Weibo sued for monopolistic practices limiting access to its data as China’s antitrust crackdown invites new challenges

  • Eefung Software is suing the microblogging platform for ‘directly destroying’ its business model by restricting access to data used to analyse public opinion
  • The case is China’s first civil antitrust lawsuit, showing an increased awareness among small firms of Beijing’s antitrust scrutiny

Weibo, one of China’s biggest social media sites, is being sued by a small software company over alleged anticompetitive restrictions on the use of the microblogging platform’s data, which could test the limits of Beijing’s enhanced antitrust enforcement this year.

Eefung Software, based in the city of Changsha in southern Hunan province, sued Weibo Corp, owned by Shanghai-based Sina Corp, in a local court, arguing that the company’s refusal of a request to access data constitutes a monopolistic practice, according to an article posted to Eefung’s official WeChat account.

The 11-year-old software developer said the refusal is “directly destroying” its business model, which includes helping authorities discover and remove “harmful information” online using systems that “monitor and analyse online public opinion”. The company’s clients include multiple agencies at different levels of government, according to the WeChat post.

“The case demonstrates a growing awareness among Chinese businesses in invoking the antitrust law to gain better access to data during competition,” said Angela Zhang, an associate professor and director of the Centre for Chinese Law at the University of Hong Kong.

The case is the country’s first civil antitrust lawsuit, according to the Changsha government, and it comes nearly a year after Beijing started ramping up antitrust scrutiny of Big Tech companies, starting last December with the launch of an investigation into Alibaba Group Holding, owner of the South China Morning Post.

In its suit, Eefung emphasised the size and influence of Weibo, saying the platform’s large user base and social influence made it an important birthplace of public opinion. Although the two companies share a “data cooperation relationship”, Eefung said Weibo has never allowed the use of its data.

Weibo did not immediately respond to a request for comment.

In 2018, Weibo won a lawsuit against Eefung over the gathering and use of the platform’s data. That lawsuit found that Eefung had been illegally crawling and using data from Weibo, Zhang said.

Now Eefung is trying to turn the tables, arguing that Weibo’s restrictions have “severely limited” market competition and technological innovation. The company may be looking to take advantage of a new political climate this year, which has seen Alibaba and on-demand delivery giant Meituan both hit with major fines for violations of the Anti-Monopoly Law.

Strengthening antitrust enforcement and “preventing the disorderly expansion of capital” has been at the top of regulators’ agenda this year, with crackdowns expected to continue as Chinese President Xi Jinping pursues “common prosperity”, a government buzzword used to represent China’s push to narrow the wealth gap.

The State Administration for Market Regulation is now boosting the headcount of its antitrust division, and a draft amendment of China’s 13-year-old Anti-Monopoly Law suggests more scrutiny of the technology sector. The amendment, expected to go into effect next year, says businesses shall not “exclude or limit” competition by abusing data, algorithms, technology, capital advantages or platform rules. A dominant player engaging in these activities is considered to be abusing its market power.

Still, Eefung faces an uphill battle, according to Zhang, because the burden of proof is very high for winning a “refusal to deal” case.

The company would need to establish that Weibo possessed a dominant position, a debatable charge given the many social media platforms in China, and that the platform abused its dominant position without justification, Zhang said.

Author: Xinmei Shen, SCMP

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