The Role of Competition Law in Regulating Data in China's Digital Economy

• Date: 01 December 2022

THE ROLE OF COMPETITION LAW IN REGULATING

DATA IN CHINA’S DIGITAL ECONOMY

W

ENDY

N

G

*

As the importance of digital markets to society has grown, so too has the

volume and variety of data that have been generated, collected, used, and

shared. Increasingly, the ability to access, control, analyze, and apply data is a

source of competitive advantage for businesses, especially those operating in

the digital economy. At the same time, the data and data practices of busi-

nesses have come under regulatory and political scrutiny. In the United States,

for example, the data practices of TikTok, owned by ByteDance, a Chinese

company, came under intense political and public scrutiny over concerns that

user information was being shared with and accessed by the Chinese govern-

ment, raising questions relating to privacy, data security, cybersecurity, and

national security.

1

Similarly, data and data practices are key concerns in competition law dis-

cussions surrounding the regulation of digital platforms.

2

Questions such as

how data affect market definition and the assessment of market power and

competitive effect, when data-based business strategies and practices might

constitute anticompetitive conduct, and whether privacy and data protection

matters should be incorporated into competition law frameworks are being

discussed and debated by competition regulators and legislators all around the

world.

3

Germany’s Bundeskartellamt handed down a landmark decision in

* Associate Professor, Melbourne Law School, The University of Melbourne. I would like to

thank Eleanor Fox, Michal Gal, Yee Wah Chin, Su Sun, Angela Zhang, and the anonymous

reviewers for their helpful comments on earlier versions of this article.

1

See, e.g., David McCabe, What’s Going on with TikTok? Here’s What We Know, N.Y.

T

IMES

(Aug. 3, 2020); Bowdeya Tweh & Euirim Choi, Does Oracle’s Winning Bid for TikTok’s

U.S. Operations Avert a Ban?, W

ALL

S

T

. J. (Sept. 13, 2020); Samm Sacks, Banning TikTok Is a

Terrible Idea, S

UP

C

HINA

(July 16, 2020), supchina.com/2020/07/16/banning-tiktok-is-a-terrible-

idea.

2

See, e.g., Filippo Lancieri & Patricia Morita Sakowski, Competition in Digital Markets: A

Review of Expert Reports, 26 S

TAN

. J.L. B

US

. & F

IN

. 65, 65–66 (2021).

3

See, e.g., Press Release, I

NTERNATIONAL

C

OMPETITION

N

ETWORK

, Intersection of Competi-

tion, Consumer Protection, & Privacy—September 7 (Sept. 3, 2021), www.internationalcompeti

tionnetwork.org/news-events/intersection-sept2021/; A

USTRL

. C

OMPETITION

& C

ONSUMER

841

842

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NTITRUST

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AW

J

OURNAL

[Vol. 84

February 2019, when it found that Facebook had breached German competi-

tion laws for its collection, processing, and use of user and device-related

data.

4

This is the first decision made by a competition authority that has based

a breach of competition law on a violation of privacy and data protection

laws. Data and data practices have also been targeted in competition law and

related legislative reforms that have been adopted, or are being considered,

that provide for ex ante regulation of digital platforms.

5

The data and data practices of companies are also attracting political and

regulatory attention in China. Over the past few years, China has been devel-

oping a legal regime to regulate and enable the state to exercise control over

data, covering matters relating to cybersecurity, data security, and personal

information protection. Moreover, after a long period of relatively lax regula-

tory oversight and control over internet and technology companies that tended

to favor innovation and growth over regulation, China has now shifted to

tighten regulatory scrutiny and control over these companies, and the sector

more broadly.

6

The suspension of the much-anticipated initial public offering

of Ant Group (a subsidiary of Alibaba operating in the financial technology

sector) in November 2020 by the Shanghai Stock Exchange less than 48 hours

before its securities were scheduled to start trading

7

was the watershed mo-

C

OMM

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N

, D

IGITAL

P

LATFORMS

I

NQUIRY

: F

INAL

R

EPORT

(2019); J

APAN

F

AIR

T

RADE

C

OMM

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N

,

R

EPORT

R

EGARDING

T

RADE

P

RACTICES ON

D

IGITAL

P

LATFORMS

: B

USINESS

-

TO

-B

USINESS

T

RANS-

ACTIONS ON

O

NLINE

R

ETAIL

P

LATFORMS AND

A

PP

S

TORES

(2019); S

UBCOMM

.

ON

A

NTITRUST

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C

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.,

AND

A

DMIN

. L

AW OF THE

H. C

OMM

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ON THE

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UDICIARY

, 116

TH

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ONG

., I

NVESTIGATION OF

C

OMPETITION IN

D

IGITAL

M

ARKETS

: M

AJORITY

S

TAFF

R

EPORT AND

R

ECOMMENDATIONS

(2020);

A

USTRL

. C

OMPETITION

& C

ONSUMER

C

OMM

’

N

, D

IGITAL

P

LATFORM

S

ERVICES

I

NQUIRY

: D

ISCUS-

SION

P

APER FOR

I

NTERIM

R

EPORT

N

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. 5 (2022).

4

B6-22/16—Facebook Inc. (Social Networks), Bundeskartellamt [BKartA] [Fed. Cartel Off.]

