Do competitors have a legal entitlement to access to exclusive usage data?
The current scandal involving Facebook and Cambridge Analytica underlines once again very clearly that collecting, analysing and using exclusive usage data is now of tremendous importance for companies active in the internet economy. Not only Facebook, but also other companies such as Amazon or Google process enormous quantities of data every day. As a result, Google, for example, with the Android operating system installed on many smartphones, has made it into end users’ jacket or trouser pockets. This means that the company has an almost unique opportunity to create comprehensive profiles of smartphone users’ movements and profiles. Meanwhile, Amazon has been present in many people’s living rooms for some time now with its Alexa language assistant, where it has direct access to usage data and profile information when customers place orders online using apparently harmless voice commands. And last but not least, so-called smart cars – intelligent, networked vehicles – are now on the agenda with the next stage of digital development, which will benefit from the processing of enormous quantities of data and also be dependent upon it.
The comprehensive gathering of data by the large internet companies has long since been attracting the attention of competition authorities. For some while now, the European Commission has been taking a close look at the precise way in which Google Android functions. Working at the interface between data protection, consumer protection and the protection of competition, the German Federal Cartel Office is currently examining whether, and how, gathering and using data from Facebook might represent an abuse of market power. In doing so, the Office is to some extent moving into relatively unknown territory, because neither data protection nor consumer protection are among the areas that a competition authority traditionally works in.
Andreas Mundt, President of the German Federal Cartel Office, recently let it be known that his Office considers Facebook to have a dominant position in the market – “dominant” as defined in competition law – not least because of its comprehensive gathering of data. One reason for this assessment might be that companies such as Facebook, Amazon, Google & Co. benefit from so-called learning effects. Any company which has been active for some while in markets within the internet economy, and which has been able to access exclusive usage data over a number of years, has learned a lot about the behaviour of its users and, as a result, has carved out a long-term market position which is almost untouchable by any new competitors. Against this background, it can be both technically and economically difficult, if not almost senseless, for any new entrants in the market to take on the long-established companies in gathering and analysing large quantities of data. The established companies have what is practically an unassailable lead over others in the knowledge they have – not least because of ever faster data processing on the internet. Potential competitors with new and creative ideas can find no way into the market because they have no, or not enough, processed data.
With this in mind, it would be a good idea if, in the current debate about the data-based power that large internet companies have, the focus were turned not only on aspects relating to data protection and consumer protection, but also increasingly on questions of competition law in the classical sense. Do the competitors of Facebook, Amazon, Google and Co. have a legal entitlement to access exclusive usage data? In other words, can competition law be used to oblige certain internet giants to share with their competitors the data they have gathered – and, as a result, also information about users’ behaviour? An essential and fundamental condition for any such obligation would be that exclusive data usage represents an abuse of market power – because neither German nor European competition law specifically addresses market power and monopolies exercised by companies. Accordingly, there is no objection, from the point of view of competition law, to some companies in the internet economy having large quantities of data and a powerful position in the market. The complex central question in any analysis undertaken under competition law – and it is a question to which there is not always an easy answer – is: Under what conditions does such an abuse occur? In comparison with old industries, the internet economy has brought to light a series of new problems which are not always easy to deal with using the traditional principles of competition law. An obligation to allow access to data in this overall sense, for example, does not seem to be very reasonable at first glance, as it would be a not inconsiderable intervention in the entrepreneurial freedom of the large companies involved. It is clear, however, that any new or disadvantaged market players would, by means of such access to data, be able to compete faster and, as a result, basically be able to exercise welcome competitive pressure on companies already established in the market. This would result indirectly in recognizable benefits for internet users, because, if there were sufficient pressure from competitors, Facebook for example would hardly be able to afford another data scandal. Any demands for access on the part of other companies would not be alien to competition law. In individual cases, such demands may be necessary and appropriate to create fair competitive conditions.
Nevertheless, a single-case analysis under competition law, however advisable, does mean that it would be impossible to find any uniform answer to the question of an obligation to share access to data. The starting point, though, must always be the fundamental recognition that competition law wishes to protect and promote outstanding entrepreneurial successes. The principle of competition remains valid: good entrepreneurial work must find its reward and prevail in the market. Therefore, in connection with the issue of obliging companies to make data accessible, the competition authorities should in future ask themselves more often what special entrepreneurial achievement Facebook, Amazon, Google and Co. can actually be credited with when they gather and analyse data. For this purpose, it is not only a legal or economic view that is required, but rather a comprehensive technical analysis of the internet service in question. Such services do not just consist of "one" algorithm or "one" set of data. Rather, it is all about technically highly complex computer centres consisting of a large number of hardware and software components. In the case of usage data, however, what quickly becomes noticeable is that what is at stake at bottom is internet users’ data, which are merely processed fully automatically using algorithms and computing power. It would appear, at the very least, to be debatable whether, ultimately, this is an entrepreneurial achievement in the sense mentioned above, and one worthy of being protected.
In his dissertation written at the University of Münster, the author, Dr. Jan Markus Weber, dealt with the question of the extent to which competitors should have access to the algorithms and data sets held by the dominant undertaking in the search engine market, Google. Jan Markus Weber is currently a trainee lawyer at the Berlin Court of Appeals.