Posted by Harvard Business Review
By Joe Kennedy
Innovation has always required a constant iteration of trial and error as companies use data about current performance to improve future performance. So it should come as no surprise that companies in the information age want to use ever more data to hone their products. But there is an emerging debate over the competitive implications of big data. Some observers argue that companies amassing too much data might inhibit competition, so antitrust regulators should preemptively take action to cut “big data” down to “medium data.” Others say there is nothing new here, and existing competition law is more than capable of dealing with any problems.
Among those advocating for an expansion of antitrust reviews around data are law professor Maurice Stucke and antitrust attorney Allen Grunes, who voice three interrelated concerns in Big Data and Competition Policy. First, they argue that allowing companies to control large amounts of data raises barriers to entry for potential rivals that lack enough data to develop competitive products. By this logic, deals like Facebook’s acquisition of WhatsApp should be fought, because allowing a dominant company to acquire even more data will increase its market power.
Second, proponents of this view assert that existing antitrust law is inadequate for the competitive threats stemming from large collections of data. One reason why is that much of traditional antitrust analysis focuses on the prices of goods and services, because companies with market power face incentives to limit supplies and charge more. With the profusion of “free” services, authorities may have a much tougher time adequately evaluating the implications of competition other than price, such as degradations in product quality or privacy protection.
Finally, some who worry about big data from an antitrust perspective claim that consumer protection laws are inadequate, because privacy protections are themselves a function of how much competition companies face, so antitrust regulators must step in to protect privacy.