Commentator
Professor Rolf Weber, University of Zurich
Leader of the assessment
Professor John Asland, Departement of Private Law
Supervisors
Professor Lee A. Bygrave and Associate Professor Inger Berg Ørstavik, Department of Private Law
For outline and draft text, contact Samson Yosef Esayas.
Abstract
Project Title: Data Privacy and Competition Law in the Age of Big Data
Sub-title: The Commercialization of Personal Data and its Implications for the Foundations and Policy Boundaries of Data Privacy Law and Competition Law
Objective
The core remit of this project is to investigate the theoretical and practical implications that the commercialization of personal data has on the foundations and policy boundaries of data privacy law and competition law including their potential intersection.
Background
The digital economy is marked by vast information collection that is analysed and exploited by businesses for their commercial ends, which has become to be known as ‘big data’. Increasingly massive amounts of data about consumers – where they are, what devices they use, what they purchase, and different categories of their online behaviours and interests – are collected every day. This, together with advancement in data mining and analytics technology, allows companies to unlock previously inaccessible insights from new and existing datasets. As a result, the last few years have seen the emergence of companies that have their core business model built around the monetization of personal data. This development in turn has led to a proliferation in the number of catchphrases highlighting personal data’s importance as ‘the new oil’, the ‘new asset class’, the ‘lifeblood of businesses’ and the ‘new currency’ of the digital economy. These aphorisms signify the increasingly pivotal role that personal data plays in the digital economy, spurring new business models and serving as a key source of revenue but also unlocking a range of benefits for consumers in exchange for their data.
At the heart of the business models for companies, such as Google or Facebook, is a detailed collection and analysis of consumer data, often gathered without the individual’s knowledge or consent. Among other things, the availability of such vast amounts of data enables these companies to create detailed profiles of individual consumers and to deliver online advertising in an extraordinarily precise fashion. This ad-based business model has allowed these companies to achieve extremely high turnovers and to ascent to the top of the hierarchy as the most valuable companies in the world, displacing their predecessors in the oil and gas industry. Apart from its importance for targeted advertisement, personal data is instrumental for improving the quality of many digital services, increasing the profitability of services through personalized pricing, developing new products/services and making better decisions. Thus, the volume and quality of the personal data controlled by companies is becoming a key source of competitive advantage.
In a similar fashion, consumers are getting better and more useful ads and a broad array of free content, products, and services. Once very expensive services such as navigation tools are now gratis. Google is believed to offer more than 100 services, of which more than 70 are free. Consumer communication services have allowed users to make international calls that once were very expensive. Although not widespread, there are also emerging business models promising users payment in return for sharing their personal data. These services generate enormous social and economic benefits for users. For example, the Economist estimates the value that Europeans and Americans drive from ‘free’ services, such as Internet search or online map services, to be worth of USD 280 billion a year. All that users are asked for in exchange to use the services is their personal data – preferences, contacts, locations.
However, these developments – particularly desire to amass personal data to gain competitive advantage, the key role that personal data plays in generating value (turnover) and the fact that many digital services are offered at ‘zero’ price – generate significant challenges linked to privacy and competition policy. On the one hand, the collection of data on an unprecedented scale has put the privacy of consumers in greater danger than ever before. Even more alarming is the danger of a ‘race to the bottom’ in privacy protection where non-compliance with data privacy rules and the acquisition of data through illegitimate and deceptive mechanisms become a source of competitive advantage. On the other hand, there are emerging competition concerns that dominant companies might be able to exploit the network effects from data and create barriers to market entry. Companies might also use the data in their possession for anti-competitive practices, for example, to leverage their power into different markets. Moreover, in recent years, privacy has begun to creep into competition law discussions, particularly where companies in data-rich industries seek a merger or acquisition.
In light of these developments, the challenge lies in balancing the economic benefits from the commercialization of personal data and its harm to privacy while maintaining a healthy competitive environment. The core research question for the project is:
What are the theoretical and practical implications of the commercialization of personal data for the foundations and policy boundaries of EU data privacy law and competition law?
Specific research questions
Under the umbrella of the above core issue, the project considers several narrower research questions. The first research question is: what are the changes in data processing practices of firms that are brought about by the commercialization of personal data and how do these changes affect the application of current EU data privacy rules? In particular, what threats and challenges does the commercialization of personal data pose on the data privacy of rights of individuals and their enforcement?
The second question is: how does the commercialization of personal data affect the application of EU competition law? Sub-questions here include: how does control over personal data affect the balance of economic power and whether such control over data could be used to foreclose competition in a market? To what extent is privacy a concern for competition law and whether firms can exercise market power by degrading data privacy or excluding competition in data privacy?
The third question is: what are the potential areas of convergence or tension between data privacy law and competition law that follow the commercialization of personal data? How does the commercialization of personal data change the role that data privacy law plays in the competitive process and what does that entail for both sets of laws?