Please note: this article is a long read.
The lack of a standardised approach to data collection, privacy assessment, and controversy surrounding the recent investigations[1] indicate challenges that are not initiating traditional anticompetitive scrutiny.[2] The debate on the intersection between competition law and privacy constitutes a major challenge for the existing competition law framework. The notion of privacy has achieved extensive attention from academics and adjudicators, indicating its dynamic nature.[3] The unprecedented magnitude of data collection could raise challenges for both society and legislation, as it has emerged that personal data is seen as a tradable commodity,[4] placing companies in a position where the data helps them to achieve a stronger position in a market. The aspects of personal data protection have had a numerous impact on the framework of competition law — from the anticompetitive agreements to abuse of dominance or merger control. The merger control and abuse of dominance related to competitive harm through the access to substantial customer data; the price-fixing cartels are replaced by irretraceable algorithms based on access to Big Data. Online platforms offer a high quality of digital services and products to users without imposing any monetary price, however, they keep obtaining revenue from the advertisement-based business models, based on collection and procession of data. Examples of such networks are extensive and cover the platforms including Facebook, Youtube or Google. The business models are ambitious without a clerkly defined context of personal data. As would be noted below, the twofold features of their business model might have both advantages and disadvantages for market participants. The more data is collected and processed, there are higher chances of valuable correlation, information and prediction to be obtained. Such data is then used to improve the quality of both paid and free services, and to create new ones. Therefore, the practice of online firms to collect and process exceedingly large amount of data through the use of advanced algorithms to reveal trends, associations and patterns of their users, deserve special attention of competition authorities due to their novel dimensions to market power.
The rapidly evolving digital economy raised challenges at two distinct levels: practical and policy levels.[5] The former concentrates on the added complexity in the assessment of the anticompetitive behaviours and conducting a dynamic enforcement assessment, which includes the additional challenges in the competitive pressure, and self-correctness of markets. The latter focuses on the novel competition dynamics, which raise the issue of the normative scope of competition enforcement. Such analysis is often important to arise with optimal use of competition law, and broadly — its goals. There is a broad consensus that the digital economy is a key driver to future prosperity, which, unquestionably has revolutionised business models, services/products, and social interactions. Furthermore, it is also undisputed that the digital economy has introduced new constraints in delivering innovation, efficiencies, and consumer welfare, as well as stimulated market dynamics.
The article provides a basic discussion of the unique features of the digital free technology economy and discusses the potential limitations of the EU competition legal reasoning in the cases concerning privacy breaches. In essence, this article is about the Big Data-fuelled industries in transition which, because of significant developments, also highlights the difficulty in anticipating the new structural form of the industry. In terms of the normative debate on the objectives of competition law within privacy concerns investigations, the discussion is provided in the doctrinal context. The assessment is carried out concerning the current doctrine on the competition law goals, and this is going to act as the foundation of the article, allowing to deduce the favourable objectives of the competition law within privacy concerns investigation. In contract, socio-economic research on the context of privacy investigations would not be appropriate, due to its extensive nature on the socio-economic consequences of digital technologies and its impact on consumers’ lives and would take away the main focus of this research.
Setting the context: the proliferation of privacy value and unique nature of the digital economy
The aspects of Big Data and the digital services have attracted a lot of attention of academics, regulators, businesses and consumers. Unquestionably, the data collection and procession have become a central element of many digital platforms, which some reach a huge number of users. Digital platforms have become an inevitable part of commercial and social interactions, and the use of data is deeply grounded in the aspects of business-to-consumer relation. It has been widely discussed that the extensive data collection creates challenges for antitrust regulations which aim to preserve competition.
The concept of privacy might be defined both in a broad and narrow sense. Unquestionably, any breaches of privacy affect a great number of peoples and could potentially compromise the process of democracy.[6] Yet, the precise contours of privacy effect constitute a subject of extensive academic discussion. Many perceived the EU legal order as offering the most attractive personal data protection. Article 16 TFEU serves as a basis for the EU data protection.[7] Further protection of personal data is offered by the Charter of Fundamental Rights of European Union, where Article 8 recognises personal data as a proactive right that reaches being individuals’ protection against the intervention of a state.[8] As per Article 8 of the Charter, personal information of individuals could be proceeded by anyone, including the State. Such a wide right is subject to Article 8(2) and (3), requiring any information proceeding to be fair, transparent and lawful for individuals. The protection has been more recently ‘enriched’ with the implementation of the General Data Protection Regulation (GDPR).[9]
The GDPR’s fundamental principle is the requirement to establish a legal basis for personal data processing,[10] requiring of a data subject’s explicit consent. Under the GDPR, the processing involves any activation which could be pursued with personal data, defined as any information acquired relating to natural persons, and allows for their potential identification. The GDPR also introduced clarity of its regime by defying key issues, such as the definition of ‘data subject’ as any person of whom data is collected;[11] and ‘data controller’ which refers to any person that proceed the acquired data.[12] Importantly, the key feature of the GDPR’s regime is a consent, which has to be unambiguous, specific, informed and freely given. The GDPR strengthened the protection of personal data and, simultaneously — users’ privacy.
The GDPR sets a basic required for the effectiveness of the legal consent for the data processing, which requires the consent to be specific, unambiguous, freely given and informed;[13] granted by individuals by clear affirmative action, or by a statement, which signifies a consent to proceed their personal data. In this respect, the GDPR represents a twofold nature: individuals are asked to consent for any data proceeding making it clear that a digital platform or services would rely on their data and consequently have a right to be informed about the way their data would be proceeded,[14] whereas the data controlled is obliged to perform the data processing obligations with the guarantee that the data would be processed to the extent which is well-grounded and demonstrable as agreed by individuals.
Generally, there is no ex ante choice available to the individuals, under the EU data protection law, as to whether they want their personal data to be processed. Although consent is required, individuals are unable to thoroughly consent to a real purpose of data processions.
