Big Data Dominance: Underpinning the Separate Relevant Market

Introduction

The competition law is based on two economic theories, namely, neo-classical theory and harm theory. The neo-classical theory posits the idea that the market entry barrier should be reasonable, where new entities can enter and compete with existing competitors.¹ The harm theory elucidates how competition can be affected by the anti-competitive behaviour of the entity.² The underlying principle of both theories is the welfare of the consumer by preserving competition. However, the rise of the digital platform has raised concerns for the competitive business environment and consumer welfare, presenting a unique conundrum before the Competition Commission of India (CCI). A key dilemma pertains to the collection of data, commonly referred to as big data. Digital platforms which operate on a multi-sided model, generate revenue through the monetisation of user data. Concerns have been raised about the anti-competitive practices of these platforms due to their significant control over data, which creates entry barriers in the market and fosters an anti-competitive environment, leading to both direct and indirect effects on the platform. While the CCI has not elucidated data as a separate relevant market, it showed concern regarding access to data. For instance, while authorising Facebook’s acquisition of shares in Jio, CCI raised concerns regarding the sharing of user data.³ Similar concerns have been stated in the case of Google’s acquisition of shares in Jio.⁴ Furthermore, the data concern intensified with Google’s acquisition of a shareholding in Bharti Airtel.⁵ However, CCI attempted to mitigate the concerns by imposing regulatory measures rather than defining the separate relevant market for data.

Unravelling data market dynamics

The CCI would initiate an investigation into anti-competitive transactions by first establishing a separate relevant market to ascertain the boundaries within which enterprises compete. To establish the relevant market,⁶ the CCI would consider both the relevant product market⁷ and the relevant geographical market.⁸ To put it simply, a market is determined by market forces i.e. driven by the supply and demand for the product and services. Anti-competitive transactions disrupt the economic equilibrium and allow a company to function independently of its competitors, engaging in anti-competitive activity by controlling supply.

Currently, digital platforms operate as multi-sided markets wherein platforms provide free services to their customers in exchange for data, which has become the new currency for service exchange. Further, this data is analysed to better understand the consumer tastes, preferences and behaviours and subsequently, the data is provided to other entities to augment their product or services. This process establishes the demand-supply relationship of the data in multi-sided marketplaces. There are two means to establish demand and supply relationships: firstly, by monetising data with advertisers, and secondly, by monetising data with third parties. In the first scenario, platforms acquire data from the consumer, act as controllers or intermediaries of the data, and then supply it to the advertisers for behavioural targeting advertising. The users of the platform have no control over the supply of data, as they voluntarily agreed to share data with the platform in exchange for “free” services. Advertisers demand this data to evaluate it and tailor their campaign to particular needs, benefiting since they know that their product is advertised to the customers who are most likely to buy it. In the second scenario, a clear supply-and-demand chain exists when the platform sells this data as a product or raw material to a third party for a price.⁹ Here, the platform would supply the data to a third party, who would demand the data to scrutinise it and enhance its services or products, thereafter offering these improved products or services to customers. Hence, data could be considered as a separate relevant market for competition law, given its demand and supply in the market.¹⁰

However, this separate relevant market for the data would create three dilemmas before the CCI, such as: Firstly, the platform has acquired the data without providing any monetary compensation to users; there is no direct economic exchange. Thereafter, it is impossible to assess the value of data, as the economic valuation of data acts as a consideration to establish demand and supply connections; secondly, even if data is under the platform’s control, this is not equivalent to exclusive control. Since data originates from users and can be provided to multiple platforms concurrently, implying that a single platform lacks market power as competitors can obtain identical kinds of data. Thirdly, the data possessed by the platform would not constitute anti-competitive behaviour, as data control by the platform represents a small fraction of the entire data market. This indicates that large data control by a single platform does not translate into market power, given that it has a negligible market share in terms of data.

