Judicial Approaches of Shanghai Courts in Platform-Related Disputes: perspective from Typical Cases

Against the backdrop of the booming digital economy, various e-commerce platforms have become deeply integrated into all aspects of socio-economic activities. While the rapid development of the platform economy has brought innovative momentum, it has also given rise to new and complex legal disputes. Establishing a scientific and reasonable dispute resolution mechanism, and promoting the healthy and orderly development of the platform economy have become critical challenges for judicial authorities at all levels.

Recently, Shanghai’s High People’s Court released the second batch of ten typical cases aimed at supporting and safeguarding the development of the digital economy. These cases cover several newly emerging areas. Notably, nearly half of the cases involve e-commerce platform dispute resolution, reflecting the predominant types of disputes in the current digital economy and underscoring the judiciary’s heightened focus on platform economy governance. Below, we will delve into the judicial practices surrounding e-commerce platform dispute resolution, beginning with a brief introduction to the relevant cases released:

1. Legitimacy of Social Media Platforms Prohibiting Users from Deleting Banned Accounts – Infringement Liability Dispute

Xia was permanently banned from a social media platform for repeatedly posting comments suspected of financial marketing promotions. Xia sued the platform, demanding the deletion of his account and personal information. The court ruled that Xia’s actions violated platform regulations and financial marketing qualification requirements, and the platform’s measures to ban the account and retain personal information to prevent circumvention were reasonable. Xia’s claims were dismissed. This case clarifies the legitimacy of platforms regulating user behaviour and retaining personal information, providing suggestions for improving account management mechanisms and personal information protection.

2. Legitimacy of Competitive Behaviour Between Platform Operators and Service Providers with Dependency Relationship – Unfair Competition Dispute

The plaintiffs operated a platform and alleged that the defendant’s software, which added modules, blocked QR codes and some other acts, constituted unfair competition, seeking cease of infringement and damages. The court found that the defendant’s actions did not disrupt market competition or harm the plaintiffs’ legitimate interests, dismissing the claims. This case establishes the principle of “protecting competition rather than competitors,” emphasizing that the legitimacy of competitive behaviour should be based on maintaining fair competition, promoting data value mining and sharing, and fostering a regulated and inclusive internet competition environment.

3. Validity of Platforms Assisting Consumer Rights Protection Through Online Dispute Resolution Mechanism – Service Contract Dispute

The plaintiff sold lithium batteries on an e-commerce platform. After a product explosion caused a fire, the platform deducted 60,000 yuan from the plaintiff’s store funds to compensate consumers and restricted fund withdrawals. The plaintiff argued that the platform had no authority to take such actions and sued to terminate the contract and recover the deducted funds. The court held that the platform’s actions complied with the E-commerce Law and the contract terms, dismissing the plaintiff’s claims. This case highlights the platform’s role in assisting in the protection of consumer rights when sellers fail to fulfil after-sales obligations.

4. Standard for Insurer Duty of Disclosure and Explanation in Digital Platform Insurance Models – Insurance Contract Dispute

A network technology company enrolled its delivery riders in employer liability insurance through a food delivery platform. The platform and the insurer added a third-party property damage liability limit clause but did not allow sufficient time for adjustments. After a rider caused an insurance incident, a dispute arose over the validity of the new clause. The court ruled that the platform and the insurer failed to fulfil their duty of disclosure and explanation, ordering the insurer to pay full compensation. This case clarifies the principles for reviewing insurers’ obligations in platform-based insurance models, providing guidance for protecting consumer rights and promoting the healthy development of new insurance practices.

5. Burden of Proof for Algorithmic Recommendations and Platform Liability Determination – Unfair Competition Dispute

The plaintiff discovered that a game used elements from its animated film for promotion, capitalizing on the film’s popularity. A platform featured the game in its     “Game-Curated Selection” section through algorithmic recommendations. The plaintiff sued for cease of infringement and 500,000 yuan in damages. The court ordered the game developers to pay 60,000 yuan in compensation but dismissed the claims against the platform. This case clarifies the identification of free-riding unfair competition, the burden of proof for algorithmic recommendations, and the liability boundaries of algorithmic recommendation service providers.

From the above cases, we can learn that Shanghai courts have demonstrated the following judicial approaches and key points in handling platform-related disputes in accordance with laws and regulations, including Anti-unfair Competition Law, Anti-monopoly Law, etc.:

1. Clarification and Refinement of Platform Responsibilities

Shanghai courts have clarified the boundaries of platform responsibilities in the above cases. For example, the court holds that platforms have the right to ban illegal accounts and retain user information to prevent re-registration, but they must minimize the impact on user rights through technical means. Additionally, the court refines the obligations of platforms in assisting consumer rights protection, and requires platforms to take tiered measures based on the urgency of risks and the necessity of assistance to support consumer rights protection.

1. Protection and Regulation of Platform Innovation Models

The courts have provided clear protection and support for platform innovation models while emphasizing the balance between compliance and innovation. Specifically, the courts recognize the legality of platform-based insurance models but requires insurers to fulfil their duty of disclosure and explanation. In addition, the courts emphasize that while platforms may use technological means to enhance user experience and service efficiency, they must ensure the compliance of such technologies to prevent legal risks arising from their misuse.

 III. Legitimacy Judgment of Platform Competitive Behaviour 

Shanghai courts have introduced the principle of “protecting competition rather than competitors,” supporting positive competition between platform operators and service providers. Particularly, the court establishes criteria for assessing the legitimacy of competitive behaviour, emphasizing that platforms shall demonstrate the positive impact of their actions on market competition order, consumer rights, and social public interest.

In conclusion, the newly released typical cases showcase the judicial approaches of Shanghai courts to focus on the specific scenarios and dynamic judgment of platform responsibilities in handling platform-related disputes. Relatively speaking, the courts have adopted an inclusive attitude toward platform innovation models, providing protection and support for their development. And the courts focus on balancing platform obligations with their self-governance, while also considering the protection of user rights as well as public interest. From another perspective, platforms can make use of these rulings as a guide to achieve a dynamic balance between innovation and regulation, promoting their own compliance management and innovative development.