References：Platform Revolution

Presenter: Li Zihan, Juris Master, Class of 2018

Free Discussion:

Ding Xiaodong, Associate Professor, Renmin University of China:

      Platform Revolution analyzes the rise of platforms from economic, sociological, psychological and other perspectives. From my perspective, the book offers us inspirations in two respects. First, it enhances our understanding of platforms per se. Its analysis of the reasons behind the rise of platforms and their operational mechanisms provides ample inspiration, and is also highly instructive for grasping current platform-related issues in China. Second, there are legal dimensions to consider. Only one or two chapters of this book carry analyses from regulatory and legal perspectives. Nevertheless, a close reading reveals that many issues it addresses are highly relevant to the themes of our subsequent reading seminars, such as platform liability, platform competition, platform neutrality, platform autonomy and platform regulation. This book has, to some extent, reminded us that platforms are multi-faceted in nature. They not only exhibit the characteristics of traditional enterprises in certain respects, but also possess attributes of media, intermediaries, and conduits, while at the same time functioning as public infrastructure and assuming the roles of organizers and managers. From a legal perspective, perhaps the next important task is to build on the existing insights from various disciplines and, in light of specific contexts, to bridge traditional legal theories and frameworks with platform-related legal issues.

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

      I had browsed through this book before, and after reading it again today, I feel that I have gained quite a few new insights. The student’s presentation just now was also very well prepared. This book not only provides valuable information from a technical perspective, but also offers direct recommendations from the standpoint of regulatory policy.

      From a legal point of view, it is not only necessary to focus on the regulatory policies for internet platforms, but also, at least equally importantly—and even as a prerequisite—to have a necessary understanding of the technological and commercial operational principles of platforms. An understanding of platform technology and business mechanics helps us make more appropriate policy judgments.

Shen Chen, Postdoctoral Research Fellow, Renmin University of China:

      I would like to share several straightforward reflections after reading Platform Revolution with all teachers and fellow students:

      First, I am struck by the unprecedented speed of information and knowledge dissemination today. The book was published in 2016, an era when internet platform operators were at the height of their influence and kept disrupting traditional business models. As a systematic overview of platform operational mechanisms and development prospects, it was undoubtedly extremely valuable back then. By 2019, however, many of its once innovative arguments have more or less become familiar to us through fragmented daily online reading, owing to the rapid spread of information across the internet. This fully demonstrates how staggeringly fast knowledge circulates online.

      Second, This offers an enlightening insight. Coase, in his famous paper "The Nature of the Firm", argued that a firm cannot expand indefinitely due to the marginal increase in organizational costs. In the development of platform enterprises, with the emergence of giants such as Tencent and Alibaba, I even once thought that the theory of organizational costs did not apply to online platforms. However, since 2018, the expansion of major internet giants has begun to slow down, and even to shrink. Whether this is a practical confirmation of Coase's thesis is perhaps a question worth pondering.

      Third, it provokes reflections on the legal regulation of platforms. The book touches upon platforms’ legal status yet fails to reach a definitive conclusion. In light of the evolution of positive law, exemplified by Article 38 of the Tort Liability Law, we may argue that platforms, especially social media platforms, are more than mere private-law market participants. In many cases, they are tasked with social governance and dispute resolution, rendering them a hybrid form of entity standing between the state and private enterprises. I believe this issue merits in-depth discussion in our subsequent reading seminars.

     Fourth, This concerns a research topic I have been focusing on recently. The book mentions that an important issue in platform regulation is fair pricing. When platforms charge differentiated prices for different users, such conduct is defined as price discrimination in economics. It is widely recognized that monopoly power and information asymmetry constitute two major triggers of market failure. Contemporary platforms usually possess both dominant market power and complete information superiority, leading to conspicuous malfunction of the pricing mechanism. We know that price discrimination under monopoly can, from the perspective of overall social welfare, increase efficiency—indeed, for some platforms, this is the key to their profitability. Yet price discrimination is also a typical form of unfairness to consumers. How, then, should we balance this contradiction between efficiency and fairness? Should the law regulate price discrimination? If so, how? And to what extent? All these questions merit our careful consideration.

      Those are my preliminary and unrefined thoughts. Thank you!

Yuan Jun, Juris Master, Class of 2018, University of International Business and Economics:

      First, regarding "tipping" (reward-giving) behavior, Article 10 of the Electronic Commerce Law stipulates: "E-commerce operators shall complete business registration in accordance with law, except, natural persons selling self-produced agricultural and sideline products or homemade crafts, or engaging in convenient services by using their own skills for which no permit is required by law, or occasional and low-value transactions, or engaging in transactional activities for which no business registration is required by laws or administrative regulations. "

      What are the defining criteria for " low-value transactions "? Should we adopt differentiated regulatory approaches based on variations in the legal nature and monetary amount of tipping?

      Second, Articles 38 and 45 of the E-Commerce Law set forth the subjective standard of "knows or should have known" applicable to e-commerce platform operators. Should regulatory authorities prioritize examining this mental state when determining platform liability? As a senior executive of JD.com remarked at a conference, we may draw an analogy to the four-element constitution of a crime in Chinese criminal law: platform liability shall not be established if any single element fails to be satisfied. This mechanism could alleviate the prevalent problem of excessive liability imposed on platforms in practice.

      Third, This point concerns the relationship between new media, public participation and public-opinion-driven law enforcement. When enforcing laws concerning platform liability, should regulatory authorities avoid over-reliance on public opinion pressure? This issue is especially prominent when new media’s biased reporting on major public incidents triggers public-opinion-driven law enforcement. Take Didi as an example. I personally witnessed its development trajectory: in 2015 and 2016, it enjoyed tremendous momentum and was widely praised by all forms of media as a model of the sharing economy. However, after a string of incidents, public sentiment shifted sharply, and attitudes toward Didi’s liability changed drastically among both the general public and regulators. This dramatic swing deserves our in-depth reflection.

Liu Wei:

      Platform Revolution offers a fairly complete analytical framework for platform operation models, making it an excellent book that leads readers from basic concepts to in-depth insights.

      First, the validity of live-streaming tipping conducted by minors

      In this regard, I hold the view that platforms bear an obligation to stop minors from engaging in age-inappropriate activities on their services. Platforms possess massive user data and sophisticated technical capacity, which enables them to identify underage users through algorithms and other technical tools. At the very least, platforms can adopt account-based mechanisms to fully inform minors’ guardians of such activities — in other words, parental notification shall serve as a minimum requirement. Accordingly, platforms shall assume corresponding liabilities if they fail to deploy any technical barriers or routine review mechanisms governing minor access and consumption.

      Second, the balance between fairness and efficiency in platform regulation

      Platforms are essentially profit-driven commercial enterprises. However, their massive user bases and troves of data empower them with tremendous influential power. Therefore, platforms should be guided to foster a sound market ecosystem, which requires both industry self-regulation and official supervision from regulatory authorities.

Editor:Xu Liuya

Reviewer: Zhu Peiwen