Big Data is an anti-trust issue.
That’s the latest warning shot across the bows of the US tech industry to come come out of Brussels where the European Union’s Competition Commissioner Margrethe Vestager is arguing that the gathering of data by tech firms, most notably those with a US headquarters, is competitively harmful.
It’s another barely-disguised piece of saber-rattling from the European Commission in the direction of the US tech industry, coming at the same time as the deadline to find some cobbled-together Safe Harbor substitute looms at the end of this month.
So, just the right time to lob another firestorm into the mix.
Now, at first sight, you might be tempted to ask what Big Data has to do with Vestager, whose remit as Competition Commissioner doesn’t include privacy issues. And you'd be right to do so.
But the Commissioner has come up with a line-of-argument to justify getting involved, which runs as:
If just a few companies control the data you need to satisfy customers and cut costs, then you can give them the power to just drive rivals out of the market.
And from that premise, it’s a simple Eurocratic step to reach the conclusion that what’s needed is centrist intervention in the free market. Or as Vestager puts it:
If a company's use of data is so bad for competition that it outweighs the benefit, then you may have to step in to restore the level playing field.
If we analyze a merger, if we have a suspicion or concern when it comes to antitrust, if it comes to data, of course we will look at it. It may be a competition problem.
Vestager goes on to play the 'all in the best interests of the consumer' card:
You might assume that people are generally happy with the way their privacy is protected.
But the evidence shows that's not the case. A recent survey found that less than a quarter of people trust online businesses to protect their personal information.
Some people say this is a competition problem. They say that if the market worked properly, companies couldn't get away with letting down their customers like this.
To which the response is clearly: who exactly are these people you're talking about, Commissioner?
Vestager’s attempt to expand her remit has come under fire already. Diego Zuluaga, Head of Research at the European Policy Information Center, EPICENTER, makes the point:
At no point does the Commissioner explain how such dominance in the collection of user data might come about. Nor does she go into further detail about how competition authorities could gauge the extent of a firm’s “control” over data.
Zuluaga sees little reason to accept that competitive concerns could arise in the collection of customer data by online platforms and other digital firms, arguing:
Data is unlimited and non-rival. One firm’s use of a customer’s data does not prevent other firms from using it. Furthermore, any action/ statement/ click by users is a data point – user data is endless.
Data is what you make of it. The flip-side of point 1 is that the key issue about data is not how much of it you have, nor how much of it your competitors have. Rather, the point is what you do with that data. Have you got a sophisticated method for sifting through the pile of data points collected? Are you able to prioritise those bits of data which are most likely to lead to a business transaction?
Without a useful way to monetise the information collected, data is useless. And therefore, those who look at data as valuable in itself are barking up the wrong tree. What is valuable is the business proposition that is tied to the data, for instance, the algorithms that refine results and recommend additional items for purchase on the basis of key words and previous transactions. It is the latter that characterise digital innovation and determine the success of online firms.
Mike Weston, CEO of data science consultancy Profusion, also finds Vestagers reasoning “perplexing”, commenting:
Bulk collection of data by businesses or governments is seldom a good thing. However, penalising companies because they use better techniques to gain and action insights from this data doesn’t seem fair. Simply being better at data science or analysis than your competitors shouldn’t be an anti-trust issue.
The fear that if a business has a lot of data it would be able to erect barriers against competition is unfounded. With the advent of the Internet of Things and wearable devices the sources of information that different companies could gather data will skyrocket. Add to this the ability of any company, from start ups to huge global corporations, to use data science techniques to analyse this information and it’s difficult to see how any one company will be able to create a monopoly on data.
Vestager, a 47-year-old Danish politician, has made a lot of headway since taking up her position in 2014. Two notable campaigns with her imprint on them are fresh investigations into Apple’s tax practices in Ireland and the instigation of an inquiry into e-commerce regulations. She’s also behind antitrust charges against Google, claiming that it has unfairly favored some of its digital services over rivals.
She insists however that none of this is indicative of any form of protectionism or a deliberate targeting of US tech firms, telling CNBC:
I hear that as well, and I take that extremely seriously, because if that was true, it would be highly critical. So of course we look at the stats and we cannot find the bias.
Look harder, Commissioner!
And stick to what you're supposed to be doing.
Vestager is forced to concede:
We haven't found a competition problem yet.
But in the 'never say die' world of the European Commission, she adds hopefully:
This certainly doesn't mean we never will.
If anyone can, I'm sure Commisioner Vestager is just the person to do it.