(Author Wu Jingfei, Associate Professor at the School of Economics, Shanghai University)
On December 29, 2023, Alibaba's claim of being fined 1 billion yuan from JD.com topped the Weibo hot search list, and its popularity continues to rise. According to information disclosed on JD's official website, on December 29th, the Beijing Higher People's Court made a first instance judgment on JD's lawsuit against Zhejiang Tmall Network Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and Alibaba Group Holdings Co., Ltd., determining that their abuse of market support position and implementation of a "two choice" monopoly behavior were established, causing serious damage to JD, and ordered compensation of 1 billion yuan to JD.
Public information shows that the dispute between JD.com and Alibaba regarding the "one out of two" policy can be traced back to 2013. In 2013, JD.com publicly stated that merchants were forced to "choose one from two" by Alibaba; In 2015, JD.com reported Alibaba with its real name to the former State Administration for Industry and Commerce; In 2017, both parties went to court. In 2019, the Supreme People's Court made a final ruling rejecting Alibaba's request for "objection to jurisdiction" and determining that the Beijing Higher People's Court has jurisdiction over this case. Both parties will come and go until the end of 2023, which can be considered as a statement.
Many people cannot help but feel that justice will only be late and will never be absent. But wait a moment, how do you know that Alibaba's forcing merchants to choose between two is unjust? You should know that there was also a two choice lawsuit from Tencent and Qihoo 360 around the time, and the answer was exactly the opposite.
On November 3, 2010, Tencent announced that it would stop running QQ software on computers equipped with Qihoo 360 software. Users must uninstall 360 software to log in to QQ, forcing them to choose between two options. So, for their respective interests, from 2010 to 2014, the two companies staged a series of internet wars and embarked on the path of litigation. The final verdict of the two choice case between Tencent and Qihoo was that Tencent won, and forcing users to choose between the two does not constitute unfair competition.
Why are the verdicts completely opposite when they are all forced to choose between two? I don't have time to elaborate today. Interested friends can come to the court judgment to carefully study it. I believe it will definitely benefit you greatly. I just want to say that the legal judgment on whether a company's competitive behavior is fair is not simple.
Let's change the way we ask, does a company have the right to define its own qualified supplier standards?
If your answer is yes. So, when choosing a supplier, Alibaba has the right to determine whether it is a qualified supplier based on whether the supplier is supplying to other third parties (such as JD.com), is it also legal?
Okay, even if we believe that Alibaba's forcing suppliers to choose between two is unfair and illegal, Alibaba screens and eliminates qualified suppliers based on this standard. How can law enforcement officers observe this "illegal" behavior? Should judges constantly supervise every enterprise and supplier selection in society? I don't think anyone with a slightly normal mind would think that way.
In fact, it is simple to establish that certain behaviors are illegal in legal form, but if the cost of supervising these illegal behaviors is extremely high, the enforceability of this law in practice will be low. This law can only be a paper article and cannot bring value to the behavior norms of social subjects, and may even undermine the authority of the law.
JD competes with Alibaba, and it is understandable that JD chooses to retaliate through legal litigation. In modern rule of law commercial society, litigation is one of the important means used by enterprises in market competition, but it must be understood that no enterprise has ever won and become a great enterprise through litigation in market competition. For enterprises, the uncertain factors in litigation are high and the efficiency is low. Only by taking control of their own destiny, focusing on customer needs, and continuous innovation is the fundamental way to stand invincible.
Today, looking back, Alibaba's "one out of two" strategy for merchants ten years ago not only did not have any substantial impact on JD.com, but more importantly, it did not have any impact on China's e-commerce competition landscape. In 2013, when Jingdong and Ali began to fight, Pinduoduo, which was based on the vast rural market, was still on the way to build, not to mention the later Tiktok and Dongfang Selection, the rising stars in today's e-commerce industry. In the past decade, while two e-commerce giants are still fighting fiercely over whether the "two choices" policy is legal, the spark of China's new e-commerce forces has ignited, and to this day, it has become magnificent. The market value of the former two giants has continued to decline, and their fatigue has now emerged.
A market economy is a rule of law economy, where the law sets a bottom line for the behavior of market entities and clarifies what cannot be done. In fierce market competition, enterprises will inevitably adopt a variety of competitive behaviors, as long as these behaviors do not touch the legal bottom line, there is no need to regulate them. It has been proven that the best way to combat monopolistic behavior by enterprises is not to make such behavior illegal, but to allow other enterprises to enter the market at any time, compete fully, and have a variety of opportunities. The law determines the lower limit of corporate behavior, while market competition determines the upper limit of corporate behavior.
Competition by law rather than by usage is the secret to the prosperity of modern market economy!
(The author Wu Jingfei is an associate professor at the School of Economics, Shanghai University)
This article only represents the author's viewpoint.