Baidu.Com’s Case Study—Pros and Cons of Web Site Ranking Service Under Chinese Anti-monopoly Mechanism
© Springer-Verlag Berlin Heidelberg 2015Yimeei Guo (ed.)Research on Selected China’s Legal Issues of E-Business10.1007/978-3-662-44542-6_1
1. Baidu.Com’s Case Study—Pros and Cons of Web Site Ranking Service Under Chinese Anti-monopoly Mechanism
Center for Economic Law, Law Department, Xiamen University, Xiamen, 361005, China
Web site ranking service is a kind of pay-per-click (PPC) advertising offered by online search engine operators as Baidu.com, which is an efficient method for e-marketing in the network economy era. Besides, it also brings service providers much more profits. However, there are concerns that such Web site ranking service will create a space of commercial fraud and unfair competition, and more and more corporations will be kidnaped by this marketing mode because of the market dominant position of Baidu.com in the Chinese search engine service industry. Therefore, lack of legal risk management for the search engine companies in this field has made the Web site ranking service a significant source of disputes. By doing Baidu.com’s case study, this article explores the legal problems arising from Web site ranking service and discusses Baidu.com as an Internet service provider (ISP)—its legal liability under Chinese newly enforced anti-monopoly law (AML) mainly. Then, this article tries to analyze other potential legal risks of Internet business under AML as an extensive thought from the discussion beforehand. Finally, this article puts forward some resolutions aiming at protecting the fair and efficient competition environment as well as the rights and interests of all parties. With the hope to achieve three wins, this article presents its conclusion with the suggestion of more clear legislation and other feasible administrative measures.
KeywordsWeb site ranking serviceAnti-monopolyLegal risksLegal liability
Web site ranking service, known as a kind of pay-per-click (PPC) advertising via online search engine, is an efficient method for e-marketing in the network economy era. Companies which pay for this service from search engine can directly get a front position in some keyword search results. Natural ranking results can easily be changed by money; this is a convenient way for some enterprises to do Web sites promotion. Therefore, the service is more attractive and efficient than traditional search engine optimization (SEO) service which is based on the pure network technology method.
Current Web site ranking service seems to be a double-win business mode. By using this kind of service, companies can obtain the goal as “Let Clients Ask for You” to seize more opportunities to do business with their potential customers. According to the online survey, the top 10 Web sites appear on the search engine account for 72 % of all clicks (Yongjun and Xiaoming 2008). Meanwhile, with the increasing uses of search engine in China, plenty of small- and medium-sized (hereinafter SMS) enterprises are investing much more than ever in search engine advertising. As a result, it brings search engine companies quite a huge profit. According to the 2008 financial annual report of Baidu.com, the revenue brought from online marketing services (mainly the Web site ranking service) accounts for 99.8 % of total revenue, which makes a great contribution for surpassing the revenue of 2007 with a big rate as 83.5 % (Baidu, Inc. 2009).
However, lack of efficient legal regulation and risk management in Web site ranking service field also brings commercial fraud and unfair competition to cyberspace. For instance, Google’s Adwords and Baidu.com’s Web site ranking service has been sued for joint torts in trademark infringement cases. Furthermore, the absolutely dominant position in Chinese search engine market now has made Baidu.com in anti-monopoly disputes. Baidu has been increasingly criticized by the captioned market about its inappropriate choice between commercial interests and ethics.
By conducting Baidu.com’s case study, this article explores the legal problems arising from Web site ranking service and discusses Baidu.com as an Internet service provider (hereinafter ISP)—its legal liability under Chinese newly enforced anti-monopoly law (hereinafter AML) mainly. Then, this article tries to analyze other potential legal risks of Internet business under AML as an extensive thought from the discussion beforehand. Finally, this article puts forward some resolutions aiming at protecting the fair and efficient competition environment as well as the rights and interests of all parties. With the hope to achieve three wins, this article presents its conclusion with the suggestion of more clear legislation and other feasible administrative measures.
1.2 Baidu.Com’s Case Study
1.2.1 Case Overview
The first case against Internet monopoly under Chinese anti-monopoly mechanism has recently been exposed. Qmyy.com, China’s first online information platform linking medicine manufacturers with distributors and users, sued the biggest Chinese language search engine Baidu.com on December 25, 2008, for its monopolistic conduct Hao (2009). Qmyy.com required Baidu stop blocking its Web pages from appearing on its search results and pay ¥ 1.106 million yuan (US$161,460 dollar) for the losses that such conducts have incurred. Beijing First Intermediate People’s Court accepted the case on December 26. Besides, the company has requested the State Administration of Industry and Commerce (SAIC) to investigate into Baidu’s abuse of its monopoly position in the market.
In this case, the plaintiff argues that if Web sites bought Web site ranking service before and now refuse to continue, it will probably be screened by Baidu.com. Although these Web sites can be found at the top place in searching results of other search engines, at the same time, they will disappear from sight in Baidu.com’s search results. Aiming at this problem, as early as in 2005, some Web sites even built a “Anti-Baidu Union” and get the number for record (Yu ICP R 05009507) in Ministry of Information Industry of the PRC (Present Ministry of Industry and Information Technology of the PRC) (Legal Daily 2008). On March 30, 2009, in order to change the negative images of Web site ranking service, Baidu.com even change the name of this service to “Search Marketing Service” as a core part of Baidu.com’s new online marketing services plan.
1.2.2 Legal Status of Baidu.Com Under Chinese AML Mechanism
184.108.40.206 Dominant Position—How to Judge Online Market Share
In order to find a fair and reasonable solution in this case, Baidu.com’s legal status should be taken cognizance of. Particularly in an anti-monopoly case, market position of the enterprise as well as its behavior is the key points. According to Article 19 of China’s AML