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Protocol | China

China’s Big Tech legal teams are unbeatable on their home courts, literally

Opponents fear to sue teams like Tencent's "Nanshan Indominables" and Huawei's "Longgang Invincibles."

China’s Big Tech legal teams are unbeatable on their home courts, literally

It's clear Tencent prefers local courts.

Photo: Qilai Shen/Bloomberg via Getty Images

In late March, TikTok's parent company ByteDance dropped an unfair competition lawsuit against Tencent. Upon Tencent's request, the matter had been relocated to a court in Shenzhen, the tech-intensive southern metropolis where Tencent has its headquarters.

Many on the internet speculated that Douyin knew it had a slim chance of winning. After all, it was facing a suit on defendant Tencent's home court, where its proclivity to win has earned its legal team the nickname "Nanshan Indominables" (南山必胜客) on China's web, named after the district where Tencent's offices are based. Douyin, which disputed the change of venue, ultimately dropped its suit.

Small wonder. A data analysis of public court rulings by the Chinese newspaper Dahe Daily found that between 2018 and 2020, out of a total 564 matters involving Tencent as either the plaintiff or the defendant, Tencent won 95% of those litigated in Shenzhen courts. By contrast, the newspaper found Tencent's win rate in Beijing courts to be 54%. The analysis didn't track suits that settled. Tencent declined to comment.

Douyin filed its suit in the coastal city of Fuzhou, a large city in Fujian province, in September 2019. It alleged Tencent had violated the Anti-Unfair Competition Law by banning Douyin links shared on Tencent's social media platforms QQ and WeChat. Douyin requested a preliminary injunction and compensation of $13.9 million.

Protocol was unable to verify the Dahe Daily data, but Mark Cohen, a senior fellow and director of the Asia IP Project at the Berkeley Center for Law and Technology, told Protocol that local protectionism is often apparent in Chinese court rulings. In China, judges are generally locally appointed. An academic study found that the stronger party — the party with greater resources, more experience or in a better strategic position — in a legal tussle tends to prevail in Chinese litigation. And in a case involving local and out-of-town parties, the local one, especially a bread-and-butter institution, often comes out ahead, as the government and the business can both influence the outcome through back channels

Generally, in an IP dispute, "if you're a foreigner, or you're from out of town, and there's not a huge local interest, you'll probably get fair treatment," Cohen said. "But it's when other economic or national policy interests are implicated that you start seeing the scales of justice get unbalanced."

Tencent is not the only company known for triumphing at a high win rate in local courts. ByteDance, for instance, is sometimes called the "Haidian Roly-Polys" (海淀不倒翁) in the Haidian District of Beijing, where its headquarters are based, presumably because it can't be knocked over. Huawei, headquartered in the Longgang District of Shenzhen, is the "Longgang Invincibles" (龙岗无敌手). Cohen said he had looked into Huawei's legal outcomes in the past, and what he found validates Huawei's reputation. "I heard from many companies who have gotten in fights of various kinds with Huawei," Cohen said, "that the last place they want to go is Shenzhen."

It's clear Tencent prefers local courts. In February, Douyin filed a separate case against Tencent in the Beijing Intellectual Property Court, alleging Tencent violated antitrust rules by blocking the sharing of Douyin content on its messaging apps. A month later, Tencent played the same game, requesting the Beijing court transfer the matter to Shenzhen. (The suit is ongoing.)

These days, antitrust cases can have very serious outcomes. Ecommerce titan Alibaba was slapped with a record $2.75 billion fine by China's antitrust regulators earlier this month amid a broad and harsh crackdown on anticompetitive practices by Big Tech.

China's legal system is not precedent based like the U.S. or U.K. systems — where a judge's decision is binding on future ones — but judges do strive to be consistent with their decisions. The last high-profile antitrust case Tencent was involved in was years ago, when the cybersecurity firm Qihoo 360 and Tencent sued one another for unfair competition. In 2014, the Supreme People's Court issued a landmark ruling on the dispute, dismissing Qihoo 360's claims against Tencent. Angela Zhang, associate professor of law at the University of Hong Kong, said that matter essentially set precedent for other courts, making it harder for plaintiffs to challenge Tencent's dominance.

