when the platform operator implements restrictions through incentives, if it has obvious effects of eliminating or restricting competition. All of the above may be deemed to constitute restricted transactions.

Taking WeChat and QQ as examples, they themselves generate almost no economic benefits. On this basis, using traffic monetization is Tencent’s main economic income, such as WeChat Reading, Tencent Video, QQ Music, Pinduoduo and JD.com, etc. So are these likely to be the subject of investigation?

Now can you understand why the Internet giants are trembling? This deterrence means that the reckless era of the Internet's barbaric growth is over, and Internet companies are officially under "antitrust" laws.

In the long run, antitrust documents are unlikely to harm the bottom line of giants' profits, but will suppress their upper limit.

Respect the law and respect the market, the same applies to business operations and investments, and you should not be "too casual".

Regarding this draft guideline, most antitrust experts expressed their approval. Some experts said that from a judicial perspective, this time's guidelines essentially do not go beyond the original legal framework, but the refinement of legal provisions in departmental regulations can play a great role in setting an example for enterprises and guide them to Check for compliance. The earlier it is announced, the more helpful it will be for companies to improve compliance. The refinement of the guidelines can help reduce the cost of law enforcement and operator compliance, and is a reflection of law-based governance.

But this does not mean that the judicial trial of Internet antitrust will become simple.

Unlike traditional industries, the definition of Internet-related markets and dominance cannot be measured by simply fitting an economic or mathematical model into specific values.

In interviews, other antitrust experts also had some disagreements on how to apply antitrust laws.

Some researchers believe that large companies monopolize subdivided industries through mergers and acquisitions, and will eventually become "too big to fail" and will inevitably do evil. Even if there are no mandatory means to restrict the entry of competitors, giants have occupied a large amount of market share and raised the barriers to entry. When there are only two companies in the market, consumers are forced to "choose one of the two."

Some experts also said that in the Internet field, the inevitable result of fierce competition is that only large companies will remain. This is also a situation where resource allocation is optimal. Antitrust is not to oppose companies becoming bigger and stronger: " Anti-monopoly is not against the rich, but against the rich being unkind for their own sake."