INTERSECTION OF COMPETITION LAW AND BIG DATA: A BIG THREAT
Updated: Mar 3, 2019
This piece is authored by Shambhavi Sinha, a student of B.B.A.LL.B (Hons.) at the Symbiosis Law School.
The boom in the technology and internet arenas has changed how business operate, government functions and people live. The era of digitalization has globally accelerated the growth of a digital economy. The quality of any online firm or platform is controlled by the amount and variety of data it holds. These online corporations are running their business mostly on the acquisition and monetization of the personal data of their customers. This data which represents a significant class of economic assets fuel the information economy and provide a competitive advantage to online firms and are commonly termed as “Big Data”. It can be commonly understood as the use of large-scale computing power and technologically advanced software in order to collect, process and analyze data characterized by a large volume, velocity, variety, and value. It has altered the corporate environment by enabling the introduction of new products, for example, self-driven cars and digital personal assistants such as Siri. Indeed, a whole range of product and services are offered free of cost in exchange for the ability to harvest user’s data. Although there are many benefits of big data, concerns are raised about data security and privacy.
While collection and protection of personal data should fall under the domain of data protection laws and consumer protection laws, various competition lawyers and economists are racing to define big data in the parlance of anti-trust and competition laws. I shall explore these events for insights into the best role for the antitrust and consumer protection authorities with ongoing concerns about regulating Big Data.
REGULATION OF BIG DATA BY COMPETITON LAW: A THREAT
I will describe a number of ways in which critics argue that firms use Big Data to gain an unfair competitive advantage which can potentially harm consumers. To properly assess the antitrust implications of Big Data, it is necessary to understand the ways in which online platforms use Big Data and the nature of competition among them.
1. Big Data as is its own product market
Competition Law is not suited to regulate Big Data because of the difficulty inherent in defining the relevant market for data. Market definition and market power still form the backbone of antitrust analysis under the current law. Section 2(r) of the Competition Act defines “relevant market” as the market which may be determined by the commission with reference to the relevant product market, relevant geographic market or both the markets. This definition is unfit for online platforms which exhibit a completely separate set of characteristics when compared to offline or brick and mortar shops. In the background of abuse of dominance cases under Section 4 of the Act, the competition authorities initiate their investigation by ascertaining the relevant market definition. It is far less likely that any single entity will be found dominant if a relevant market is very large. This was substantiated in the European Commission’s review of the Facebook’s WhatsApp acquisition, where the Commission blatantly refused to define a market with respect to the provision of data or data analytics since neither party was active in the provision of data to third parties.
2. Monetization of data supports free products for consumers
The most prevalent benefit in the Big Data era is the ability of firms to offer highly subsidized or free services to customers and in return, the firms get permission to monetize customer’s personal data on the other side of their business. So, criticising the provision of free services, as it was argued in the case of Vinod Kumar vs. WhatsApp Inc. that messaging application WhatsApp has abused its dominant position in the relevant market in contravention of the provisions of Section 4 of the Competition Act by indulging in the practice of predatory pricing is baseless. The Competition Commission of India held that no prima facie case of contravention of any provisions of the Act can be made out in the instant matter. The ability to offer high-quality services to consumers for free is a procompetitive effect of Big Data monetization and not anticompetitive harm. In fact, it is more difficult for new entrants to compete with established rivals in free services. The dating application Tinder, which was initially launched in September 2012, had no access to user data, but nevertheless, it became the market leader within a couple of years.
3. Harm to privacy
4. Data-driven mergers and data-driven defences
Most of the proposals to use competition law to address privacy are concerned about mergers or acquisitions by data-rich companies that combine previously separate pools of information about consumers. The critics contend that the combination of data itself raises a privacy concern warranting intervention, rather than arguing that the transaction reduces privacy as a non-price attribute of competition or that it will create undue power in the market for consumer data. Although concerns about the creation of large datasets with personal information are not baseless, attempting to address these concerns by fitting them into an analytical rubric preoccupied with economic efficiency creates more issues than it solves. First, it ignores the fact that consolidation of data across business platforms often creates significant efficiencies and gains in consumer welfare. Moreover, a thorough search of case laws and agency actions reveals that no case law on Big Data or any action of the antitrust agency consents that consumer data constitutes a barrier to entry. Over the last five to ten years, antitrust agencies have considered a number of mergers and instances of conduct involving potential theories of harm built around Big Data. One of the earliest examples of this was Google’s acquisition of DoubleClick in 2007. The competition authorities accepted the merger stating that Google and DoubleClick were not potential competitors in any market for online advertising or services and incumbent’s access to users data cannot be treated as a barrier to entry in online advertising. Similarly, both the Federal Trade Commission and the European Commission while examining Facebook’s 2014 acquisition of web-based messaging platform WhatsApp observed that even if Facebook were to begin collecting data from WhatsApp users, there would be no competitive harm, as “there will continue to be a large amount of Internet user data that are valued for advertising purposes and that are not within Facebook’s exclusive control.”
The sole purpose behind government antitrust review of mergers and acquisitions is to distinguish and identify transactions that harm competition. The Commission lacks legal authority to require conditions to this merger that do not relate to competition law. Thus, utilization of antitrust as a sword to address Big Data concerns dangers decreasing competition and innovation.
In India, the Competition Act, 2002 is unfit to deal with challenges of Big Data and hence a Committee of experts headed by B.N Srikrishna was appointed by the government to balance the privacy concerns and Big Data challenges. The committee has submitted a draft bill establishing omnibus privacy and data protection framework. This Personal Data Protection Bill, 2018 is a notable step in India’s pursuit of a fair digital economy realm and it marks a watershed moment in the domain of data protection in India. Therefore the most appropriate remedy to deal with the big problems of Big Data is the application of data protection laws and privacy laws.
Responsibility for the information and views set out in this Article lies entirely with the authors. Reproduction is authorised provided the source is duly acknowledged.
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 Supra note 6.
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 The Personal Data Protection Bill, 2018