Last week, the so-called first case of abuse of dominant market position (DMP) was heard by the Beijing First Middle-level court. This time, the famous Chinese search-engine Baidu was brought under the sword of China’s Anti-monopoly law (AML).
Baidu was sued by the plaintiff, Tangshan Renren information service center (Renren). The charge was Baidu’s abuse of its dominant position to shield Renren’s website from its online search engine. The plaintiff claimed that on July 10th, 2008, visits to its website dramatically decreased from 2961 IP to 701 IP. According to its investigation, on that day, there were 6690 pages of information about Renren’s website on Google, compared to only 4 pages in Baidu. The plaintiff insisted the cause of the decrease in visits was the use of an “electronic shield” by Baidu to block the website. Renren also argued that Baidu’s behavior based upon its dominant position in the online search-engine market constituted an abuse of dominant market position under the AML. Baidu argued its market share is far from dominant within the relevant market. What is more, Baidu has a duty to supervise and ensure that all pages it offers conform to all relevant law and regulations.
From my perspective, two points of importance concerning the above should be underscored.
First, the key point of this case is whether Baidu possess a dominant market position in the relevant market. In order to define dominant market position, one should first know what is meant by “relevant market”. When we try to identify the relevant market, we should take into account the product market and the geographical market. However, what makes this case unique are the characteristics of the internet. Theoretically speaking, no matter where one is, he may gain access to whatever website he prefers. Nonetheless, due to the vast differences in language, Chinese customers are unlikely to use English websites for their routine internet searches. As a result, singling out the Chinese online search-engine market may be proper in defining the relevant market for this case.
As a result of the above, Baidu may possess a dominant position in the relevant market. However, whether their use of an “electronic shield” can be labeled as an abuse of dominant position remains questionable. Abuse means without justified reason or out of malice. However, being a Chinese company who offers an online searching service, it is the search engine’s duty to ensure the search results are legal. Therefore, the duty requires a search engine to try and shield those websites which are fraudulent or retain illegal contents. Thus, if Baidu is capable of proving the existence of illegal material on Renren’s website; Baidu will still stand a good chance at defeating the suit.
The result of this case is worth expecting.
It is phenomenal that after promulgation of the AML, there is increasing private litigation challenging the abuse of DMP. Such actions are helpful in establishing a healthy market atmosphere and should be encouraged. However, my concern is whether plaintiffs in private litigation can afford the expense of litigation. Plaintiffs hold the burden of proof and they must provide evidence illustrating a dominant market position. Such actions and investigations consume tremendous amounts of time and money and may therefore be out of reach from potential actors.