Data Competition Compliance in the Online Platform Economy

Data is a critical production factor of the online platform economy, and data resources underpin the core competitiveness and competitive advantages of many companies. Platform data resource competition generally involves the protection of users’ personal information, data security, cross-platform data disputes, and lawful use of data resources.

In this article, the author analyzes the compliance of data competition involved in the development of the platform economy from several cases.

Protection of personal information

Li Yu
Partner
Jincheng Tongda and Neal

Platforms must process personal information in accordance with basic principles of legality, legitimacy and necessity – without excess. In principle, they must obtain the user’s consent, disclose the rules, purpose, method and scope of information processing, and must not violate any laws, administrative regulations or agreements between the two parties.

In Ling Moumou vs. Douyin (2020), the platform collected personal information such as user’s geographic location and social connections without user’s consent while scanning QR codes to order food at a hot pot restaurant. The collection of the plaintiff’s personal information was deemed not legal, legitimate or necessary – and therefore constituted infringement.

During the Moji weather app’s IPO, the China Securities Regulatory Commission (CSRC) questioned its data collection, use and processing, and data compliance eventually became the one of the main reasons for the rejection of the IPO.

In addition, criminal cases involving the protection of personal information have also emerged frequently in recent years, with offenders convicted of using the dark web to sell personal information or providing technology and data services for illegal lending.

Obviously, the processing of personal information by a platform must comply with legal provisions, otherwise it will materially affect its commercial development. Companies may also be unable to use data resources due to the illegality of the data source. Moreover, they cannot claim the protection of “rights and interests” by using this data, and may even incur criminal liability.

Data security

When processing data, platforms must comply with laws and regulations, adhere to social and business ethics, be honest and trustworthy, and duly fulfill data security protection obligations. Platforms should establish and improve data security management systems, take necessary technical and other measures to ensure data security, and conduct regular data security risk assessments.

List revisions from Ucloud Information Technology, Das Security and MRTech have all drawn the attention of regulators due to data security concerns. Notably in MRTech’s ChiNext list, CSRC has closely interrogated compliance issues involving nearly its entire data protection lifecycle, demonstrating the importance of data security compliance for platforms, especially when ‘it’s about cross-border data transactions.

In addition, in the case of the juketool social e-commerce platform’s group control system, the court ruled that, although it does not have the exclusive right to use the relevant data, it has an obligation to ensure the security of the platform’s data and therefore had the right to file a complaint on this basis. His complaint for unfair competition was finally upheld by the court.

It is therefore clear that platform data security is not only a legal obligation of companies and the object of the application and monitoring of administrative law, but can also become the basis of companies’ claims. in terms of competition.

Cross-platform data disputes

In recent years, data competition disputes between platforms have frequently occurred at home and abroad, with many cases worth investigating, such as hiQ Labs vs. LinkedIn and the competition and anti-monopoly dispute between the public surveillance network Yingji and Weibo.

Since the “right to data portability” was added to Article 45 of the Personal Information Protection Law, data protection and competition over data resources on Chinese platforms face greater challenges. .

Chinese judicial authorities consider three main factors in data disputes between platforms – data ownership, legality of sources and legitimacy of collection – and make comprehensive judgments on the trinity of interests between data operators. platforms, consumers and social audiences. The success rate of data entry disputes is relatively high, with an average damage recovery rate of around 97%, and an average

awarded damages of approximately 9.7 million RMB (1.4 million USD) per case, according to a court report on the big data on the anti-unfair competition law published by the author on the occasion of the World Intellectual Property Day this year.

Since there are still uncertainties in the trial experience and standards of such cases, if platforms wish to have exclusive rights to the data, it is recommended that they establish explicit clauses in their user agreements. and pay attention to their construction of anti-data monopoly compliance systems.

To the author’s knowledge, there have only been two national anti-data monopoly cases – Wei Yuanma vs. WeChatwhich lost its case because of an erroneous definition of the relevant market, and Yingji system against Weibo, which is still on trial.

Use of data resources

With the development of new Internet technologies, new problems have arisen regarding the reuse of data resources, such as price discrimination based on big data, algorithm recommendation, plug-ins and pop-ups. The technology itself is neutral but its use, which should be legal and compliant, is not.

At present, national oversight at different levels has denied price discrimination based on big data and also demanded that the recommendation of algorithms respect users’ right to know and choose.

Regarding the re-use of data via plug-ins, pop-ups and other technical means, the current opinion is to encourage free competition and to allow the development of new products based on platforms. existing forms.

For example, in Taobao versus B5M, the court ruled that the price comparison plugin installed on Taobao did not constitute unfair competition when certain conditions were met – but also stressed that it should: not substantially substitute for the platform’s products; respect users’ right to know and choose; respect the principles of business ethics and good faith; have substantial non-infringing purposes; and be beneficial to improving the general welfare of consumers and society.


Li Yu is a partner at Jincheng Tongda & Neal. She can be contacted at +86 10 5706 8560 or by email at liyu@jtn.com

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