BIG DATA AND COMPETITION LAW: EVOLVING REGULATORY TRENDS AND WAY FORWARD

Updated: Jul 13

[Aaryana Anand is a fourth-year student at Gujarat National Law University, Gandhinagar]


In ‘The Hitchhiker’s Guide to the Galaxy’, a supercomputer was invented to estimate the answers to the “Ultimate Question of Life”, the Universe, and Everything. The computer was called Deep Thought, which took approximately 7.5 million years to answer the question, to which the answer ‘42’ was held to be highly unsatisfactory. There are two very important lessons to be learnt here. First, technological advances do not follow predictable progress curves. Second, it is not practical to always approach unfamiliar challenges with a nut/sledgehammer approach. More acceptable would be to carefully consider what questions need to be answered and in which way. Digital Markets have sundry concerns. However, the ‘Ultimate Question’ would comprise those challenges that are sprung before development in the antitrust regulations and whether the currently available and presentable tools sufficiently tackle all such concerns raised.


Big Data, its continuous rise in our world and its effects from numerous platforms and networks complicate conventional market dynamics. Albeit without an exact definition, Big Data has been frequently described by the three V’s- the Volume of information handling, the Velocity at which information can be handled, and the Variety of information that has expanded with new endeavors currently storing data.


If more Data could mean better services and arrangements, smaller organizations with access to less information would pull in fewer users. Differential levels of access to data, likewise, fortifies the market power of industry giants, which further guarantees the concentration of higher incomes, valuations and more ventures for further growth for Big Data. For example, the usage of IPR licensing prevents entry of new players into an industry. This is particular of markets such as agriculture, where seed genome licenses by multinational seed manufacturing corporations (like Monsanto) create barriers to entry. This is to be perceived in light of the immense research and development costs that prevent the development of alternative products at competitive prices. Years of data advantage go a long way in mitigating data acquisition costs.


Another significant data barrier is the inter-operability of information. The absence of interoperability between contenders prompts market monopolization and hampers the appropriation of digital platforms and various other like services. In 2004, the European Commission found that Microsoft was at risk for abusing its dominant position in the Operating System market by virtue of its denial to supply interoperability data to its rivals. Thus, Microsoft was ordered make several datasets accessible to permit competitors to interoperate on the Windows platform. The Economies of Scale imply that initial expenses or the costs of entering the market are high, while marginal costs are, for all intents and purposes, non-existent once the framework is up and running. This double barrier to data implies that in markets that utilize data as a key resource, wherein the search engines or matching platforms are regularly concentrated between a couple of key players, competitors must continuously engage with this upper hand that Big Data possesses. It thus becomes imperative to attempt to analyze the implications of these issues in anti-trust law.


Foreign Trends in Anti-Trust: Addressing the rising impact of big data on market elements


EU has been proactive by adopting an interpretation of the Treaty on the Functioning of the European Union (‘TFEU’) and European Charter of Fundamental Rights which considers the harms of the collection of personal data of individuals. It imposes strict compliances on the collection of individual information. In 2016, the German Federal Cartel Office instituted an investigation against Facebook on grounds that it had misused its dominant position in the digital economy by altering, without notice, its security, cookies and terms of use policies, which was an encroachment of data protection laws. This advancement, contradicts the decision of the European Commission, during the mergers of Google/DoubleClick, Microsoft/LinkedIn or Facebook/WhatsApp, where it had held that, “Any privacy-related concerns flowing from the increased concentration of data […] do not fall within the scope of the EU competition law rules”.In 2021, the European Commission has instituted a fresh investigation into Facebook to assess whether it breached EU competition rules by using data gathered from advertisers on its platform to compete against them.


The UK Competition and Markets Authority (‘CMA’) is also examining whether Facebook’s use of data has given it an unfair advantage over competitors in providing services for online classified ads and online dating”. The CMA is investigating whether Facebook has unfairly used the data gained from its advertising to benefit its own services, particularly Facebook Marketplace and Facebook Dating. Such advantages make it more difficult for competing firms, particularly smaller businesses, which could reduce customer choice in the long term. This is the third investigation that has been instituted by the CMA in the last two years concerning a suspected breach of competition law. Investigations are also open against Apple and Google.


Big Data and Indian Antitrust Law


In Facebook’s acquisition of WhatsApp, as opposed to the decision of European Commission, the Competition Commission of India (‘CCI’) gave a clean chit to WhatsApp for not having abused its predominant position. As per the CCI decision, the market for instant messaging services using consumer communication apps through smart phones” had only one category of players, and none of the players in this category levied any subscription fee or charge.


In the above-mentioned situation, Facebook could, in truth, misuse the dominant position that WhatsApp enjoys in the Indian market, by moving the traffic of information to its advantage. In the online data market, a merger between a predominant business and a smaller player would bring about the new entrant accessing a combination of datasets. If the smaller player worked predominantly in a different market prior to the merger, the consolidated datasets could make it untenable for competitors to access the new