By Susan Ning and Yun Wang
On 29 December 2011, the Ministry of Industry and Information Technology ("MIIT") finally promulgated the Various Provisions on Regulating the Order of Internet Information Service Market ("Rules"). Viewed by many as been driven by the QQ/360 disputes in late 2010, the Rules mainly set out the code of conducts for an internet information service provider ("IISP") vis-à-vis its competitors and consumers. The Rules also create a dispute resolution mechanism between IISPs.
Pursuant to Article 5 of the Rules, IISPs are expressly prohibited from carrying out the following conducts that may infringe other IISPs’ lawful rights:
- maliciously interfering with other IISPs’ services on users’ computers, or maliciously interfering with the download, installation, operation and update of other IISPs’ related products;
- fabricating and spreading false facts to infringe the lawful rights of other IISPs, or disparaging the services or related products of other IISPs;
- maliciously causing incompatibility against services or related products provided by other IISPs;
- deceiving, misleading or forcing users to use or not to use other IISPs’ services or related products; and
- maliciously modifying or deceiving, misleading or forcing users to modify the parameters of other IISPs’ services or related products.
As to the code of conduct vis-à-vis consumers, IISPs are prohibited from carrying out the following conducts as set out in Article 7 of the Rules:
- refusing, delaying or terminating to provide services or related products to users without valid reasons;
- requesting users to use or not to use designated services or related products;
- offering services or related products to users by deceptive, misleading or coercive means;
- providing services or related products that are inconsistent with the services or related products advertised or promised;
- unilaterally changing the service agreement or operation standard, or lowering the quality of services or increasing the users’ responsibilities;
- when providing services or related products that are incompatible with services or related products of other IISPs, failing to voluntarily remind users of such incompatibility; and
- changing users’ web browser configuration or other system and application configuration without first notifying users and having their permission.
The Rules also set out the requirements for IISPs in relation to installation of software, evaluation of internet information services, collection and use of users’ personal information, etc. For instance, evaluators are prohibited from using the result of evaluations to deceive or mislead users. IISPs are required to remind users of bundled software in an obvious way and to let users decide whether to install the bundled software. The Rules do not ban pop-up ads though. IISPs are only required to provide users with obvious ways of closing pop-up ads.
The Rules have specified many forms of unfair competition conducts particular to the internet industry that are missing in both the Anti-unfair Competition Law and the Telecommunications Regulations.
However, the penalties appear to be minimal. The maximum fine for violating the Rules is only RMB30, 000. Nevertheless, according to the Rules, if a conduct violates both the Rules and the Telecommunications Regulations, the penalty provided under the Telecommunications Regulations shall apply. For example, an IISP is likely to be subject to a fine of RMB 100, 000 to RMB1 million under the Telecommunications Regulation if it is found to have forced users not to use other IISPs’ services or products.
In addition, the Rules have designed a dispute resolution mechanism between IISPs. Pursuant to Article 15 of the Rules, IISPs shall report to telecommunications administration agencies if they believe that other IISPs have violated their rights causing significant negative impact on consumers. Local telecommunication administration agencies shall then evaluate the situation and report to MIIT if the impact is particularly significant. The telecommunication administration agencies may also require IISPs to suspend their conducts at dispute before a decision is made.