The Role of Big Data in Antitrust
24 Pages Posted: 19 Nov 2020
Date Written: November 11, 2020
There is an astounding amount of data generated every moment. While the use of data has always been essential for a well-functioning market economy, the current scale, scope, and speed at which data is collected, organized, and analyzed is unprecedented—leading to the apt label of “big data.” Importantly, an entire infrastructure has been built around data including cloud computing, machine learning, artificial intelligence, and the 5G wireless network.
In this chapter, we discuss the role of big data in antitrust with a particular focus on the rise and success of large digital platforms—as the importance of data has caught the attention of various reports on the digital economy and also raises issues involving privacy. We begin with an economic overview of data and what sets it apart from other firm assets. In this discussion, we will also assess the question of whether big data represents a sizeable barrier to entry that hinders the ability of entrants to compete on equal footing.
Next, we discuss data in the context of network effects. While network effects traditionally are associated with a network of people, some have hypothesized that the advantages that data confers to platforms can also be framed as type of network effect. The idea is that data creates a feedback loop of more data, which ultimately results in an impregnable bulwark against competition. We aim to demonstrate that, while there are commonalities between using data and network effects, there are important differences and distinctions worth highlighting.
We also explore a number of relevant legal considerations involving big data and antitrust. Generally, should courts administer cases that involve big data differently? Should there be a stronger presumption of market power when a large platform possesses big data? On the other side of the coin, can combining big data assets result in merger-specific efficiencies?
Finally, big data is increasingly discussed as a potential remedy for competition problems involving platforms. Proposals range from allowing users to more easily port their data across platforms to forced data sharing and interoperability. We examine the incentive effects from imposing such remedies and potential unintended consequences. Ultimately, these proposals are putting the cart before the horse, as remedies without an actual showing of an antitrust violation is not antitrust enforcement but sector regulation.
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