mid accusations of overpricing and monopoly abuses, China’s market regulators opened an antitrust investigation into the China National Knowledge Infrastructure database (CNKI), the country’s biggest academic database and source of research data, which was set up by top Chinese university Tsinghua.
China’s State Administration for Market Regulation (SAMR) announced the probe into CNKI over suspected monopolistic practices on its website on May 13. It did not provide further details.
The probe comes after a slew of complaints from academic institutions and universities about the exorbitant cost of subscribing to China’s leading academic database.
On April 8, the Chinese Academy of Sciences (CAS) announced it was going to stop subscribing to CNKI as it could no longer justify the annual subscription fees, which had soared to 10 million yuan (US$1.6m).
In 2021, six universities and research institutes, including Peking University and Wuhan University of Technology, had already unsubscribed to CNKI because of the rising costs, although after student pressure they backtracked. CNKI made a vague response to the CAS announcement, saying it would continue to provide normal services to all institutes affiliated with the Chinese Academy of Sciences until the end of their 2022 subscription. It did not explain how the annual fee had risen so high.
For years, academic circles have questioned whether CNKI is too commercial and if it was abusing its dominant market position.
CNKI, also known as Zhiwang, was set up in 1999 as an academic service by Tsinghua University and its commercial arm Tsinghua Tongfang, a Shanghai listed company and State-owned enterprise (SOE). Tsinghua Holdings, a company fully owned by Tsinghua University, used to be the holding share-holder of Tsinghua Tongfang. At the end of 2019, Tsinghua Holdings sold its Tongfang stake to SOE China National Nuclear Corporation Capital Holdings. The majority of the stake was transferred in early 2020, making China Nuclear the controlling shareholder of Tsinghua Tongfang since then. And in December 2021, Tsinghua University agreed to transfer its Tsinghua Holdings stake to Sichuan Energy Investment, another SOE, meaning Tsinghua has completely divested all its stock in CNKI.
CNKI, building on its lead as China started its online era in the early 2000s, has become China’s largest repository of academic electronic resources, including over 95 percent of published Chinese academic resources. According to CNKI, in early 2020 it had over 33,000 institutional users, and more than 20 million individual registered users across 56 countries globally, with 16 million daily visits. There can be up to 23.3 billion full text downloads a year.
“I used CNKI to review published research related to my dissertation almost every day in the months I was writing my doctoral paper,” Liu Tao, a PhD candidate in anthropology, told NewsChina. “I rarely try other academic databases like Wanfang and Weipu, because they only host a fraction of published academic resources compared to CNKI.”
CNKI hosts more than 95 percent of published Chinese academic resources and has signed exclusive contracts with over 1,690 journals. The two other databases used in China, Wanfang and Weipu, also known as VIP, have exclusive contracts with Chinese journals too, but these only number in the hundreds.
In 2020, CNKI posted revenue of 1.168 billion yuan (US$172m), and the gross profit margin was 54 percent. In 2021, annual revenue increased to 1.289 billion yuan (US$190m), and its profitability was 53 percent. Students pay an average of 15-25 yuan (US$2-4) for each paper they download. CNKI charges different fees for universities and research institutions depending on their student numbers and size of funding.
But within its business model, CNKI’s major client base is also the primary provider of its product.
“The information contributors to CNKI are also the target audience for the information they provide,” Jia Kang, president of the China Academy of New Supply-side Economics told NewsChina in April.
CNKI gets dissertations and theses from universities and academic journal content. Then it charges subscription fees from institutions and universities for using its databases and charges individual users with fees to download documents.
The fees charged to institutions rise annually. In 2016, Wuhan University of Technology issued a statement saying that from 2010 to 2016, the average annual increase of CNKI database prices was 18.98 percent. Yet CNKI pays a one-off flat fee to the copyright owners of journal articles and dissertations. These fees have not risen since 2016. The copyright owners of a doctoral thesis published after 2008 and selected by CNKI receive a 400 yuan (US$59) CNKI database coupon and 100 yuan (US$15) in cash, but the copyright owners of a doctoral dissertation published before 2008 get even less. The copyright owner, however, does not see any share of the revenue generated from downloads.
The focus of the public controversy is not on the fees, but rather the unreasonably high profits CNKI reaps. According to Feng Xiaoqing, director of the Center for Institute for Intellectual Property Economics Studies at the China University of Political Science and Law, the core of the controversy is the unequal and opaque profit sharing between CNKI, academic journals or universities and copyright owners.
