Rethinking the legal regulation of Internet platform monopoly in China

Abstract

AbstractThe existing regulatory regime for single firm exclusionary activity is primarily to establish a dominant position for a finding of an abuse, but there are challenges coming out of relevant market definition, market power determination, and the efficiency or innovation justifications. This paper argues for an alternative solution: an effects‐based analysis methodology for regulating platforms which are not proven to be dominant. Based on case studies including the Alibaba decision, JD.com case, Meituan case, and Visa case, it follows that we should stay focused on foreclosure effects while specifying the type of conduct that calls for careful scrutiny. But it is controversial to apply the traditional leverage theory and essential facilities doctrine to digital markets, which are of great significance to the determination of foreclosure effects. This paper introduces a “related markets hypothesis” to illustrate the leverage of market power, and applies a modified “costs‐based test” to determine whether the data resources held by the platform constitute a bottleneck. This paper finally proposes a classification scheme different from the criteria on a basis of company size. The decisive factors for classification include: form of platform enterprises, behavioral pattern, nature of market, market structure, and the competitive environment in related markets.