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The business revolution of big data: a curse or a blessing for consumers?

 di Annalisa Pistilli  Lucia Antonazzi In the digital era, online services represent an efficient problem-solving instrument for all of us. As a result, anyone, as users of such services, is used to disclose masses of personal information with the everyday use of the IT applications, platforms and social networks which are the so-called “big data”.

“Big data” have become a significant source of power for all the companies playing an important role in digital markets, insofar as the bulk of such information, even if is perceived as “free’, stands as a sort of indispensable currency used to pay for those services. At the same time, a great part of “big data” is made up of (but not exclusively) personal data, so users become increasingly exposed to a lack of protection in terms of consumer welfare and right to privacy.

In addition, this risk is likely to grow more and more in case of concentrations between undertakings or, at least, in case of abuse of market dominance where firm process massive amounts of personal data, as demonstrates the last investigation started by the Bundeskartellamt against Facebook Inc., USA, the Irish subsidiary of the company and Facebook Germany GmbH, allegedly responsible for the exploitation of its dominance position in the market of social networks.

On this regard, the challenge imposed to competition authorities is to adopt a more forward-looking view in order to protect consumer welfare, considering how competition will evolve in the future scenario where data is the currency of the new digital markets.

More specifically, when data-driven businesses incur significant costs to obtain, store, and analyze data (as well as provide “free” services to collect data), they may have strong incentives to limit their competitors’ access to these datasets, prevent others from sharing the datasets, and could likely be averse to data-portability policies that threaten their data-related competitive advantage. As a result, companies which want to secure the competitive advantage granted by the collection of such big data, may adopt strategies aimed at preventing rivals from accessing the data (such as through exclusivity provisions with third-party providers) or foreclosing opportunities for rivals to procure similar data (such as making it harder for consumers to adopt other technologies or platforms).

 In addition, big data results in another concern as well: while they can benefit consumers in certain instances, there are a range of new consumer harms to users from its unregulated use by increasingly centralized data platforms. Consider that, for example, information asymmetry between big data companies and consumers is easily converted into economic inequality when one side of every transaction has so much more knowledge about the other during bargaining. The increasing information asymmetry in consumer markets, driven by data mining and facilitated by online services, may play a significant role and represent an additional input to the economic inequality.

This is what it is likely to happen in the abovementioned case concerning Facebook terms of service: the huge amounts of data collected by this company could be used as a market leverage on detriment of the users that, in many cases, aren’t aware of the type and extent of data they’re requested of and consent to collect.

For this reason, in the next years the interplay between data flows and market competition should be subject to a in-depth exploration and re-thinking with this dynamic perspective in mind.

The scope of this paper is to determine the borders of the interaction between the role of big data in the new model of business adopted by the companies and the impact that the collection of data on a large scale can have on consumer welfare and competition, especially in case of unilateral use of such information in an anti-competitive manner, also taking into account the special responsibility theory which could be applicable to an hypothetical company in a dominant position.

In the end, all the relevant bodies, EU Commission, national competition authorities, advocacy groups and legal practitioners are requested to engage in a broader and deeper discussion on the interplay between big data flows, market competition and consumer protection in a broad meaning, aimed at finding a new form of data protection capable to balance the trends of the new hi-tech economy with the need of privacy of users avoiding, as a result, that big data becomes not a curse but a benefit of the digital era.

30 gennaio 2017

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