If ever there was a demonstration of missing ingredients from Nico's racecraft, that first corner was it. Nico seems not to have learned from the previous encounters and does not appear to factor in the probable trajectories of his opponents. As every race driver knows (or should know), a tight entry to a corner will lead to a wide exit and visa versa. The guy on the inside entering a corner effectively "owns" it as he has covered off the apex and regardless of steering input* his car will be going wide on exit. The driver on the outside will be remiss if he does not understand that on an instinctive level and respond accordingly.
*Steering input was mentioned in the TV commentary, i.e. that Lewis was not steering fully into the corner. We should remind the commentators that the track was wet and that if more or full lock is applied one will spin!
The art of the pass around the outside is reliant on a combination of speed differential and room for manouvre. If neither factors are clearly in one's favour the corner is lost and the only sensible option is to back off and go for the undercut. However, one should recall that it was Lewis who was on fact performing an overtaking manouvre from the outset of the start. Therefore, Nico's manouvres were in defense of his own position. Thus it was Nico's responsibility to concede that first corner.
The rules on overtaking and defending position do not actually address these situations since the above is actually commonsense and very basic racecraft knowledge, otherwise known as "the unwritten rules".
27.6 More than one change of direction to defend a position is not permitted. Any driver moving back towards the racing line, having earlier defended his position off-line, should leave at least one car width between his own car and the edge of the track on the approach to the corner.
27.7 Any driver defending his position on a straight, and before any braking area, may use the full width of the track during his first move, provided no significant portion of the car attempting to pass is alongside his. Whilst defending in this way the driver may not leave the track without justifiable reason.
For the avoidance of doubt, if any part of the front wing of the car attempting to pass is alongside the rear wheel of the car in front this will be deemed to be a ‘significant portion’
27.8 Manoeuvres liable to hinder other drivers, such as deliberate crowding of a car beyond the edge of the track or any other abnormal change of direction, are not permitted.
From the FIA 2016 FORMULA ONE SPORTING REGULATIONS