An attempt to define privacy from a competition law perspective could be witnessed by the Bundeskartellamt’s (BKA) Facebook case. The assessment of the privacy protection rights in the case begins with a simple principle: personal data processing can only take place once data subjects agreed to their data being processed,[15] or when data processing is granted by the law.[16] The BKA took an approach of a data protection authority and explained that the Facebook’s T&Cs were deemed as appropriate within the remits of the GDPR, noting several points from privacy protection’s perspective. Firstly, the BKA noted that Facebook’s users were not aware of the means to which Facebook collected and processed their personal data, which constituted a not genuinely and well-grounded consent from their users. Also, users were not likely to expect that Facebook also analysed the data from different websites.[17]
Objectives of EU Competition Law
EU competition law rules have been clarified through different case law and official publication over the years, with its key objective being often proclaimed to be: “the creation and preservation of an open single market promotes an efficient allocation of resources throughout the Community for the benefit of consumers.”[18] Hence, the promotion of market integration appears to be a key feature of competition law. Yet, the EU Commission safeguarded the market competition as a means of consumer welfare enhancement, ensuring an efficient resources application,[19] as well as protecting ‘not only the interests of competitors or consumers, but also the structure of the market and, in so doing, competition as such.’[20] The unique DNA of the EU competition law by its ethos might be challenging or controversial, as lacking clarity over pursued goals. The competition law values and goals might overlap with each other or reveal some conflicts. Hence, Ezratchi suggested that their implementation could require trade-offs between the goals, which could introduce further ambiguity or balancing points.[21]
The above considerations ought to be interpreted in the scope of wider European normative values, ensuring the consistency between the EU’s policies and activities. Arguably, the EU policies would be implemented by considering social protection,[22] consumer protection,[23] public health,[24] equality considerations,[25] transportation,[26] regional development, investment[27] and environmental protection.[28] Yet, this multitude of goals (its position within the wider normative EU values) is unquestionably challenging, due to its effect on the desire to engage in economic analysis.
This section applies the findings from the above discussion to assess the normative objectives of EU competition law, which could potentially apply to the anticompetitive investigations with the apparent privacy breaches. The section analyses the keynon-welfare and welfare objectives ascertained to the EU competition law regime. As discussed above, the concept of privacy might be defined both in a broad and narrow sense. Unquestionably, any breaches of privacy affect a great number of digital users and could compromise the democratic processes.[29] Yet, the precise contours of privacy effect constitute a subject of extensive discussion, assuming that the debate is more complex than primarily anticipated, as reliance on free high technology services and platforms does not necessarily evidence in distributing which objectives should competition law pursue. Hence, a further question might be asked: should we aim for protection of competition or consumers or both? The debate appears to be fluctuating around the assessment for the intervention desirability, based on better knowledge about the privacy concerns instances. In this respect, an assessment of the rationales behind each of the goals functions as a key prerequisite in undertaking the nature of privacy concerns, which could influence the rationale behind authorities’ investigations.
The literature on EU competition law appears to suggest a multitude of different competition law goals being pursued, which at the different levels act as distant from each other to the extent that the debate amongst them becomes tenuous. The debate on the competition law goals is questioned on several levels of assessment. Firstly, the theoretical underpinning questions why competition law allows for such an objective, often put forward to the theoretical perspective to comply with political goals. The second underpinning bases on the assessment as to the origin from a particular goal, which later allows to rank the goals on its normative levels. Lastly, the underpinning focuses on the goals being derived from case law, or objectives pursued by the Commission or any other competition authority.[30]
Since this research considers the intersection between competition law and privacy, the emphasis is also placed on the coherency of the legal arguments pursued by the EU Commission. Hence, the debate revolves around the interpretation within the framework of Article 102 TFEU, which aims at the prohibition of the abuse of a dominant position at the core, protecting the EU’s internal market.[31] The discussion in this section revolves around three key objectives of competition law, which are demonstrated considering the legal tests applied by the EU Commission, namely: protection of competition, protection of consumer welfare and efficiencies. The assessment of the previous EU Commission indicated that consumer welfare might be one of the key elements of competition law. Yet, simultaneously, the set of investigation is based on the opposing objective of protection of competition law, as originating from the competition law rules. Equally, the third objective of efficiency is based on the assessment of market integration, as a key prerequisite to improve the prosperity of the EU. The assessment of privacy concerns within the remits of competition brings these three elements with each other. Hence, the section considers only these free objectives. Furthermore, as the discussion indicates, the BKA’s Facebook case remains the sole proceeding involving an intersection between competition law and privacy concerns. There is no legal equivalent available at the EU level. In this respect, the further discussion is enriched by reference to different proceeding involving digital services and products.
Non-welfare objectives in the assessment of privacy concerns
Protection of competition structure and competition
The core differentiation in this section is following: the term ‘protection of competition' describes situations to ensure no reduction in the processes of competition, whereas the concept of competition describes the market with multiple competitors.[32] Potentially, the current competition policy narrative aims at effective competition processes, aiming at the protection of competitive structures, and subsequent protection of competitors on a market.[33] Furthermore, the assessment of competition processes protection, within the privacy protection cases, would be based on the assumption that certain digital undertakings are capable of storing a vast quantity of personal data. In this respect, the concept of privacy protection introduces certain industrial elements which are necessary for the competition law assessment, and, in this respect, the definition of privacy acts as a broader prerequisite.
The variety of goals pursued by EU competition law is growing broader with the case law evolution. Notwithstanding, the EU competition law regime demonstrates a pragmatic interpretation of competition law and adheres to a classical provision: deontology and efficiency. Advocate General Kokott, in the British Airways case, expressed that one of the competition law goals exhibits the objective of protecting the competition as an institution since competition law is interlinked with the protection of the internal market.[34] Furthermore, in the same case, the Court, relying on the Continental Can judgement,[35] indicated that Article 102 TFEU aims both at the protection of consumers and competition, from any practices prejudicing their welfare and having detrimental effects on the competition structures.[36] In that sense, competition could be protected where the number of competitors is reduced, assuming that competitors are not stopped from competing on merits.[37] However, the aspect of effective competition protection does not refer to a competitors’ number but aims at ensuring the competitiveness of the market, which produce benefits for consumers.
