Cyberlaw Reading Group Session 24 of the Renmin Law and Technology Institute was held in Room 725, Mingfa Building, Renmin University of China on April 1, 2019. At this session, teachers and students delivered thematic reports and conducted discussions centered on two literatures, Law for the Platform Economy and The Law of the Platform.

Theme I: Uniqueness of Online Platform Law；Law for the Platform Economy

Presenter I: Wang Xuan, Juris Master, Class of 2018, Renmin University of China

Theme II：The Law of the Platform

Presenter II: Qian Qiqin, Juris Master, Class of 2018, Renmin University of China

Free Discussion:

Ding Xiaodong, Associate Professor, Renmin University of China Law School:

      These two papers bear highly similar titles and both focus on the law of platforms, yet they differ substantially. Professor Lobel’s article centers on how the law responds to the rise of platforms, covering a wide range of issues including market access, taxation, labor relations and more. By contrast, Cohen’s paper emphasizes the structural shifts brought about by the rise of platforms. Drawing on Polanyi’s theories, the author argues that the emergence of the platform economy represents a great transformation, which has given rise to a new economic model. More importantly, platforms have also forged a legal framework that takes shape incrementally through their day-to-day operations, and platforms themselves provide a social safeguard mechanism for economic activities. Taken together, I believe both papers boast prominent originality, yet their reasoning lacks adequate clarity. Cohen’s second paper implicitly suggests that platforms have evolved into a distinct organizational form to a certain degree. Therefore, the conclusion seems to be able to be further refined, that is, the platform requires research in political economy. Because the platform itself can hardly be regarded as a purely private entity. In fact, the platform has already taken on many governance functions.

Xiong Bingwan, Research Fellow, Renmin Law and Technology Institute, Renmin University of China:

      Professor Lobel’s paper addresses the role of insurance. Discussions of insurance typically revolve around two core issues: first, its psychological moderating effect on risk-averse parties; second, the new moral hazards that insurance may induce. Psychological research shows that people are often risk-averse and tend to overestimate risks. Insurance functions to correct such bias and enable parties to assess risks in a more rational manner. This explains the prevalence of various mandatory insurance schemes under current laws. Nevertheless, mandatory insurance may bring about new problems. For instance, some jurisdictions including Australia and New Zealand once adopted a full indemnity insurance system, which resulted in a sharp rise in claim frequencies. Many countries thereafter set compensation caps for insurance or linked the insurance claim rate to the premium discount rate. To sum up, insurance generates two types of incentives. First, where specific groups incur excessive costs due to risk overestimation, insurance schemes are necessary to correct their distorted risk perceptions — a problem that, I believe, also exists in online platform markets. Second, applying insurance to a certain scenario may resolve the issues we care about yet amplify latent risks or damages. I have not yet contemplated scenarios for insurance application on platforms, which could be a worthwhile research topic.

      Professor Lobel’s paper is largely framed within legal doctrines, emphasizing that the law should adapt itself to emerging industries to achieve more effective regulation. By contrast, Professor Cohen’s article holds that the emergence and development of platforms inherently call for matching rules. It takes a more proactive perspective on platforms and examines how platforms themselves exert influence over legal norms. The paper cites the example of infants versus furniture: whether the priority lies in protecting children or furniture reflects a series of dilemmas we face. When discussing newly emerging phenomena, classical civil law theories tend to analogize and interpret such novelties through existing institutions and theoretical frameworks, an approach that often works well. For instance, the dispute between WeChat and Duoshan can be addressed using frameworks such as data portability rights, general personality rights, or contractual clauses prohibiting data transfer. Given that data portability rights are unlikely to be formally established in China in the short term, standard form clauses may serve as an alternative remedy. In other cases, however, this approach fails to deliver satisfactory outcomes and yields simplistic, unimaginative binary conclusions. Take the WeChat-Duoshan dispute as an example: one side prioritizes personal privacy and individual rights, while the other adheres to contractual prohibitions on data migration. Under such circumstances, an alternative line of thinking is needed. An in-depth investigation into the contact list dispute underlying the Tencent-Duoshan conflict reveals that social relational capital embedded in contact lists has been continuously expanding from a historical perspective, and the carriers of such capital have undergone constant iteration. In acquaintance societies, people stored social connections in their memories; later came telephones, pagers and early mobile phones, followed by WeChat contact lists today. Technological progress keeps expanding people’s social networks, which have experienced explosive growth in the digital platform era. For example, users can now reconnect with their primary school classmates through WeChat.

      Thus, we find: On one hand, individual rights and interests carry great personal significance for users. On the other hand, WeChat invests massive resources in helping users build social capital, including expenditures on technology, operation, management and other areas. This raises a further question: if a user wishes to export their WeChat contact list to find friends on platforms such as Douyin, has WeChat obtained sufficient compensation for its investments? If the consideration received by WeChat proves inadequate, how should the corresponding value be priced? While such questions lie beyond the usual scope of legal practitioners, they are not unanswerable — enterprise valuation mechanisms in corporate mergers and acquisitions offer a viable reference. In short, conventional thinking tends to rigidly follow established doctrines and institutional arrangements, siding either with individuals or platform enterprises. By reframing the conflict as a pricing issue, however, a solution acceptable to both parties may be reached.

Shen Chen, Postdoctoral Researcher, Renmin University of China:

      Reading these two papers has inspired me greatly, as they help me sort out a framework for resolving issues concerning the legal regulation of online platforms.

      Both papers take the "law of platforms" as their research subject, which brings up a core question: what exactly is the "law of platforms"? Judging from their content, it covers two separate legal systems. The first is the system where platforms act as regulators, or quasi-legislators. The second is the state legal system under which platforms are the regulated subjects.

      The reason platforms can be deemed "legislators" lies in the stark difference between platform-user interactions and ordinary contractual relationships. Although platforms and users sign user agreements, their interactions are not merely confined to the rights and obligations stipulated therein. Instead, the operating model works as follows: platforms set out operational rules via product design; users provide feedback based on their usage experience; platforms then decide whether to adjust product structures in response to such feedback; if users’ demands remain unmet, they may sanction the platform by voting with their feet. Fundamentally, this whole system operates under market logic.

      Nevertheless, these legislative platforms do not act arbitrarily. Just as a constitution lays down boundaries for formal legislators, national laws function as the constitution within the law of platforms to constrain platform rule-making bodies. Within this system, national law establishes three bottom-line standards: public interest, industrial competition, and individual rights. Where exactly to draw these dividing lines remains unsettled, which essentially boils down to a value judgment regarding the stringency of market regulation.

      According to this system, we can start to consider the current hot issues related to platform laws. For instance, the contact list problem of Douyin. This issue, when viewed in the first system, is essentially a matter of product design: if users express that they do not accept this product feature of Douyin, then Douyin will decide, based on its own interests, whether to change the feature—for example, by asking users for authorization or the like. In the second system, however, we actually need to examine whether it touches upon the three bottom lines. Since this issue clearly does not involve public interest or industry competition, the core of the value judgment is whether it infringes upon individual rights—in this case, mainly privacy rights.

      Admittedly, the above analysis remains incomplete, and I welcome all comments and corrections.

Editor:Xu Liuya

Reviewer: Zhu Peiwen