When evaluating proposed mergers and breakups, control of data should be considered along with market impact.
As former FCC Chairman Tom Wheeler points out in a recent post, proprietary data is a source of market control and he cites two examples where opening data has led to competition. In the US, a law mandating open access to video content enabled satellite companies to compete with cable companies and in the UK, open access to customer banking data led about 200 organizations to offer new services in its first year.
Wheeler's position is elaborated in Unlocking Digital Competition, a report from the Digital Competition Expert Panel convened by the British Treasury Department. Their data-related recommended actions are:
- Establishing data mobility and open standards between services: overcoming network effects which cause markets to tip by requiring systems to ‘talk’ to each other using open, standardised formats. This will mean consumers can port their data between networks, interact with users on other, similar networks, and smaller firms can plug their services into those of bigger ones. New business opportunities will open up that use, manage, and combine data made available. Consumers, in turn, will have new choices of digital services, with switching made much easier.
- Securing access to non-personal and anonymised data: tackling the data barrier to entry for smaller and newer firms, while protecting privacy. The power of bulk data driving economies of scale and scope is a key reason new firms struggle to compete and bring innovative services to consumers. Overcoming this barrier will allow the digital economy to remain dynamic.
- Sustain and promote effective competition in digital markets, by establishing a pro-competition digital markets unit, tasked with securing competition, innovation, and beneficial outcomes for consumers and businesses.
- Take more frequent and firmer action to challenge mergers that could be detrimental to consumer welfare through reducing future levels of innovation and competition, supported by changes to legislation where necessary.
- Update and effectively use tools against anti-competitive conduct to help them play their important role in protecting and promoting competition in the digital economy.
- Continue to monitor how the use of machine learning algorithms and artificial intelligence evolves to ensure it does not lead to an anti-competitive activity or consumer detriment, in particular to vulnerable consumers.
- Conduct a market study into the digital advertising market encompassing the entire value chain, using its investigatory powers to examine whether competition is working effectively and whether consumer harms are arising.
- Engage internationally on the recommendations it chooses to adopt from this review, encouraging closer cross-border co-operation between competition authorities in sharing best practice and developing a common approach to issues across international digital markets.
The last strategic recommendation -- international engagement -- recognizes the global nature of the Intenet. (Note that the Digital Competition Expert Panel was chaired by an American). Nations like China and the US have different goals with respect to competition, but democratic, capitalist nations should strive to adopt compatible institutions and policies. In the era of Brexit and MAGA, we need to work with other nations -- I'd rather end up with two Internets than fifty.
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