[Beijing Diary] China Sides with US Companies

Recently, there have been two notable rulings in China. The common points of these two lawsuits are that the parties involved were Chinese individuals and American companies, and that the courts ruled in favor of the American companies. The Chinese individuals are ordinary consumers whose names are unknown to us, while the opposing companies are Apple and Tesla, symbols of the United States.

The first ruling was the first-instance verdict by the Shanghai Intellectual Property Court on the 29th. The plaintiff was a Chinese consumer named Jin, and the defendant was Apple. In January 2021, Jin claimed that Apple and Apple Computer Trading Shanghai abused their market dominance and charged consumers excessive fees in an anticompetitive manner, demanding compensation for the costs and economic losses he had paid unnecessarily. This targeted the so-called "Apple tax," a 15-30% commission Apple charges on all digital content consumption within the App Store.

The plaintiff demanded 100,000 yuan, including a price difference of 219 yuan (about 41,600 won) for four apps he purchased on the Apple App Store compared to the Android app store. In fact, China pays the highest commission rates related to the "Apple tax" worldwide. Although Apple has lowered these rates in the US, South Korea, Europe, Japan, and other regions following related criticisms, it has maintained the rates in China.

However, as mentioned earlier, the court ruled in favor of Apple. The court stated, "The operating system of the App Store platform is vast, making it difficult to ascertain the specific costs Apple incurs to operate the platform," and added, "Considering operating costs, there is no evidence that the commission is significantly higher than that of similar operators." Plaintiff’s attorney Wang Qingfei has expressed an intention to appeal.

The second ruling came a day later, on the 30th, from the Shanghai Qingpu District People’s Court. The plaintiff, Tesla, filed a lawsuit against a former Tesla owner named Zhang, seeking damages. In April 2021, at the Shanghai Motor Show, Zhang climbed onto a Tesla vehicle displayed in the Tesla showroom and shouted "brake failure." Wearing a T-shirt with the word "brake" on it, it appeared to be a premeditated stunt. Zhang was immediately detained by security guards and was held for five days on charges of disturbing public order.

In the ruling regarding the "Shanghai Motor Show incident," the court ruled in favor of Tesla, ordering Zhang to pay 172,275 yuan in damages and to issue a public apology. Furthermore, the court ordered Peng, an automotive journalist identified as the mastermind behind the incident, to also submit a public apology and pay 250,000 yuan in damages. This amount was significantly lower than the 5 million yuan Tesla initially demanded.

An interesting fact is that Chinese media have been quite active in publishing articles about this ruling. This can be seen as a strategic approach to demonstrate that China is making rational and objective judgments even in lawsuits involving American companies. It also aligns with the recent social atmosphere that seeks to avoid excessive patriotism or nationalism in criticizing companies. In these days when Chinese companies like ByteDance’s TikTok and Huawei are facing severe pressure, forced exits, or forced sales in the US, is it an overinterpretation to feel that China is preparing countermeasures?