The evidence that protection of competition is the most important objective of competition law could originate from several sources, including academic literature but also the ideological organs of the law itself. Beginning from the economic ideology of Ordoliberalism, which influenced the regime of EU competition law.[38] The EU competition law proclaims a special responsibly of dominant undertakings, obliging them to function in a way that does not harm the competition processes.[39] Hence, the protection of competition is a very important objective of competition law: competition policy is one of the several key policies that serve in the advancement of the EU goals, which ensures a healthy functioning of the internal market, as per Article 3 TEU.[40]
The concept of the internal market requires elaboration within the remits of competition law.[41] Establishment of the internal market allowed for the creation of further economic benefits, which promotes efficient allocation of resources throughout the EU with the aim of consumers’ benefit.[42] Some of the cases that impact the market integration issues within the digital economy include: contractual restriction used to restrict from selling/buying goods online,[43] or technological specification used for geo-blocking,[44] warranty restrictions,[45] or limitation on broadcasting.[46]
Yet, the concept of market integration is a neutral term, attached to the subject-matter analysis of competition law rather than a self-standing objective of competition law.[47] During the analysis of the potential market structure, a further argument might stipulate that observation of the market remains an important prerequisite in the assessment of behaviour on a particular market over a certain period.[48] In the situations where the outcome of the market is required, the subject-matter of the analysis is the outcome of the market behaviour conduct;[49] competition law tends to look backwards, and observing market outcomes, which allows to perceive if a particular conduct was harmful to consumers as well as internal market. For instance, with a lack of competition in the digital economy market, any dominant platforms might increase demand for data in order to sell more advertisement. However, any enforcement is only precipitated when abuse can be demonstrated. The market structure effect would be required to assess the outcome of the subject-matter analysis on the behaviour of the market and not the consideration of the market structure.
Importantly, the debate on privacy concerns and competition law appears to be myopically, as focuses solely on consumer welfare without considering a wider objective of protection of competition structure. Considering the role of data in the creation of a platform value, it can be deduced that the digital platforms rely on technology to aggregate services and content which allows to connect users for the different purposes of sharing, transactions or communicating. Hence, the potential privacy violation arising from an aggressive data acquisition is that Big Data connotes the concept of Big Analysis, which is a competitive danger.
From the digital economy prism, the protection of economist stricture offers an independent mandate for intervention, detached from a direct effect on consumers. Yet, it does not necessarily have to result in more aggressive enforcement, but arguably more effective approach in the digital economy scope. Also, a focus on competition processes demonstrates the scope for a potential negative impact by the use of networks, data pool as a potential expansion to raise rival’s costs or introduce barriers to entry. Hence, there is an increased significance of data in markets recognised due to its influence on competition distortion.
Hence, the question as to whether the potential privacy breaches might influence the competition law structure could be answered by Ezrachi’s analogy, which pictures the relationship between competition policy and wider societal deliberations with a sponge and membrane analogy.[50] In his research, he recognises competition law as a sponge with a political core, and economics as a membrane which allows certain external by-passes into its realms.[51] Consequently, both general values on the maximisation of consumer welfare and social and political priorities, that shape local enforcement, could be part of the competition law objectives. Competition policy objectives need to be carefully defined, as the incorporation of a multitude of different local political principles might lead to the unpredictability of the competition law enforcement.[52]
Furthermore, the element of ‘effective competition structure’ might be linked to the consideration of choice in the digital economy sphere, introducing important benchmarks for the assessments of limits imposed via tying practices,[53] or reduced interoperability. Ezrachi noted a potential angle of introducing an upstream effect on how bottleneck digital players, impacting on input providers’ viability through practices, negatively affecting upstream, downstream markets and end-users.[54] Economic freedom indicates that healthy competition structures offer an unfettered exercise of choice. In this respect, Rubinstein noted that data mining destroyed informed choice due to lack of users’ knowledge and notice how the Big Data is used/processed/acquired/stored, as well as it remains unclear whether the right to be forgotten and data portability, the key features of the GDPR regime, are capable to be applied to novel knowledge acquired from personal data that has been anonymised or generalised by being put into group profiles.[55] Hence, freedom of choice and competitive marketplace are key elements in the realisation of the democracy and other freedoms pursued by the EU, with the economic plurality acting as an example of protecting wider policy examples. Therefore, the preservation of economic freedom could be a precondition for democracy, and as a result, safeguarding against regulatory or political capture.[56] In a healthy functioning competitive markets, products are offered at lower prices, and better quality of product/services is likely to attract consumers, guided by informed choices. Such a process is further subordinated by better competition and innovation in a ‘virtuous circle’.[57] Unquestionably, digital platforms, due to the proliferation of data-fuelled platforms and services, are becoming monopolies. Yet, a demonstration that all digital platforms demonstrate anticompetitive features could be preliminary wrongful. Therefore, regulators might be required to go beyond the scope of the existing competition law rules and consider a bigger picture. The digital markets are more dynamic than static and require careful considerations, due to the abstract nature of the data-fuelled markets.
Yet, there could be potential problems identifiable in elevating of the protection of market structure to the ultimate objective of competition law regime. One of the potential problems lays in defining the competitive process.[58] Even if the definition of competitive processes encompasses the rivalry amongst firms on a particular market, the standards cannot distinguish between any further anticompetitive misconduct from functioning market equilibrium.[59] By solely focusing on the matters of competitive processes, it is impossible to reach a consensus whether it would be necessary to add a further objective of protecting competitive process, introducing a further normative standard to establish undertaking’s conduct as violating the competition law regime. In this respect, any normative standard should not be the competitive process in itself, because it would not have allowed for further analysis of the market equilibrium. In the EU, the decisions which articulated privacy as non-price competition factor are Facebook/WhatsApp and Microsoft/LinkedIn mergers. In the Facebook/WhatsApp merger, the Commission held that in the consumer communications markets, privacy is the key element of competition.[60] In this case, the Commission realised the need to recognise the data privacy as introducing competitive edges: privacy is valued by consumers. In Microsoft/LinkedIn, the Commission further supported such a statement, stating that privacy concerns can be considered during the competition assessment to the extent that consumers see it as ‘a significant factor of quality’,[61] indicating that ‘data privacy was an important parameter of competition between professional social networks on the market, which could have been negatively affected by the transaction’.[62]
Returning to the concept of preservation of the market structure, which safeguards competition processes, Acquisti inquired whether market forces are capable to maintain a balance between privacy and disclosure in the environment where personal data unfold electronic data trains and where the information available is more respected over the informational protection in the instances of economic interests.[63] In both unilateral conducts assessments and merger reviews, structural remedies are preferred,[64] diverse to shrink the assets and markets, rather than provide with remedies which would require firms to regulate their conduct. In this respect, the aspects of market condition receive less attention. Competition law enforcers would not generally consider the basic market conditions, as it is beyond their legislative power. Yet, in the privacy protection cases, competition authorities might be unable of creating and enforcing any behavioural requirements acting as a means to protect consumers’ privacy. Some features of the data-fuelled industry make it unlikely that any market forces or private investments could result in socially optimal outcomes. Potentially, investors could not be able to capture the benefits of production of the common good, such as cybersecurity. Yet, in other cases, due to network effects, consumers cannot perceive the benefits of increased output.[65]
Furthermore, the EU Commission discussed the calculation of the market share,[66] which is unquestionably an example of the instrumental approach to the assessment of the market.[67] Yet, such an approach demonstrates perils. The defined tests such as SSNIP-test might not explicitly work in the digital economy, especially in the cases regarding privacy protection, as their rationale is based on price deliberations.[68] The SSNIP test might bear a problem of the ‘cellophane fallacy.’[69] Markets, with little or no competition, might distort the protection of privacy, due to anticompetitive donuts of undertaking, which enjoys a strong market position. Yet, the non-price market's elements acts as stripping off consumer rationalities, which do not provide an explanation of market’s functions. This corresponds to the prime problem, namely: how do the digital undertakings process the users’ data? Hence, the question remains whether the privacy could be collected with income, or whether privacy could influence competition law.
