If the head of Germany's competition watchdog group has his way, the massive stores of consumer data held by Internet companies would involved in the due diligence authorities make when investigating merger deals. Here are the key details, from Reuters:
"Until now, markets in which no money flows and in which no revenues are posted do not count as markets from a competition point of view. But that obviously goes against the logic of many Internet markets," Andreas Mundt told Sueddeutsche Zeitung's Saturday edition.
Collections of "big data" - covering billions of internet searches, messages and other online interactions - hand Internet companies huge power they can exercise in marketing and commerce and which potentially makes it difficult for smaller businesses to compete in those areas.
Facebook's $19 billion acquisition of Whatsapp in 2014 almost escaped scrutiny from cartel authorities as the messaging service hardly had any revenues at the time, Mundt said, adding that it was apparently still of great strategic importance to Facebook.
"How many users are there and which data is concerned? Those are the better measurement categories when it comes to defining competition in the Internet," he said, adding that lawmakers should clarify rules.
While the German cartel authority does take data issues into account when making decisions, these may be successfully challeged in court due to the lack of clear legislation, he added.
The German competition watchdog has set up a six-person Internet task force which is working on drafting plans on how German law can be adapted to the Internet age, he said.
Analysis: Big Data Is the New Crude Oil
As the Reuters report notes, European Union officials have also been scrutinizing the impact of big data collections on competition. While there's no similar drumbeat in the U.S., significant rules changes in Europe would nonetheless have considerable impact on large Internet companies given that most have a global corporate footprint.
The German watchdog agency's proposals are justified, says Constellation Research VP and principal analyst Steve Wilson.
"If data is the new crude oil, or if data is currency, absolutely anti-trust regulators should consider the concentrations of power by 'infomonopolists,'" Wilson says. "If data is a consumer good, then some reasonable market regulations must apply. Consumer protection laws I expect will become one of the most potent privacy enforcement paths."
"The big information companies know much much more about information than consumers do, but they continue to pretend that everyone knows how the internet works, and that the free market in data should remain unfettered," Wilson adds. "Ergo, consumers' ignorance of how information flows is being exploited by some of the biggest corporations the world has ever seen. That's not right, is it? The smartest data scientists in the world are not working on a cure for cancer. They are working on new ways to target advertising."
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