Caixin
Sep 10, 2021 09:25 PM
BUSINESS

Citing Competition Campaign, Shanghai Judge Says Hiding Negative Search Results Is Illegal

A Shanghai court has said suppressing search results violates Chinese consumer laws. Photo: VCG
A Shanghai court has said suppressing search results violates Chinese consumer laws. Photo: VCG

A Shanghai court proclaimed it is illegal to bury negative results on search engines, in a ruling that could have implications for reputation management firms and search engine optimization (SEO) services.

The claim, made as part of a ruling by Judge Wang Fei of the Shanghai Changning District People’s Court in a contract dispute involving SEO services, said suppressing search results violates Chinese consumer laws.

The facts of the case were published by the court on Tuesday. A public relations firm had sued an IT company for failing to deliver on a contract to suppress negative search results about a brand it represented. But the judge used the case to launch an attack on the practice, citing China’s anti-competition crackdown.

Neither party was named in a case brief posted online by the court (link in Chinese). In China, parties are publicly identified at the discretion of the judge.

The disputed contract, signed in November to help improve the brand’s search rankings on Baidu and on Quora-style question-and-answer platform Zhihu, included a fee of 67,300 yuan ($10,400) for the services. But one of its clauses said that the IT company would “ensure there is no obvious negative content (about the brand) on Baidu’s first five pages for a period of 30 days.”

BAIDU

Experts have a number of techniques at their disposal to push unwanted links down in search results — and out of view of a typical search-engine user. Many public relations firms offer the service, known as “negative suppression,” as a way to control negative online sentiment about the people and brands they represent.

In this case, the IT company used three main methods to game the search engine, the court said, including: publishing positive content and artificially boosting its view count to promote its ranking and drown out negative content; linking to the critical content from other downgraded content so that the search engine would bundle them together and rank them all lower; and lodging complaints against the platforms that published the negative content.

The public relations firm had sued the IT company for violating the contract as it had only completed part of the negative suppression service for certain keywords. But according to the legal brief, Judge Wang used the case to launch an attack on the practice.

“With the exception of lodging complaints against platforms hosting the negative content, the other two methods involved in the negative suppression clause are essentially the concealment of negative reviews and the promotion of positive reviews, which are vastly different from other lawful SEO methods such as keyword optimization and ad bidding in terms of purpose and use,” he said.

The court ruled the clause invalid and ordered the IT company to refund 30,500 yuan of the 48,500 the plaintiff had already paid, but said it could keep the remaining 18,000 yuan which was spent on lawful services.

Citing Chinese President Xi Jinping’s directive on strengthening rules against monopolies and unfair competition at a high-level meeting on Aug. 30, the judge said the unlawful SEO methods violated the legal principle of good faith and the spirit of the Consumer Rights Protection Law and Anti-Unfair Competition Law.

Unlawful use of negative suppression tactics affects users’ choices through misleading methods, hinder the normal circulation of positive and negative information on the internet, and damages the rights and interests of other operators, either directly or indirectly, Judge Wang said.

“In essence, it is a new form of unfair competition behavior online,” he added.

The ruling has an exemplary and guiding significance for similar cases as well as for regulating online behavior and creating a clean internet space, the court stated.

“This is a judgment on an individual case by the court, and cannot be directly used as the basis for law enforcement or judicial judgment,” said Yuan Lizhi, partner at Jingtian & Gongcheng based in Beijing.

But Yuan noted that while the ruling does not set a binding precedent, it may be taken into account in the judgment on other similar cases.

“The legal value of the ruling and the interpretation of the applicable regulations are a meaningful reference, and if the case is selected as a typical case (典型案例) or a guiding case (指导性案例) by the Supreme People’s Court, it will have a bigger influence on the judgments on similar cases,” he said.

Yuan, who is also an expert on cybersecurity and data privacy laws, said negative suppression has been quite common in the internet space, but noted that seeing its legality judged in court is rare.

“It’s not binding, that’s for sure,” said Nicolas Bahmanyar, a tech and data compliance consultant at LEAF Law Firm. “Any other court at the same level or higher can have a different opinion.”

“It’s a low-level court, and China is not a common law system, so we cannot say for sure that this decision is going to be taken as jurisprudence. It’s actually maybe going to be forgotten — if the court has bad SEO for example,” he said.

But Bahmanyar said the case raised new questions for PR firms and celebrity agents about how to stay within the law as China cracks down on anti-competitive practices online. “Essentially this is SEO on trial… This case is more exploratory, but I won’t be surprised if it escalates.”

One legal expert, who asked not to be named, said although the practice is widespread, it is often carefully left out of such contracts.

Beijing has stepped up efforts to combat anti-competitive practices by the country’s major internet companies, starting with the country’s top market regulator issuing regulations in November last year to stop internet platforms from abusing their dominant position to undermine market competition.

After notably slapping Alibaba with a record $2.8 billion fine in April, the State Administration of Market Regulation, along with cyberspace and tax regulators, summoned 34 tech companies and warned them of “severe punishment” if they continue to break antitrust rules after a one-month grace period.

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Contact reporters Kelsey Cheng (kelseycheng@caixin.com) and Flynn Murphy (flynnmurphy@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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