By Vasundhara Shankar and Mudit Kaushik
August 26, 2021
Pioneering and futuristic technology companies have been known to provide free services to their users and, in turn, have amassed a massive amount of data. Companies such as Facebook, Google, WhatsApp have become a gold mine of data and are encashing on it, like never before. While these companies have been using data mostly for the purpose of targeted advertisements and primarily revenue generation for their custodians, regulators foresee a situation where these companies might gain a monopolistic position in the market, thereby creating suffocating competition for other, smaller players.
This takes us to the question of whether monopolistic data ownership and behaviour concerning data should be regulated through the use of competition law provisions? Is there a valid ground in the regulator’s perceived apprehension and fear in the manner of handling data?
OBJECTIVES OF THE LAWS CONCERNED
In order to understand, appreciate and discern the synergy between Data Privacy Laws and Competition Laws, it’s important to first consider each of these laws, their aim, purpose and agenda, in isolation.
The concern that competition regulators have had across the world has primarily been over activities of data-driven companies controlling the market by perhaps employing algorithms to fix prices, facilitate cartel agreements, which may lead to tacit collusion. This possible collusion ought to cause discomfort to regulators across the board and globally, too, considering how easily companies can avoid legal scrutiny under the current and existing legal frameworks since technology has gone way beyond what legislators perhaps accounted for. Legislations tend to define monopoly or other such concepts for only an offline world. There have been several judgments across the world, especially in the European Union, concerning monopolistic activities by entities such as Google & Facebook, and hefty fines have been imposed against them.
A bare analysis of this would make one wonder - would the usage of data in this manner by companies then not fall under the direct ambit of Competition Laws? Let’s dive deeper into the concept of Competition Laws.
Competition Law, as the name suggests, is a law or a set of regulations intended to regulate inter alia, anti-competitive practices and dominance in the market by an entity. This law seems to be primarily backed by the concept that once a company acquires a dominant position in the relevant market, monopoly will be automatically created, difficult to control and important to regulate.
UNCOVERING THE DISGUISED LINK
Data, as a commodity, will tend to grow progressively and proportionally for a dominant company, owing to its significantly high market share, and ever-growing access. For a smaller entity, gaining such traction and thereby procuring such volumes of data, is unimaginable. In addition, it might take them years to collect any substantial volume of data. In fact, the nature of data and the privacy rules around it, make it impossible for smaller entities to gain access to or acquire any of this data. In addition to this, since “Data” includes personal information such as contact number and email address for communication, user behaviour such as purchasing activities, spending patterns, etc., the dominant entity has the weapon to regulate and capitalise on several different fronts, by using such data.
With the growing use of technology and the internet for every little thing today, it becomes easier for these online companies to regulate, control and influence a user using cookies, re-marketing services, history details, chat conversation mentions, voice assistant instructions - you name it, they have it!
One may argue that the competition law practically should come into play when the circumstances so transpire that the small players are unable to replicate the data which the ‘Big’ players have amassed and the same is causing a high level of prejudice to maintain fair competition in the market between all sized players. As a counterclaim to the said proposition, it can be asserted that collection is an activity which can be done by small players as the ‘Big’ players do not necessarily and always block the small players from doing so; hence, the exercise of collecting and storing data should not be construed as competitive conduct.
IN LIEU OF CONCLUSION
The million-dollar question, an answer to which perhaps will save the big players from paying millions of dollars in fines, is whether competition law should be given the steering to drive the data collected by the companies? More specifically, should data-rich companies be completely let loose to dominate the market and eliminate any company which could become a potential competitor in the near future, or should competition law have the ultimate power to monitor minute moves? Should access to, use of and application of bigdata by an organisation be considered a competitive threat to industry, segment or group of companies?
It would definitely be ethical to have healthy competition in the market, and the position of the small players should not be prejudiced outrightly by the big data players. An appropriate law should certainly bring a strict action/fine to the big data players so that they do not, in an unprincipled manner, use the data and manoeuvre it in a way that may drastically impact consumer choices and prices.
