Cyberlaw Reading Group Session 33 of the Renmin Law and Technology Institute was held in Room 725, Mingfa Building, Renmin University of China on November 26, 2019. During this reading group, faculty members and students delivered thematic presentations and held discussions centering on two papers: Can Big Data Protect A Firm from Competition? and Innovation and Inequality: The Separability Thesis.

Thematic presentations:

Theme: Can Big Data Protect A Firm from Competition?

Presenter: Wang Miaoting, Juris Master, Class of 2019, Renmin University of China Law School

Theme: Innovation and Inequality: The Separability Thesis

Presenter: Luan Jie, Juris Master, Class of 2019, Renmin University of China Law School

Free Discussion:

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

      Networks process data via algorithms, which gives rise to competition issues; competition issues ultimately translate into questions of consumer welfare. When examining consumer welfare, we generally analyze it along two dimensions. The first dimension concerns the protection of consumer rights, including privacy infringements, damage to credit standing, and "big data price discrimination" resulting from personalized recommendation algorithms. The second dimension lies in distributive fairness among consumer groups, industry practitioners and enterprises.

      The issue of distributive fairness has two facets. The first facet concerns how much consumer surplus individual consumers can capture. Taking the unfair competition case of Tencent v. Douyin as an example, Tencent claimed that relevant data of WeChat users (avatars, nicknames, contact lists and the like) belongs to Tencent, while Douyin argued that contact lists and other such data may be shared with consumers’ consent. Beneath competition disputes lies the allocation of property rights over data. Broadly speaking, we need to consider whether personal information, such as contact list data and location data, ought to be regarded as a means of production. If the answer is affirmative, we must identify who the investors of such data are: individuals, enterprises, or both. This leads to the subsequent question of right allocation, whose structure directly bears on fairness.

      The first paper argues that it is business models, rather than data itself, that determine enterprises’ competitive edges. However, its reasoning adopts inductive logic and thus risks hasty generalization. Focusing on distributive fairness, the second paper holds that ostensible wealth inequality may embody underlying equality, as subjective well-being does not correspond proportionally to wealth holdings. As Daniel Kahneman and Angus Deaton elaborate in their paper High income improves evaluation of life but not emotional well-being, higher income can lift people’s life satisfaction ratings yet fails to guarantee better emotional well-being. Moreover, the second paper notes that wealthy people do not consume all their wealth personally but allocate a portion to philanthropy. I would add an extra dimension: the affluent also engage in reinvestment, which serves to boost overall social welfare. Meanwhile, the article points out that the fortunes of the rich are built through diverse venture capital investments, a process that inevitably includes many failed ventures.

   The second dimension of distributive fairness concerns whether governments should impose entry controls to secure the sustainable development of innovative enterprises. Most Chinese academic papers discuss regulatory tools for governments to foster emerging businesses and boost social welfare, yet few examine whether such ideal regulatory frameworks can be translated into tangible policies and the extent to which authorities will adopt them, given entrenched vested interests in every industry. The second paper observes that untapped sectors offer greater chances of entrepreneurial success due to lighter regulatory constraints. By contrast, industries populated by numerous vested interest groups witness coordinated collective action to suppress innovative startups, with the taxi industry serving as a typical example. This provides us with another perspective to interpret governmental regulatory conduct. Traditional research mostly centers on inter-platform competition, yet entry barriers and property right arrangements set up by governments to shield vested interests may themselves constitute a form of monopoly. In addition, the author highlights innovation’s positive impact on employment. We ought not to overlook the new job opportunities created in emerging industries merely because innovation displaces workers in traditional sectors. Lastly, this brings up a classic labor law dilemma. For instance, quantitative licensing restrictions imposed by authorities on the taxi industry function as a de facto minimum wage threshold. The rise of ride-hailing services dismantles this existing wage floor. We are thus confronted with a thought-provoking trade-off: should policies prioritize decent livelihoods for a smaller group of workers, or broader labor participation at the cost of lower average living standards?

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

      From an ideological standpoint, both papers lean toward free-market doctrines and argue against excessive state intervention. The first paper targets data monopolization and distinguishes data from conventional factors of production. A core attribute of data is replicability, or non-scarcity, which means the regulatory rules governing data diverge from ordinary property rules. In this sense, data can be analogized to air—an inexhaustible resource. To take the metaphor further, data resembles flame light: it can be shared endlessly with others and benefit a wider population. Like knowledge, data ought to be encouraged to circulate widely. Another characteristic of data is non-rivalry: public ownership of data will not generate delimitation costs or trigger social conflicts. That said, the first paper claims data is substitutable, a viewpoint that needs to be examined against more practical cases. Ordinary data differs fundamentally from big data. Once an enterprise accumulates big data of sufficient scale, it will form a competitive moat. Whether such a moat can be easily substituted as the paper contends remains an open question requiring further deliberation.

      The second paper targets the digital divide. The author does not dismiss inequality as an insignificant issue, but argues that we should not address it by restraining the development of technological innovation—a view I fully endorse. Nevertheless, inequality is an intricate matter. The paper argues that measuring inequality by wealth is unreasonable. Following this line of reasoning, one may ask: is there any historical period entirely free from inequality? If wealth fails to serve as a sound metric, other indicators such as power also prove inadequate to gauge the extent of inequality. Drawing on Foucault’s theory, power relations operate within specific fields, and absolute unilateral control or domination is rarely observed. Thus, the paper’s analysis of inequality remains open to debate. Furthermore, China’s policies on scientific and technological innovation share certain similarities with the arguments laid out in this paper. Take the important assertion from the Three Represents that the Party “represent the requirements of the development of China's advanced productive forces”, where advanced productive forces essentially refer to innovation.China’s laws and policies on science and technology strongly incentivize innovation, and they do not seek to restrict technological progress itself or limit the distribution of rights and interests of inventors and creators through private law merely because certain negative externalities emerge. At the same time, Chinese policy places greater emphasis on equity. Another tenet of the Three Represents states that the Party “represents the fundamental interests of the overwhelming majority of the people in China”, which embodies the requirement for equitable distribution of the fruits of innovation. In this regard, the author’s perspective diverges from China’s governance logic. Rooted in the Chicago School of economics, the author is a typical pro-market scholar who pays relatively little attention to equity issues. Even so, his approach of separating innovation and equality for independent analysis is worthy of recognition.

Editor:Xu Liuya

Reviewer: Zhu Peiwen