“CNKI should be aware that a lot of the public dissatisfaction is justified,” Jia Kang said.
Over the past decade, at least six universities said they had stopped subscribing to CNKI but reluctantly resumed cooperation.
CNKI’s integrated database has been promoting the digitalization of academic resources and publishing resources since online research took hold in the late 1990s. The uniqueness of its content and the one-stop research function with resource integration have absolute market advantages. Scholars feel if their articles are included in CNKI, it is a reflection of their academic achievements and status.
Most users feel CNKI is an unaffordable but indispensable resource, a situation which gave CNKI the space to keep inflating its prices. Now, China’s market regulators may agree.
China’s Anti-monopoly Law which was revised in 2021 stipulates that operators with a dominant market position are prohibited from abusing it, including items such as “selling goods at unfairly high prices or buying goods at unfairly low prices.”
Feng Xiaoqing said that to determine whether CNKI holds a monopoly, the first thing to establish is whether CNKI has a dominant market position. Since that is not illegal, authorities must judge whether it abused this position.
“To some extent, considering CNKI can provide information services such as plagiarism checks, one-stop searches, digitalization of academic resources and other services, it is understandable for it to charge fees for these services,” Jiang Zhipei, former vice president of the second Council of China Copyright Research Society told Legal Weekly in early May.
“The problem with CNKI is that most of the resources on its databases are not fully authorized by the author while it charges institutional subscribers high prices, so it has become excessively commercial,” Jiang said.
Once a paper has been uploaded, CNKI’s model means it is the only entity that profits from its downloads.
“Basically, CNKI built a public knowledge database, but now its public interest attributes are weakened by its quest for profits. At present, the pricing mechanism of CNKI is not transparent, and its primary income still comes from copyright fees,” Cong Lixian, Dean of the School of Intellectual Property, East China University of Political Science and Law told Legal Weekly in early May.
Under pressure from media, academics and the legal establishment, CNKI made some efforts. This included allowing free access to academic resources published prior to 2008, launching an authors’ service platform, and lowering the download price for master’s and doctoral dissertations. However, Jia said these measures were superficial and CNKI still needs to set up an effective incentive mechanism and find a balance between profits and fulfilling its public interest role.
“CNKI should not only play its role in connecting with the market but also acknowledge that its database is at a certain level a public good, or even come under the description of public interests under the concept of a public good,” said Jia, adding that it requires input from several stakeholders. “We should allow a certain level of market competition to use market power to address price inflation.” But if this happens, Jia said, “Wouldn’t it be possible to reach a balancing point to achieve zero charges?”
There have been many calls to reform CNKI in recent years. During the 2020 two sessions, China’s top legislative meetings, Ni Minjing, a member of the Chinese People’s Political Consultative Conference National Committee, suggested that CNKI should become open access for domestic users for browsing and downloading papers, while continuing to charge for other services including paper reviews, plagiarism checks, paper citation retrieval and big data services.
Jia Kang and Feng Xiaoqing both said that CNKI should look at the international experience. In 2019, the University of California attempted to cancel its subscription to Elsevier, a leading global academic journal publisher, because of its high prices, a common complaint among academics worldwide. This led to negotiations and Elsevier attempted to allow open access to its databases. After two years of negotiations, Elsevier finally gave in by lowering its subscription fees and making the University of California’s research freely available to everyone.
“If the database platform, universities and authors can establish a reasonable benefit balancing mechanism, they’ll achieve a winwin situation,” Feng said.
Enterprises with public data resources have an increasing impact on the public interest. Experts from academic circles told NewsChina that they acknowledge the significant role CNKI has played in knowledge dissemination and expect it to reform.
In response to a NewsChina inquiry about copyright, cost and other related issues, CNKI responded in early May that the company is preparing a series of measures and will issue new principles soon.
In response to the SAMR probe, CNKI issued a statement the same day that it would support the investigation and cooperate fully. CNKI said that it would conduct a self-examination and operate according to laws and regulations and bear social responsibilities as a knowledge infrastructure in China. It further pledged to build itself into a world-class academic database with Chinese characteristics and promote academic exchanges and technological innovations, and vowed to provide better services for authors and its readers.