The general perception of local protectionism is broadly accurate, but doesn't make for slam dunks. "Chinese judges, especially those from developed regions such as Guangdong, have become very professional after rounds of judicial reform," Zhang said. "Blatant corruption in those highly professionalized courts is uncommon these days."

And local businesses worldwide prefer to have local courts handle their legal disputes. "[Local companies] simply know the judges in their home jurisdiction better, not necessarily in person, but also in understanding their preference and belief," Zhang said. "This information advantage helps local firms better frame their arguments and present them in court."

Protocol | China

China’s edtech crackdown isn’t what you think. Here’s why.

It's part of an attempt to fix education inequality and address a looming demographic crisis.

In the past decade, China's private tutoring market has expanded rapidly as it's been digitized and bolstered by capital.

Photo: Getty Images

Beijing's strike against the private tutoring and ed tech industry has rattled the market and led observers to try to answer one big question: What is Beijing trying to achieve?

Sweeping policy guidelines issued by the Central Committee of the Chinese Communist Party on July 24 and the State Council now mandate that existing private tutoring companies register as nonprofit organizations. Extracurricular tutoring companies will be banned from going public. Online tutoring agencies will be subject to regulatory approval.

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Shen Lu

Shen Lu is a reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.

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The continued swell of reported burnout is a concerning trend for employers everywhere. Not only does it harm mental health and well-being, but it can also impact absenteeism, employee retention and — between the drain on morale and high turnover — your company culture.

Crisis management is one thing, but how do you permanently lower the temperature so your teams can recover sustainably? Companies around the world are now taking larger steps to curb burnout, with industry leaders like LinkedIn, Hootsuite and Bumble shutting down their offices for a full week to allow all employees extra time off. The CEO of Okta, worried about burnout, asked all employees to email him their vacation plans in 2021.

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It’s soul-destroying and it uses DRM, therefore Peloton is tech

"I mean, the pedals go around if you turn off all the tech, but Peloton isn't selling a pedaling product."

Is this tech? Or is it just a bike with a screen?

Image: Peloton and Protocol

One of the breakout hits from the pandemic, besides Taylor Swift's "Folklore," has been Peloton. With upwards of 5.4 million members as of March and nearly $1.3 billion in revenue that quarter, a lot of people are turning in their gym memberships for a bike or a treadmill and a slick-looking app.

But here at Protocol, it's that slick-looking app, plus all the tech that goes into it, that matters. And that's where things got really heated during our chat this week. Is Peloton tech? Or is it just a bike with a giant tablet on it? Can all bikes be tech with a little elbow grease?

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Karyne Levy

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Protocol | Workplace

In Silicon Valley, it’s February 2020 all over again

"We'll reopen when it's right, but right now the world is changing too much."

Tech companies are handling the delta variant in differing ways.

Photo: alvarez/Getty Images

It's still 2021, right? Because frankly, it's starting to feel like March 2020 all over again.

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Protocol | China

Livestreaming ecommerce next battleground for China’s nationalists

Vendors for Nike and even Chinese brands were harassed for not donating enough to Henan.

Nationalists were trolling in the comment sections of livestream sessions selling products by Li-Ning, Adidas and other brands.

Collage: Weibo, Bilibili

The No. 1 rule of sales: Don't praise your competitor's product. Rule No. 2: When you are put to a loyalty test by nationalist trolls, forget the first rule.

While China continues to respond to the catastrophic flooding that has killed 99 and displaced 1.4 million people in the central province of Henan, a large group of trolls was busy doing something else: harassing ordinary sportswear sellers on China's livestream ecommerce platforms. Why? Because they determined that the brands being sold had donated too little, or too late, to the people impacted by floods.

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Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.
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