"Internet search engines in the focus of EU competition law – a closer look at the broader picture": today's JIPLP-GRUR seminar, Part 2

Following a much-enjoyed coffee break, Professor Dr Daniel Zimmer (Director of the Institute of Commercial and Economic Law and of the Centre of Advanced Studies in Law and Economics (CASTLE) at the University of Bonn; Chairman of the German Monopolies Commission, Bonn) spoke on " Digital markets: Competition law in need of reform?"  How can such dominant positions as that of Google come about?  Where it's expensive to create an establish a platform but cheap and easy to add users to it, the more difficult it is for competitors to emerge, especially when an increasing number of uses gravitate towards it.  This is not necessary a bad thing: people need search on only one platform for their friends or needs, and a search engine can operate more efficiently across a singly platform.

Insulation: fine for keeping out the cold,
but not for warding off the competition!
The German Monopolies Commission has not recommended dividing up large platforms, given their efficiency.  It has accepted that, for as long as a platform has to worry about losing customers to its competitors, there's nothing for the market to worry about.  Does this mean that there is no competition concern relating to Google? No: businesses must not be allowed to insulate themselves against competition by buying their competitors or putting them out of business. To achieve this, competition law must be (i) modernised and (ii) applied in a consistent and coherent way. Existing rules are not always ideal for dealing with multisided businesses, and the financial criteria for turnover requirements which must be met before the attention of competition authorities are attracted must be reduced, since historical turnover data is unhelpful.

Data portability?
The time taken by competition authorities in investigating complaints is far too long.  Turning all investigations automatically into dispute resolutions after the passage of a particular period of time is one possibility.  Also, operators already have the advantage of knowing the search algorithms they run; they should not be allowed the further advantage of being allowed to manipulate them further in their own favour.  Daniel concluded with some words about privacy and data protection: data portability (the idea that consumers can take their data with them) might also assist in the creation of greater competition.

"Digital markets and data: Competition, consumer protection, and privacy concerns" was the topic of the seminar's final speaker, Professor Dr Wolfgang Kerber (Professor of Economics, Marburg Centre of Institutional  Economics, School of Business Administration and Economics, Philipps University Marburg).  Wolfgang spoke about Big Data, excessive data collection, Facebook's privacy protection policy and the recent CJEU ruling on data transfer from the EU to the US and the inadequacy of the latter's safe harbour rules.

The economics of privacy is an interesting topic. Privacy is usually dealt with under the economics of information. Non-disclosed information usually leads to economic inefficiency. Hiding things = asymmetry of information = an economic problem.  Now, though, firms have much more information about consumers, which can lead to better and more efficient manufacture of products, but also to harmful effects such as price discrimination policy where real-time pricing can vary prices as between consumers depending on, inter alia, the time when they wish to purchase products.  Privacy itself has a price: how much is a person prepared to pay for privacy, and how much is he prepared to pay for information about others?

In our culture, privacy is context-specific and depends on many variable considerations. Also, many internet users are unaware of how much information about them is already known by others. Is there a market failure when it comes to privacy? One assumes that an efficient market would offer a range of options for privacy at different prices, but this doesn't seem to be happening.  Informed consent would be required, but that assumes that there is true transparency regarding consumer knowledge of the options and their significance.

There is clearly a large problem relating to lack of transparency in the obtaining and use of personal data, particularly from a consumer policy perspective.  But what are the policy options? Absence of consumer information about the "price" of data can itself be characterised as a misleading and therefore unfair commercial practice. Consumers are also entitled to more information about collected data, its use, and options for collecting data.

Data protection law in the EU had as its main objective an end to the fragmentation of national data retention policy, the sovereignty of the "consent" principle and the notion of privacy being a fundamental legal right.  If there is to be a market solution to privacy and data protection, it will have to be sector-specific and still respect personal preferences and privacy requirements. Internet users may be empowered to sell the right to use their data for currently "free" services for which platforms currently use that information.

There then followed a discussion session, in which each speaker in turn was first invited to pass his comments on the papers delivered by the other speakers.

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