Potentially, this discussion could be reverted to the sphere of Big Data and Big Analysis concept which was briefly discussed above. Big Data is currently seen as the new oil,[70] and some data acquisition could result in the data protection law breach. Nevertheless, the sole discussion, in this respect, should be devoted to the concept of Big Analysis, based on personal data acquired allowing digital undertakings to establish the knowledge which could introduce anticompetitive conducts. For example, in Google Shopping, the conduct of Google artificially diverted the traffic from rival shopping comparison services, and hence, hindered the ability to compete.[71] Clearly, such conduct bore a negative impact on innovation and consumers. The Commission argued that users did not necessarily see the most relevant result when comparing their shopping results. In turn, this lowers the incentives to innovate — the rivals’ products would not benefit from the same prominence as Google’s products.[72]
In other words, the price of privacy is difficult to be ascertained. The Internet’s cornerstone is personal data, which is a necessary component of digital platforms’ business model, such as Facebook and Google. The digital platforms acquire and treat data, as a necessary component to improve the quality of their services, aiming at enhancing their attractiveness to the existing and any potential customers. Consequently, digital platforms can monetise their services and products through often targeted/behavioural advertising. In this respect, the volume and quality of the possessed personal data is a key competitive element. Without any doubt, online users benefit from the digital service providers’ ability to process their personal data, acquired through the agreement between a user and a service/product provider, in the terms of a better content or more targeted advertisement. Unquestionably, the acquisition of the large quantity of data might introduce competitive restraints in the form of high barriers to entry which in hand introduces a poor competition in the digital market. With a proliferation of new digital business models, an increased number of digital companies possess a large quality of personal data.[73] In this respect, there has been a potential debate in the establishment of a test allowing to define the market for free products — small but significant non-transitory decrease in the quality, based on the SSNIP, with differentiation to consider the products’ quality to the price consideration.[74] Although the digital platforms can improve their services, based on the personal data acquisition,[75] the sole consideration of quality might not be a decisive parameter to decide the anticompetitive conduct, influencing the market structure, since it has been widely accepted that economic consideration is of utmost importance in determining both the anticompetitive types of merger/unilateral agreements but also the types of any justifications that might be used to justify any mergers/unilateral agreements.
In this respect, competition law issues might arise in several different contexts, for example, online services might try to acquire the data through anticompetitive means or seek to prevent other competitors from acquiring data. There are unquestionable positive effects of the personal data acquisition by online service providers, due to its high impact on performance, including high-quality, zero-priced services. Diversely, personal data plays also a vital role for the paying side of the market. The online advertising value aims at targeting specific needs and preferences of particular users, which is different compared to other media like radio, television, or billboards. Therefore, two elements are necessary for the success: high quality of free services and generation of revenues through advertising. The data protection concerns analysis also brings a debate on its intersection of competition law, considering the limits to the accumulation and processing of personal data.
There could be several reasons for competition law’s involvement within the data-fuelled economy. Firstly, there is a significant investment of political energy and time required to enable antitrust actions to advocate privacy protection. Secondly, antitrust actions could introduce unintended consequences in the absence of any comprehensive privacy protection undermining. Thirdly, antitrust will not be able to remedy most of the harm caused by non-dominant player in a particular market. Therefore, based on the assessment, only conduct with a detrimental effect on competition would be investigated, whereas conducts without interfering with competition process are irrelevant: such as gender discrimination would not be considered by the competition law enforcement.[76] Equally, the sole privacy breaches should not be seen as a parameter for protection competition structures. Hence, a debate is to ensure more pragmatism and less utilitarianism. Based on different case law, it is possible to ascertain that the shift will be possible on a case-by-case basis.[77] Once the conduct has been identified, the debate should focus on which conduct should be of importance to competition law regime, i.e. whether conduct should be seen as abusive, or not. Then, the assessment of competition processes should be conducted within these objectives. Therefore, it is capable to conclude that the objectives of protection of competition structures applied on normative value, which derives from the particular in question objective, makes the protection of competition law worthy.[78]
A brief discussion on fairness and a concerns
Although the article focuses only on the three key goals of competition law, the concept of fairness is necessary to enrich the above discussion on the protection of competition. The EU antitrust policy in many respect reflects on the Ordoliberal thinking, which perceives competition as demonstrating both economic and political powers,[79] affirming a role of States in keeping market open to competition, protecting a status quo of market equilibrium.[80] The political precondition, then, ensures that regulators take measurements to confirm a fair and democratic society. Yet, defining fairness is a laborious task, with a different concept of fairness recognisable in the context of different areas of law.[81] Within the meaning of competition law, fairness is ascertained into two subcategories: formal and substantial fairness,[82] with the former relating to the processes where the bias or discrimination is absent in resources’ allocation, considering the process of equal opportunities,[83] whereas the latter refers to the resources allocation outcomes, focusing on a fair allocation of the total surplus between consumers and producer.[84] If the competition law regime focused solely on fairness as competition law objective, its rules would prohibit undesirable social application of resources.[85] Consequently, competition law would become a mechanism to ensure the correct market outcomes. Yet, as Nazinni added, this ex-post function is foreign for competition law,[86] since the process of competition law protects the market structures from any competition constraint, ensuring that the resources' allocations remain fair. However, in the circumstances where it is no longer fair, the different social policies should become a means to address any distributional problems.
