Every day you can read about high expectations of big data. For example, predictability of energy usage, or in the healthcare sector to diagnose diseases at an early stage. However, there is also a potential downside to big data. What will it do to competition? Will algorithms deliver ‘best deals’ for consumers or rather for companies? Will there be an algorithm monopoly or oligopoly? How should regulators act with regard to the newly emerging circumstances around competition? To regulate or not to regulate? If so, then how?
We can see regulators struggling to answer these questions, or maybe even struggling to find the right questions. At the moment it is not clear who has the lead in forming and interpreting competition legislation and enforcement in the area of big data. Is it the European Commission (DG COMP) or national regulators?
A hybrid form of national and supranational regulation seems to be popular amongst competition law enforcers. I will argue this is not a good development for trust in the single market. Oscar Wilde plays a clarifying role in this matter.
Regulatory parameters: cultural diversity as a motive for national regulation and enforcement diversification
In May this year, the German competition authority, (Bundeskartellamt, BKA), together with the French Competition Authority (l’Autorité de la Concurrence) published a joint report on ‘Competition Law and Data’. This report makes a call for the appreciation of ‘cultural diversity’ when it comes to parameters that can be taken into account by national competition authorities. Although law-making in itself is a reflection of shared values, the margin of appreciation of taking cultural diversity into account in case of law enforcement incorporates a certain risk. This is especially true since national regulators, rather than the European Commission (DG COMP), are taking the lead in exploring the world of big data and online platforms. This in itself could lead to fragmentation of regulation and hamper the ambitions of an EU Digital Single Market (EU DSM).
In his article ‘SPONGE’, professor Ariel Ezrachi acknowledges the need for a consistent, objective, accurate and fair application of competition policy. “The benefits of a well-defined and transparent competition law regime cannot be overstated”, he writes. However, as he describes it: “the sponge-like characteristics of competition law make it inherently pre-disposed to a wide range of values and considerations. Its true scope and nature are not a ‘given’ of a consistent objective reality, but rather a complex and, at times, inconsistent expression of many values.” With the exception of fundamental rights, this valid observation applies to every type of law-making.
However, the nuance professor Ezrachi shows in his article may be lost when regulators use the argument, in particular when politicians get involved in ‘defending’ competition (read: protecting competitors and/or national champions). In times of growing nationalism, one should stand up for single market principles for the benefit of all European citizens.
Cultural diversity should be respected in all areas except the supranational ones. If cultural diversity seems to be a key factor, it most likely concerns a topic that should not be dealt with at EU level in the first place, but at national level. Naturally, cultural diversity plays a role in the law-making process at EU level as well. However, as soon as the law enters into force, it should be applied consistently, leaving no room for ‘cultural’ interpretations at the level of the Member States.
Culture depends on cookery. For myself, the only immortality I desire is to invent a new sauce. – Prince Paul. (In: Vera, or the Nihilists – by Oscar Wilde)
When the BKA goes solo as in the Booking.com case, this should not be cherished as a celebration of cultural diversity. Rather it is a warning signal, because it weakens the single market and it appears to protect the interests of specific national interest groups. It seems like BKA president Andreas Mundt is keen on cooking his own competition sauce.
Differing national or even local rules for online platforms create uncertainty for economic operators, limit the availability of digital services, and generate confusion for users and businesses. (p.4, Online Platforms and the Digital Single Market Opportunities and Challenges for Europe)
When ‘cultural diversity’ becomes an explicit argument for regulators and public policymakers to scrutinize companies differently at the national level, it is time to exercise caution.
The road ahead: a targeted approach to online platforms
At the end of May 2016, the Commission published its ’Communication on Online Platforms and the Digital Single Market. Opportunities and Challenges for Europe‘. As a general rule, when elaborating responses to issues related to online platforms, the Commission will take the following principles into account:
- a level playing field for comparable digital services;
- responsible behaviour of online platforms to protect core values;
- transparency and fairness for maintaining user trust and safeguarding innovation;
- open and non-discriminatory markets in a data-driven economy.
”The need to foster the innovation-promoting role of platforms requires that any future regulatory measures proposed at EU level only address clearly identified problems relating to a specific type or activity of online platforms in line with better regulation principles. Such a problem-driven approach should begin with an evaluation of whether the existing framework is still appropriate. The collaborative economy is a good example where rules designed with traditional and often local service provision in mind may impede online platform business models.” (p.5, Communication on Online Platforms)
EU Competition Commissioner Vestager on big data
On 29 September 2016, EU Commissioner Vestager, who is responsible for Competition, delivered a speech at the joint conference of the European Data Protection Supervisor (EDPS) and BEUC (the EU umbrella association of Consumer Organisations). She demonstrated a balancing act, emphasising on the one hand the enormous potential of big data and the need to foster innovation, while on the other hand stressing the need to scrutinize big data companies in order to protect rights of the individual, especially in terms of privacy.
'Because if we want big data to fulfil its promise, then we need to enforce the rules effectively.
Already, people are worried about how big data will affect them. The benefits it has to offer can seem far away – almost like science fiction. But people's sense that they’ve lost control of their personal data, the sense that data is making companies so powerful that no one can control them – these things are very immediate.
Those who work with big data need to take this seriously. It's up to them to convince people that they will use data properly. That they can be trusted to keep people’s personal data safe from hackers. And that they won't use it to stifle competition.
But we also have a part to play. We can show people that companies that use big data have to follow the rules.' (Commissioner Vestager, 29 September 2016)
Few people will probably disagree with Commissioner Vestager. But the real question is this: in the end, who will lay out the (dominant interpretation of) competition rules for the European internal market in this matter? New rules in themselves are not the solution. Guaranteeing common rules and acting accordingly is much more important. Therefore, I hope competition master chef Vestager is ready to cook, because I cannot wait for the ‘Vestager Sauce’ from Brussels. For competition reasons, I expect this to taste better than a new sauce from the Alsace for example.
What’s next: Slovakia will host a European Competition Day on Big Data
The next pan-European competition enforcement event where big data is on the menu will be held in Slovakia. The Antimonopoly Office of the Slovak Republic will host a European Competition Day in Bratislava on 23 November 2016. This conference is organised under the Slovak Presidency of the Council of the European Union. The main discussions will be dedicated to the issue of more effective enforcement in the private as well as in the public sphere and to a specific topic: big data.