Data governance and competition

Event report

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The digital economy today is based on the ‘winner takes all’ principle, the tendency for monopolisation and market concentration. It needs updating. The new toolbox could include ex-ante mechanisms that aid competition. This pro-competition approach should focus on expanding consumer choice, data sharing and interoperability, and go beyond regulation if necessary. In addition, innovation should be protected as big tech companies are reluctant to make a drastic shift in how they use our data.

The Competition Law Framework is vital for the functioning of our economies and currently it faces several issues across the globe. Mr Ioannis Lianos (Chair of Global Competition Law and Public Policy at University College London) presented the takeaways revealed by the BRICS-Report ‘Digital Era Competition’ which he co-authored. To assess what competition is needed, we should go beyond simple economics theories and remember that competition strategies depend more on pricing. The big issue is that the current paradigm of competition focuses on consumer welfare, too narrowly defined as consumer surplus. ‘This is important, but issues like privacy, economic democracy, complex equality are important considerations in the context of the digital economy’, he said. The moderator, Mr Philipp Steinberg (Director-General for Economic Policy, German Federal Ministry for Economic Affairs and Energy) said that Germany will soon release a recast of its competition law that will include some of these points. Mr Martin Schallbruch (Deputy Director of the Digital Society Institute at ESMT Berlin, Co-Chair of the German Federal Commission ‘Competition Law 4.0’) highlighted that in Europe, the basic principles of European competition law are good, but need additional instruments to address the roles of data and market-dominant platforms, and the effectiveness of antitrust enforcement.

However, some clear recommendations on how to improve the framework are already there. The issue of data governance is at the centre. Schallbruch noted that better access to data is a competitive advantage in the digital economy, and we could strengthen consumer power in managing their own data. This could be done via the so-called data trustees. The data trustees would act on behalf of consumers as an intermediary towards companies who want access. They would ensure the use of personal data in line with the data protection preferences and purposes the customer defines in advance. The EU Commission should have clear rules against conglomerates and dominant online platforms. The rules such as prohibiting preferencing of on-services, strengthening data portability, and interoperability, especially of Internet services to these platforms. We also need faster antitrust enforcement. The ‘Competition Law 4.0’ expert group proposes the establishment of a European digital market transformation agency as support to antitrust enforcement. The United Kingdom has a similar vision according to Mr Philip Marsden (Deputy Chair of the Enforcement Decision Making Committee of the Bank of England, Professor at the College of Europe, Member of the UK Digital Competition Expert Panel). The UK is working on establishing a digital markets unit that would focus on firms with strategic mark status long before they secure dominance, which thus enables quicker enforcement mechanisms.

The question going forward is how to have both pro-competition and ex-ante regulation, and is this enough? The answer is a balance of data sharing, data portability, and interoperability that create a new layer for competition. The competition on platforms and among platforms are two different sets of regulation. Lianos reminded the room that changing competition regulation alone is not enough, and proposed a ‘toolkit approach’ mentioned in the BRICS-Report. The toolkit approach varies among countries, jurisdictions, institutional capabilities, and the stage of economic development. The participants agreed that competition would benefit from opening and sharing data, from big players to small, under the regulation that protects the user. It would be good if the user could have a choice in the marketplace. Some would prefer to pay for a service without giving away their data, some would give it for a free service, and others would want to be paid for their data. The choice is important, especially with the tendency to have personalised markets. Finally, vertical or intermediation power deserves more attention. This is the power a company has because of its status and position in our society. The current metric of market power does account for it, but that would help see competition framework in a more holistic way.

By Jana Misic