Due to the abstract nature of fairness, the objective should serve as a guide, and not an enforcement benchmark.[87] Verstager noted that competition policy aimed at shaping a fair society, allowing a fair chance distributed to small business and individuals.[88] In this respect, it is likely that fairness, as an abstract phenomenon, would have not stood on its own, but acts as an important prerequisite in supporting against the monopolisation of large economic players. Fairness might, therefore, be entwined in the competitive process, and somehow guide the enforcement, reflecting on the consumer welfare and efficiency interpretation.[89] Economic reasoning might arguably be fused into the concept of fairness, as fairness based on ensuring legitimacy. Fairness might be seen as being a multidimensional aspect in competition law, as for example in the analysis of margin squeeze, it might acts as providing equal opportunities between competitors, as well as protecting consumers. Yet, fairness and protection of competition should not be confused: the fairness would not be used to challenge competition processes.[90]
In the assessment of the privacy and fairness, there are varying perspectives of privacy recognised globally as to the level of data protection and the role of competition law in this context. Different conceptions of privacy might be recognised in various cultures and social systems or the consumers’ heterogeneity: some might value privacy less, whereas others much more.[91] Privacy protection has been debated as falling outside the scope of competition law enforcement. Yet, the proliferation of the data acquisition in the digital economy indicated that privacy and fairness and competition law might be potentially interconnected, especially when exploitative and exclusionary effects come into discussion, as per BKA’s Facebook case.[92]
Although the concept of fairness acts as an abstract phenomenon to the normative value of the competition process[93] and protection of fair market outcomes, it crystallises the legitimate expectation of market participants. In this respect, the notion of fairness influences the structure of competition law, recognising that an economic agent cannot be prejudiced within the scope of competition law, from the disadvantaging objectives of the market. Hence, fairness might be decisive in the digital economy sphere, as its abstract norm guides the relationship between online platforms, consumers, and service providers. Fairness, yet, appears to demonstrate a multisided nature as supporting interventions of unfair market practices, discriminatory practices, as well as allows to justify intervention when misleading information might lead or facilitate distortion of competition. Arguably, this broad scope of fairness could also encompass data handling or privacy violation which could harm competition, as well as could play an important role when asymmetric information could distort competition.
Fairness, however, convincingly shows that a large data acquisition could threaten fundamental civil rights and impact on the ability to participate in political life, leading to discrimination.[94] As discussed above, the proliferation of the data-oriented business models demonstrate a risk of different cyber incidents, including data breaches.[95] It might be tempting and interesting to consider these issues in the wider competition law spectrum. However, the protection of fundamental rights has been considered to be beyond the scope and application of competition law.[96] To demonstrate this efficiently, one might consider the example of the media plurality, which is seen as an important democracy outset.[97]
On this assessment, one can consider the UK Competition and Markets Authority’s (CMA) investigation of the merger of Sky plc and 21st Century Fox.[98] Although the merger was cleared at the European level, the CMA assessed the context of public interests, including the broadcasting standards and media plurality objectives, arising from the merger.[99] The scope of the investigation demonstrated that there are a number of inferences from the scope of competition law. Primarily, the consideration was placed on the notion of media plurality as falling outside the scope of competition law, as otherwise the EU Commission would consider this notion in their investigation. Therefore, referring it back to the discussion on competition law, fairness and privacy concerns, the example of media plurality might act as closer to the enforcement of competition law, since any competition reduction might result in a reduction of media plurally, which technically creased imposition of unfairness, influencing negatively consumer welfare.
The discussion about privacy concerns adds a further element. The analysis of the media plurality demonstrated that it is not a concern for competition law, but there is a potential indication of its connection with a number of competitors on the market, and impact on the consumer welfare. Applying this rationale to privacy protection, the considerations demonstrate that privacy protection relates to big data and big analysis. Therefore, the assessment is likely to consider different elements and how they might adversity affect consumers in making a reasonable choice. It is nevertheless apparent that privacy concerns might be way behind the remits of the conventional competition law assessment as focusing on quality and innovation. For example, in Facebook/WhatsApp,[100] the EU Commission claimed that privacy polities establish a non-price parameter of competition: a degradation of private policies affect aspects of product quality, or even amount to the product price increase.[101] Hence, it might be an indication that potentially privacy concerns might be seen as indirectly influencing competition law assessment.
Additionally, the concept of fairness is linked to innovation, as fair competition ensures a better quality of technological services and products while aiming at the cost reduction, which then benefits consumers since they can benefit from a low cost and a high product’s quality.[102] Yet, the fusion of efficiency and fairness requires a certain act of value balancing. Specifically, the undertakings should not be seen as limited to the adoption of a norm-neutral economic approach, as bearing a risk of dissolution of EU competition law from its roots and norms, which include fairness.[103] Hence, the economic theory might act as a normative theory resolving any normative concerns, with non-efficiency objectives being expunged.[104] Such an approach could substitute democratic control with technocratic control.[105]
The above considerations suggest that, although the content of fairness is included in the competition law enforcement and is potentially relevant in the privacy breach assessment by focusing on achieving a desirable outcome in the protection of competition structure, fairness is a competition law’s procedural matter and should not be focused extensively in the analysis of the competition law enforcement. The proof for this proposition is that competition law could become superfluous if focused on the surplus' allocation rather than focusing on the process of allocation of resources.[106] Additionally, even if competition law aims at the fair allocation of resources, it does not mean that all economic actors should be placed in the same position in particular transactions, but the fairness of equal opportunities to participate in the market should be offered. Yet, the fairness might not be a decisive normative standard of competition law, and its idea could only focus on fair wealth distribution. However, such a notion might be seen as being beyond the scope of competition law enforcement and different policies might be more suitable to achieve fairness. Hence, fairness should not be seen as a weapon to ensure that consumers are protected against a violent undertaking, the protection of the individuals’ rights as consumers and market participants is already protected by the data protection and consumer protection authorities.
