[1] Giants clash! Douyin sues Tencent for monopoly, Tencent countersues Douyin for infringement
Compiled from: Nanfang Plus, Red Star News
Case review
1. ByteDance sues Tencent for monopoly
On February 2, Douyin formally filed a lawsuit with the Beijing Intellectual Property Court, accusing Tencent of monopolistic practices. It is reported that this is the first antitrust lawsuit between internet platforms in China since the release of the "Anti-Monopoly Guidelines for the Platform Economy Sector (Draft for Comments)" at the end of 2020.
It is understood that Douyin claims Tencent restricts users from sharing content from Douyin through WeChat and QQ, constituting "abuse of market dominance to exclude and restrict competition, a monopolistic act prohibited by the Anti-Monopoly Law." Douyin requests the court to order Tencent to immediately cease this behavior, issue a public statement to eliminate adverse effects, and compensate Douyin for economic losses and reasonable expenses totaling 90 million yuan.
In its complaint, Douyin stated that instant messaging applications have become the basic applications with the largest user base, highest penetration rate, and highest usage rate among internet users. WeChat and QQ have over 1.2 billion and 600 million monthly active users respectively, and their instant communication and sharing functions, along with network effects, make it nearly impossible for users to collectively migrate. Additionally, there are currently no other operators in the market that can provide services equivalent to those of WeChat and QQ. This means Tencent "has a dominant market position."
Douyin believes that Tencent's blocking of Douyin is a manifestation of abusing its dominant market position. The blocking not only harms user rights and disrupts the normal operation of Douyin's products and services but also excludes and restricts market competition. "(Tencent's) monopolistic behavior hinders technological progress and innovation, does not contribute to improving economic efficiency or social welfare, and can only help distort competition in other areas and consolidate its existing market position."
2. Tencent claims ByteDance is maliciously framing it and will sue the other party for infringement.
Tencent stated that it has not yet received relevant materials regarding Douyin's lawsuit against the company. Tencent emphasized that it and its products adhere to the principles of fair competition and open cooperation in providing services to users and third-party products. ByteDance's related allegations are completely false and constitute malicious slander.
Tencent responded that multiple products under ByteDance, including Douyin, have illegally obtained WeChat user personal information through various unfair competition methods, violated platform rules, and have been ordered by multiple court injunctions to immediately cease infringement. "ByteDance and related companies also have numerous illegal and non-compliant behaviors that harm the platform ecosystem and user rights. We will continue to file lawsuits."
Anti-Monopoly Law of the People's Republic of China
Article 6: Operators with a dominant market position shall not abuse that position to exclude or restrict competition.
[1] The author analyzes
[2] Abuse of market dominance, also known as abuse of market superiority, refers to the behavior where an enterprise, after gaining a certain market advantage, abuses this position to conduct unfair transactions with other market entities or exclude competitors.
[3] Differences in market structure inevitably lead to variations in economic operations. Once an enterprise holds a dominant market position, it is very prone to abusing this power, stifling creativity, and hindering competition. The government focuses on controlling market structure, prohibiting large enterprises in principle, promptly breaking up monopolistic enterprises in the market, eliminating their monopoly power, and preventing the threat of monopolistic forces to market competition.
[4] Chinese law prohibits enterprises with market control from using their market power to engage in restrictive competition behaviors that prevent new market entrants from entering the relevant field. It is noteworthy that holding a dominant market position itself is not illegal; only using this position to exclude or restrict competition is prohibited by antitrust law.