Decision (Feb. 6, 2019), www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Ent-

scheidungen/Missbrauchsaufsicht/2019/B6-22-16.html?nn=3591568. This decision was appealed

by Facebook and, at the time of writing this article, the appeal is ongoing.

5

Examples of such legislative reforms include the 10th Amendment to Germany’s Act

Against Restraints of Competition that came into effect in January 2021 and the European

Union’s Digital Markets Act, the text of which was provisionally agreed to by the European

Parliament and the European Council in March 2022. See Gesetz gegen Wettbewerb-

sbeschr¨ankungen [GWB] [Competition Act], June 26, 2013, BGBl I, last amended by Gesetz

[G], July 9, 2021, BGBl I., www.gesetze-im-internet.de/englisch_gwb/englisch_gwb.html; Eur.

Comm’n, Regulation of the European Parliament and of the Council on Contestable and Fair

Markets in the Digital Sector (Digital Markets Act), COM (2020) 842 final (Dec. 15, 2020).

6

See, e.g., Angela Huyue Zhang, Agility over Stability: China’s Great Reversal in Regulating

the Platform Economy, 63 H

ARV

. I

NT

’

L

L.J. (forthcoming Nov. 2022).

7

Zhongguo Renmin Yinhang Fuxingzhang Pan Gongsheng Jiu Jinrong Guanli Bumen

Yuetan Mayi Jituan Youguan Qingkuang Da Jizhe Wen (

) [Pan Gongsheng, Deputy Governor of the Peo-

ple’s Bank of China, Answered Reporters’ Questions about the Financial Management Depart-

ment’s Interview with Ant Group], T

HE

P

EOPLE

’

S

B

ANK OF

C

HINA

(Dec. 27, 2020),

www.pbc.gov.cn/goutongjiaoliu/113456/113469/4153479/index.html; Raymond Zhong & Cao

Li, China Halts Ant Group’s Blockbuster I.P.O., N.Y. T

IMES

(Nov. 3, 2020); John Liu et al., Ant

IPO Has Slim Chance of Getting Done Next Year, B

LOOMBERG

N

EWS

(Nov. 29, 2020); Chad

2022]

T

HE

R

OLE OF

C

OMPETITION

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AW

843

ment that shifted political and regulatory attitudes towards big internet and

technology companies operating in China, and the sector more generally. Not

only did the Chinese government take a series of regulatory interventions and

measures

8

to discipline Alibaba, one of the largest and most high-profile in-

ternet conglomerate companies in China, it also began a multi-pronged regu-

latory and enforcement campaign targeting the internet and technology sector.

Chinese regulators have taken actions against specific companies and adopted

a raft of new regulations to govern the activities of businesses operating in the

digital economy. This campaign has covered a diverse range of areas and

concerns, including, inter alia, data, financial regulation, cybersecurity, labor,

transportation, online gaming, online education, fan culture, and wealth redis-

tribution.

9

Competition law, in particular, has played a conspicuous role in this

campaign.

This article examines whether and how China’s competition laws might

apply to regulate the data and data practices of businesses operating in the

digital economy. It does so by undertaking a political economy and contextual

exploration of China’s data regulatory environment and its relationship and

interaction with China’s competition laws. The nature of China’s political

economy, as well as of its competition laws, means that a variety of interests,

goals, and priorities—which might encompass concerns that other jurisdic-

tions might regard as being beyond the purview of competition law—are con-

sidered and balanced in the enforcement of competition law, under the

macroeconomic supervision and guidance of the state.

This article is structured as follows. Part I examines China’s data regulatory

environment. In addition to analyzing the legal framework that has been de-

veloped to regulate data, this Part also draws out the interests, concerns, and

goals that the state, businesses, and individuals have in data. It also discusses

the other avenues the state uses to influence the predominantly private internet

and technology companies that operate in China and looks at the political

dynamics of data governance. Part II examines how China’s competition laws

Bray, Ant Group IPO Resumption Will Depend on How Company Adapts to New Fintech Rules,

CSRC Official Says, S. C

HINA

M

ORNING

P

OST

(Nov. 17, 2020); Jing Yang & Lingling Wei,

China’s President Xi Jinping Personally Scuttled Jack Ma’s Ant IPO, W

ALL

S

T

. J. (Nov. 12,

2020).

8

Raymond Zhong, Ant Group Announces Overhaul as China Tightens Its Grip, N.Y. T

IMES

(Apr. 12, 2021); Jing Yang, Tencent Faces Possible Record Fine for Anti-Money-Laundering

Violations, W

ALL

S

T

. J. (Mar. 14, 2022).

9

See, e.g., Stephanie Yang, China’s Tech Clampdown Is Spreading Like Wildfire, W

ALL

S

T

.

J. (June 6, 2021); Li Yuan, What China Expects from Businesses: Total Surrender, N.Y. T

IMES

(Oct. 8, 2021); Chang Che & Jeremy Goldkorn, China’s ‘Big Tech Crackdown’: A Guide,

S

UP

C

HINA

(Aug. 2, 2021), supchina.com/2021/08/02/chinas-big-tech-crackdown-a-guide; Jing

Yang et al., China’s Corporate Crackdown Is Just Getting Started. Signs Point to More Tumult

Ahead, W

ALL

S

T

. J. (Aug. 5, 2021); Lingling Wei, China’s New Power Play: More Control of

Tech Companies’ Troves of Data, W

ALL

S

T

. J. (June 12, 2021).