Lastly, fairness and equality of opportunities emphasise that dominant undertakings are not exploiting their superior efficiency, which could influence an unfair market entry. For instance, the acquisition of the large quantity of data might introduce competitive restraints in the form of high barriers to entry, which in hand introduce a poor competition in the digital market. Google/DoubleClick introduced several potential data-related competition restraints.[107] Firstly, online services might engage in anticompetitive data acquisition, taking a form of exclusionary agreements or prevention of data portability. Considering the exclusionary agreements, Google was alleged of intermediation agreements, which made Google become the exclusive search provider. Also, Google was alleged of entering into distribution agreements with software vendors, which exclusively use Google as their toolbars and web browsers. The anticompetitive spectrum on the Google issues demonstrates that exclusive agreements could exclude rivals, especially made by dominant firms. Furthermore, there is a potential element of vertical ‘single branding’ agreement establishment, which might result in anti-competitive foreclosure. In this respect, the action might prevent on the concept of freedom of choice as well as a competitive marketplace, which are key elements in the realisation of the democratic freedoms and other freedoms pursued by the EU, and the economic plurality might be hence an example of protecting wider policies, such as healthy policies. Therefore, the preservation of economic freedom could be a precondition for democracy, and as a result, safeguarding against regulatory or political capture.[108]
In summary, the fairness of competition and market might influence the fairness of economic agents, devoting both consumers and sellers. Firstly, considering the limits of antitrust, it has been already widely noted that the privacy invasions and data breaches are increasingly presenting a danger to society. In theory, some of the competition enforcement might be capable of considering the increased consequences of commercial processing/collection of personal data. Yet, neither competition law nor economic analysis supports such an argument.[109] The concept of fairness cannot be ultimately an objective of competition law, as it is methodologically impossible to accurately define and apply the concept in practice. Yet, within competition law, as well as the digital economy (based on potential privacy breaches) might influence findings of anticompetitive behaviour. Yet, a competition law breach cannot be found merely in the lights of the free-standing concept of fairness.
Social welfare objectives in the assessment of privacy concerns
The aforementioned discussion on the protection of competition law structure could be further emphasised by the referenced to the scope of welfare objectives, with consumer welfare being the more recognisable one.
As explained above, an effective competition process, which ensures economic freedom and market integration. These objectives would also be vital in the protection of competition equilibrium within the digital economy investigations. However, their scope and application might be limited due to ambiguity. Additionally, any personal protection breaches accumulated from the Big Analysis might demonstrate that protection of competition structure might lack a methodological ability to analyse the outcome of any Big Data/Big Analysis anticompetitive conducts. For example, the EU Commission in the merger case of Microsoft and Skype indicated that the fast-growing digital sector, which is often characterised by short innovation cycles, which might indicate that the large market shares could turn out to be ephemeral.[110] Hence, in this dynamic context, it was argued that the market share in itself might not be decisive in indicating the market power in itself and therefore might not be of lasting damage to competition law.[111]
Hence, the problem is still real. The myopic nature of the GDPR indicates that the problem is not simply within the remits of consumer protection, but the level of possibility of competition law to intervene in the potential privacy breaches within the cases of an appearance of competition abuse. However, the problem should not be based on the further explanation of the value of competition law in the assessment of potential extension to privacy concerns, but it might indicate that the problem is structural, and the mere assessment of the protection of competition processes might not be omniscience. In this respect, it is logical to assume that protection of competition law structures might require a further goal. Hence, to answer this question it is logical to trade into consideration other economic arrangements that with competition might arrive with arrangements bringing societal benefits and are protected because of the increase not of welfare in the society.
Since the competition regime is concerned with economic processes in society, it is necessary to also consider the aspect of competition as benefiting society.[112] However, it is necessary to add that the concepts of fairness or freedom are less not less important for competition law. However, its role often is minimal and they are only necessary for a wider picture of competition law goals, and on their own, they are not sufficient for the anticompetitive assessment, to mark which behaviour should be allowed or not under the competition law regime.
In the attempt to move from the abstract form of protection of competition structures, by considering the sole aspects of freedom and fairness, the competition law assessment needs to consider more workable preservations. Equally, the concept of privacy is abstract, and its sole assessment might be outside the scope of any competition law assessments since its nature is mostly to connote a right devoted to individuals. In fact, the GDPR, which aims at protecting personal data of private end-users, lacks a proper definition of the theory of harm. In addition, the right devoted to data controller further emphasised a potentiality to strengthen their power as private gatekeepers. In this section, an emphasis placed on the concept of consumer welfare and its value in the privacy assessment concerns.
Advocate General Kokott emphasised that protection of the market structures also indirectly protects consumers as any damage to the competition flow also impacts on consumers,[113] with the EU courts establishing that competition law aims at practises both damaging consumers and the structures of effective competition.[114] In the case of T-Mobile competition law was noted to be concerned with practice, regarded as having an anticompetitive object even if a direct connection between the practice and consumer prices is absent.[115] Furthermore, the case of TeliaSonera recognised a significance of preserving competition from possible distortion with a negative effect on public interests, individual undertakings and consumer, thereby, ensuring the EU wellbeing.[116] In this respect, in the case of Intel v Commission, the above reasoning was reiterated, indicating that, the Commission was not required to prove a causal link between data to consumers and practice in question since Article 102 TFEU aimed at remediating practices detrimental to consumer welfare and competition structure.[117]
Yet, Daskalova pointed out that an exact meaning of a consumer has been still not sufficiently discussed in the competition law sphere, acknowledging that the exact welfare measurement has also been missed from the general discussion. In her discussion, unanswered competition law aspects were identified, namely: who are consumers? are they final or intermediate consumers? Could price be seen as the only measure in the competition law? And, what about the choice or equates domestic preferences of considerations?[118]
Linking privacy protectionism to consumer welfare within the antitrust regime could be difficult. Primarily, privacy protection is a public right which falls within scope of specific regulation which does not necessarily result in consumer welfare analysis. Primarily, regulators would be forced to predict how to access the means in which new data or data sets would be used by undertakings, and how privacy, as a quality parameter, be affected. Furthermore, regulators would be required to determine any impact, or director of that impact on consumer welfare. Hence, potential changes to ‘privacy parameter’ could be approximated by any chances in amount of data acquired, or changed its use, or both.