However, since the competition has to be fair, it would be just to state that the competition office(s) should not always keep the big players under surveillance merely with the aim to make them a target for hefty fines. As speculations have it, the evolving concept of the overlap of data privacy and competition law has given birth to the emerging concern that there might be overregulation, leading to a massive disadvantage to innovative conglomerates that are using evolving technologies, massive amounts of data to change everything from surfing to shopping experience.
We may try to find a perfect solution to the problem at hand; however, we know that this puzzle does not have a piece that might fit in perfectly. Good harmony between competition and data privacy laws is the need of the hour, and regulators must ensure that none of the provisions of either law overrides or contradicts the provision of the other. It might also be a good move for the big players to offer some portion of non-personal information to small players which they can use to boost their presence, and there is no such unfair competition in the market, and help them reduce the tension and obvious prejudice that regulators have against them, owing to their superior position in the mark.
However, using competition law to vindicate privacy interests could make it harder for innovative companies to thrive with new products or technology-based offerings, which could potentially result in less competition and, in fact, trample the ever-exploding market. A regulation to work on the ways in which data might be safely monetised, a ceiling on how much manipulation or “tackling” can be done using data, should perhaps help both the bigger as well as the smaller players.
This debate has, however, seen a huge following of the anti-synergy bandwagon that have been found to support the theory that data should not be considered as a barrier to entry since it is readily accessible to most parties in the market. They perhaps believe in the adage “give credit where it’s due” and propagate the theory that if bigger companies have managed to collect, process and store humongous amounts of data, then they should be allowed to monetise and encash the benefit it brings alone as well. Another of their favourite arguments is that data’s ever-changing nature and a very brief “shelf life” makes it cheaper to store, process and use, thereby making it easier for an entity of any size and calibre to have a fair chance in the game.
The issue has been getting increasing eyeballs and has been discussed in several cases in India. For instance, in the case of Vinod Kumar Gupta vs. WhatsApp Inc., the Competition Commission of India noted that any privacy concern was outside of its purview and had to be dealt with exclusively under the Information Technology Act, 2000 - a very “birds-eye” view of an issue which absolutely needs a much more extensive consideration and deliberation.
This is perhaps why, in Re Matrimony.com vs. Google, the CCI noted:
“[I]t would not be out of place to equate data in this century to what oil was to the last one. The Commission is not oblivious of the increasing value of data for firms that can be used to target advertising better. Moreover, the data can be turned into any number of revenue-generating artificial-intelligence (AI) based innovations.”
This is well-supported by cases that have been decided in the European Union to say that “data is key in the digital economy and the same is to be considered from the competition perspective.”, and where it was also explicitly held that to protect the fundamental right to informational self-determination, data protection law provides the individual with the right to decide freely and without coercion on the processing of his or her personal data.
In this sea of data, a genuine aspiration would be that all sizes of fish, whether big or small, co-exist with the help of fair law, and regulators channelize their powers in providing solutions to the problems instead of merely imposing fines. While traditionally, price points and the market size were what that determined monopolistic competition in an industry, in today’s digital market, the parameter for competition analysis shifts focus as competition is increasingly focusing on a non-price element such as quality. The premise of this comparison is primarily based on the idea that consumer welfare is the prime focus of the competition law, and in today’s world, competition drives privacy, and when one declines, so does the other - creating a direct correlation between the two.
Vasundhara Shankar is Managing Partner, Verum Legal. She is a startup lawyer and focuses on data privacy, IP, tech laws, white-collar crime, dispute resolution & legal tech innovations.
Mudit Kaushik is Counsel, ZeusIP Advocates LLP. He is an IP and Tech law lawyer skilled in pre-filing strategies, prosecution, opposition, brand enforcement, data protection laws and domain name disputes.
The views or opinions expressed are solely of the author.