Impact of Innovation on Competition Law: From an Outcome-Oriented Approach to a Process-Orientation Approach

Impact of Innovation on Competition Law: From an Outcome-Oriented Approach to a Process-Orientation Approach

Liyang Hou (Shanghai Jiao Tong University)

Abstract:     Innovation was traditionally protected from its outcome under property law, more specifically intellectual property law. However, this approach has gradually reached its limit when more innovation needs to be stimulated. One branch of competition law, namely antitrust law, has thus developed a process-oriented protection in order to open up a process to more innovation, though such a new approach slightly intrudes on the exclusivity of IP rights. However, less has been discussed so far on how this new approach affects the other equally important branch of competition law, namely anti-unfair competition law. Anti-unfair competition law targets conduct that dishonestly takes advantage of other competitors, thus traditionally having its core analytical framework built upon the evaluation of individual loss. While anti-unfair competition law can still fulfill its purpose by resting on the outcome-oriented approach, the drawbacks have extensively emerged with the recent confrontation of ad-blocking applications. At first sight, the traditional approach may be justified to hold developers of these applications liable for the loss of online media operators. However, a second thinking would suggest that the traditional approach is handicapped by stifling innovation. Therefore, this article advances a new interpretation on the role of ad-blocking applications based on an innovative interpretation on the business model of online media operators, that is the combined sale model vis-à-vis the traditional single product model. This article concludes that the process-oriented approach should prevail the traditional outcome oriented approach in relation to the combined sale model for the purpose of more innovations.