Yet, Privacy could introduce novel challenges to the consumer welfare’s sphere, with the debate fared up after BKA’s Facebook proceeding. Consequently, the changing economic landscape brings uncertainty to the nature of the competition pressures, with an emphasis being given on the normative scope of competition enforcement — mainly as to whether the EU competition law could be viewed as a societal norm also advancing the wealth. As noted above, the objective of Article 102 TFEU are necessary to ensure a healthy functioning of an internal market and, thereby, consumer welfare.[119] In this respect, the goals could reaffirm the equality of opportunity.[120] Hence, the use of asymmetric information might give rise to abuses which adversely impact consumers wellbeing and, hence, may require intervention.
Furthermore, the notion of consumer welfare could provide a workable benchmark for intervention in digital markets, allowing to address any exploitative and/or exclusionary practices with the objective to restrict competition. Within the digital economy, the concept of consumer welfare might be used to tackle the effect of welfare on numerous groups of consumers. It can be effective in addressing multi-sided markets, which undoubtedly characterise digital markets. The Commission acknowledged that the notion of ‘consumers’ covered all direct and indirect, covered by an agreement, product users, incorporating producers, retailers, wholesalers and final consumers.
Despite the deontological approach attracting in this context, the EU competition enforcement should be oriented on contributing to a fairer society,[121] as the objective of the market integration,[122] which is a key element of the EU foundation, accounts the consumer welfare too. Vestager referred to the importance of the fair market, claiming that competition enforcement pursued the objectives of fairness, for which the public authorities also to defend the interests of the consumers.[123] The competition amongst the undertakings relates to the price, wider choice of product, or better quality. As noted by a vertical merger of TeleAtlas/TomTom, which concerned about the market of digital database maps indicated that potentially the merger could improve the welfare of the consumers as the TomTom’s large consumer base would have improved the maps provided by TeleAtlas.[124]
The application of consumer welfare is heterogeneous, as comprising all members of the society. In the digital market, the behavioural element would support an increase consumption of the users; consumers are likely to stay in the platform used by their family and friends, often unaware of maintaining competitive pricing because of their increased consumption.[125] Furthermore, considering a price-centric method to consumer welfare, a distorted picture might be provided. Clearly, the digital market usually provides ostensibly free for consumer services, and in this respect, quality forms an important parameter of competition. Bringing an example of the Facebook case, the distortion of privacy was seen as harming consumer welfare, despite the lack of price effects. Hence, the privacy might enforce a range of, not easily quantifiable, variables impacting on consumer welfare. Therefore, it is deducible that privacy concerns might not revolute the competition law itself, as the established competition law is adaptable to provide adequate remedies to bring a competitive equilibrium on a relevant market.
However, it is important to note that competition is normative. What often one might witness is the refection on competition as a part of legal incentives and constraints and social, ethical, and moral norms. The assessment of any promising legislative approach to offer individuals’ greater control over their personal data might enhance the accountability of their power in negotiation. However, this approach not always offer a great response to any protection. The potential alternatives are as follow: (1) behavioural discrimination, witnessed by information which digital users witness while relying on digital services and products, to which they immediately select ‘accept all’,[126] or (2) the default privacy notices, which as per the case of Microsoft,[127] offer an omnibus privacy support. Hence, any potential incentives to create privacy by design might sound promising. However, users would always opt out for even a minimum of our data to be disclosed, as often the privacy notices on the sides would be disturbing to the equivalent of the advertisement. Generally, the protection of personal data at the EU level is offered by the GDPR, which aims at encouraging innovation and create opportunities at the European Digital Single Market.[128] Yet, the private regulators would have their power strengthened by the GDPR, as its features, including the right to data probability, offering a wider control over the data, might, in fact, provide only a short-term approach. The data has already been used to the processes of analysing it and the knowledge has been already applied for a greater grow of a particular digital platform. Equally, each element of data bears no value of the end-users who relies on the right to data portability. Hence, practically to engage in the sphere of informational asymmetry, an under-active consumer should have their enhanced discourse protected, as its negative dimension might impose negative externalities, wearing competition.[129]
Nevertheless, the individuals’ welfare is an overarching objective of consumer law, data protection and competition law.[130] In terms of competition law, its cornerstone is to ensure undistorted competition within the internal market.[131] The application of EU competition law demonstrates a horizontal scope that is — competition law applies both to public entities which operate in the market and private, state-owned undertakings.[132] On the contrary, the data protection aims at safeguarding users’ fundamental rights and freedoms, without restricting the free movement of personal data.[133] Data protection and competition law are within the primary law of the EU legal regime; and similarly, to competition law, the data protection law regime is decentralised, i.e.. national supervisory bodies are the main enforcers (small point to note here: unlike competition law EU wide authority, there are not any equivalent for an EU-wide data protection authority.
The consumer welfare might be noted by considering the concept of notice-and-consent scenario. According to Pasquale, the problematic relationship between privacy and competition law could amount to the ‘structural production if ignorance’, which characterise the ‘opt-in/opt-out’ scenarios, experienced by consumers as monopolistic.[134] On the contrary, other commentators aim to develop a connection between competition law and privacy, and have the case for a more holistic approach between these fields. With many differentiating visions of privacy and competition law, it is important to make the case for a more comprehensive vision. Once ascertained, the State and competition law authorities could development novel and nuanced orientations towards problems sources from the intersection between data and competition law, to deter and punish any unfair and harmful behaviour and improve market processes.
It is admitted that the majority of consumers do not read privacy policies, since they are long, full of legal jargon and often unclear for users. As a result, consumers with an impaired understanding of the T&Cs, create digital self of their behaviours. Yet, their impaired understanding of the T&Cs result in the users having little confidence that they could detect any unfair or discriminatory conduct. In the age, when the users are expected to guard their data, consumers are lacking an understanding of the practices in which the platforms are using their data. Yet, many argue that there are normative rationalities for giving the users a chance to control over data, with privacy advocates attempting to solve any possible conflict.[135] Often, such advocates adopt a neoliberal model, recommending notice-and-consent policies.[136] Yet, there might be little of empirical evidence to support the current notice-and-consent framework as the favourable model for privacy protection.
Correspondingly, the concept of privacy paradox apprehends the market failures in the digital economy.[137] The concept of privacy paradox refers to a phenomenon where users respect their privacy and demonstrate a broad need for broad data protection, whereas in practice they have no preferences.[138] Yet, two caveats of the notion are recognisable, which could result in markets failures. Primarily, users, wanting to protect their data, fail to act to take measures to protect their data; they often are too lazy to read the T&Cs, or they do not read carefully the privacy protections. Furthermore, users fail to understand what happens to their data, due to the lack of transparency and intelligibility. Interestingly, the issue in this argument lies with a lack of ability.