To address the initial dilemma, the CCI may take into account the diverse economic models to ascertain the economic value of data. Multi-sided platforms offer services to customers and generate income through advertisements, which is directly proportional to the number of users on these platforms; hence, this implies an economic exchange between the platform and the users. The National Competition Authority supports this view, stating that obtaining data through the platform while offering services creates an exchange relationship.¹¹ Moreover, the European Union has stated that the platform’s ability to generate income from advertisements is based on the data provided by its users.¹² Furthermore, Section 19(7)¹³ specifies variables for determining the appropriate product market, one of which is “price”. The term “price” is broad in nature, embracing both monetary and non-monetary considerations. Data acts as a consideration,¹⁴ hence establishing an economic transaction between users and platforms. To estimate the value of individuals’ data, advertisement revenue per user (ARPU) can be examined. In 2023, Facebook had an average APRU of $11.15 per user,¹⁵ demonstrating the company’s capacity to monetise individual data in the form of advertising income. Furthermore, it is necessary to consider whether the data might be monetised in other ways, such as earning additional revenue by licensing to third parties or enhancing the effectiveness and quality of the product by using user data, which the platform would otherwise do by incurring expenditure on research and development.

To address the second dilemma, platforms can seek protection under the Copyright Act, 1957¹⁶ of India, for the data they have collected from users over time. Copyright is a right given to the individual over a period of time to have exclusive control over the work, and the Act clearly states that copyright would lie in the “Original Literary Works”¹⁷. Literary works include tables, compilations, and databases.¹⁸ Hence, it can be stated that protection can be extended to the database created by the platform, even though the original data still belongs to the users of the platform. A database can be original even if it is formed from the user’s data. A platform, through its algorithm, selects the data and arranges and coordinates it in such a way that it enhances the utility of the database. In this way, it qualifies as an original database. The Court also upheld the same view that a person is entitled to claim protection over the work under Copyright Act, 1957, if he applies the skills, labour, and judgment over the work.¹⁹ Further, the Court stresses that no person can reap the benefits of other people’s labour. Multi-model platform, by using algorithms, select and arrange the data in such a manner that it improves the value of the data, which clearly reflects that they have applied their skills and labour to the database to make it valuable. Additionally, the platform can claim protection over its database based on labour theory,²⁰ which states that where an individual applies its labour to commonly held resources and enhances its value, then it has the right to claim the right over such work as he has put labour into it and has the right to claim the fruits of his labour. Hence, it can be stated that the platform’s database can come within the purview of the copyright law and can claim exclusive rights over it.

To address the final dilemma, the CCI could further segment the data market into submarkets to accurately determine the market power of the platform. This bifurcation of the market includes categories such as social networking data, e-commerce data, search data, professional data, etc. This segmentation allows the CCI to effectively evaluate market share in each distinct area. For instance, e-commerce data would encompass consumer purchases, average order value, reviews, shopping carts, articles viewed, inventories of sellers, etc. In contrast, the social networking site gathers different types of data, such as personal data (name, phone number, age group, location, login credentials), social data (political affiliation, religious beliefs), and other data (likes, comments, photos, videos, etc.). Therefore, each platform gathers unique data, making the data gathered by social networking platforms and e-commerce platforms distinct from one another and unable to be substituted, as each platform gathers unique data. This principle also applies to professional data, search data, and other categories. Therefore, the CCI must segment the data market into several subgroups. This strategy of sub-segmentation is consistent with several CCI cases, where it has been determined that the online and offline markets are distinct relevant markets that cannot be substituted for one another.²¹ In the same manner, the CCI could segment the data market to identify the real market power of a platform based on the specific set of data it possesses, which could be used to engage in anti-competitive activity.

Conclusion

In the digital era, data has emerged as a pivotal resource, akin to the “new oil” of the contemporary economy. Consequently, competition law must expand beyond its conventional boundaries by incorporating aspects of economic regulation through what can be termed “regulatory competition law”. It is imperative to recognise data as a dimension in the relevant market. This recognition would address the challenge faced by antitrust authorities in capturing the value of data possessed by digital platforms, which can distort the market. The integration of data into market definition would make regulatory practice more dynamic, enabling the Competition Commission of India to effectively prevent potential anti-competitive practices aligned with the objectives of consumer welfare and make the law responsive in modern times.