Nevertheless, a debate as to whether the reform is needed is still present. For instance, the libertarian privacy establishment declaring that consumers’ preferences reveal for the privacy-invasive services.[139] Yet, analysing further this proposition, there is a likelihood of presenting an illogical rationale, since a simple statement that consumers are surging companies, including Facebook, out of conscious preference on privacy policies is difficult to be ascertained. Instead, users decide to use such platforms due to their personalisation of searches and social network services, which advantages from the acquired data to achieve near- or monopoly status. Given the complexity of their operation, consumers might never know the real value of privacy to their business models.
Therefore, by essence, competition law relies on the economic parameters which allow to picture the consumer harm, such as by monitoring prices or possible reduction in input, quality and/or innovation.[140] Privacy considerations are left outside the competition assessment at the moment, due to the potential ambiguity in ascertaining its anticompetitive harm.[141] There are a number of different responses why data privacy should become a part of competition assessment. The following two approaches are widely discussed.
Firstly, there is an overarching consensus that privacy is a fundamental right. Hence, competition law should be able to extend to a certain conducts, which might negatively impacted on this right.[142] Esayas claimed that this approach indicated that any mergers should be blocked by competition authority if they endanger individuals’ rights, unless the merging undertakings would implement any safeguarding privacy policies in place.[143] Furthermore, the following approach, according to Esayas, will not be based on purely competition concerns (including: price increase, output or quality).[144] Therefore, in longer terms, any mergers would be required to defeat unconquerable challenges.
Secondly, any reduction in privacy protection affects the form of quality, consumer choice or diminishes innovation. This approach is both shared by the EU Commission and the US Federal Trade Commission.[145] Furthermore, this approach acknowledged competition law as being limited to competitive issues but postulates that privacy protection could form a competition dimension.[146] The requirement to consider privacy as a competition dimension is important in consideration of services offered at zero-price in exchange for personal data. However, this approach could have been further argued to show methodological concerns, since a circle of data procession by an undertaking would indicate that privacy breach is a mere by-product of Big Data’s Big Analysis.
In this respect, it is likely to conclude that the long-term social welfare might be preferred to act as a guarantee of free competition, the efficient working of common markers, freedom of consumers and competitors as the main objectives of the competition law. Hence, long-term welfare might be theoretically superior to any other objective. The rich an extensive consumer view on the sphere of digital economy established a clear intensive to impose an instrumentalisation of competition law, with an effect of digital gatekeepers, which takes into consideration the simple aim of “protect[ion] [of] competition in the market as a means of enhancing consumer welfare and ensuring an efficient allocation of resources.”[147]
Efficiencies and privacy concerns
Efficiencies are another, frequently mentioned, goal of EU competition law.[148] The EU competition regime promotes economic efficiency, which is an ethos of neoclassical and neoliberal economics.[149] To this effect, efficiency considerations are entwined with consumer welfare promotion.[150] It is important to discuss the efficiency argument as a prerequisite in assessment of competition law from the perspective of privacy concerns in the antitrust cases.[151] This section aims at a brief assessment of efficiencies, to further emphasised the preferred long-term social welfare objective of the competition law, which could be a preferred objective of competition law in the privacy concerning dispute In this respect, any conduct that reduces market rivalry or hams the long-term social welfare should be deemed as unlawful. The discussion on efficiencies is thoughtfully enriching the above findings and are necessary for any further considerations of the social welfare long-term benefits.
As a starting point, a brief discussion about the three components of economic efficiency is necessary. Firstly, a concept of allocative efficiency corresponds with situations where goods and service are allocated according to the price consumers are willing to pay, with the price never exceeding the productional marginal cost. Such efficiency is achieved under the phenomenon of perfect competition, as the market price cannot be affected by a producer reducing its output.[152] Allocative efficiency might be contradicted with allocative inefficiency, occurring when firms (with sufficient market power) influence prices by output reduction, resulting with marginal costs exceeding; any unilateral agreements or mergers with an incentive to increase the market power would contribute to allocative inefficiency. Furthermore, productive efficiency aims at the production of goods and services at the lowest possible cost. Any output is maximised by the most efficient inputs’ combination, which, in turns, means that in the production of the goods/services requires a minimum of society’s wealth.[153] Lastly, dynamic efficiency focuses on producers and requires their constant innovation and development of new products. This might be illustrated as a battle to gain market shares, by attracting new consumers. Competition legal regimes aim to promote innovation and economic efficiency by increasing productive and allocative efficiency.
There is a broad consensus that the digital economy is a key driver to the future prosperity, which, unquestionably has revolutionised business models, services/products, and social interactions. Furthermore, it is also undisputed that the digital economy has introduced a new constraint in delivering innovation, efficiencies, and consumer welfare, as well as stimulated a dynamic on markets.
The efficiencies of the business model of Facebook is based on a personalised advertising model, and according to the BKA, it does not outweigh the users’ interests during the processing of their personal data from outside Facebook sources.[154] The social network function would depend on the valorisation of data and its high degree of processing. In this respect, the T&Cs, with data acquisition in their cornerstone, demonstrates a considerable impact on social network functioning, as well as the welfare of consumers of the Internet. Yet, this argument could further impose an important point: is there a fine line between competition law and data protection law infringement?
The EU Commission has rarely considered the efficiencies in itself. In the case of Microsoft/Yahoo!,[155] the Commission appeared to hint some efficiency arguments, arguing that to effectively compete against Google, the dominant search engine, the parties needed a larger scale. Nevertheless, there was not any direct mention of the efficiency by the EU Commission. However, as it will be noted, consumer welfare and efficiency might clash at the instances where the lower costs, caused by efficiency, are not directly passed on to consumers. In fact, within the digital economy, the products and services are offered to consumers for free, and consumer is not charged any positive price to use and access the digital services.
Assessing the BKA’s Facebook case, the BKA provided a vague discussion on the efficiency assessment and indicated primarily that the assessment of Facebook misconduct qualifying the data protection breach was capable of being analysed through the competition law since it overemphasised the dominant position of the social network. Nevertheless, the Facebook case was decided solely on German law, and there is no equivalent on the EU legal level.
Generally, competition law improves efficiencies. According to Schneider, there are two distinct debates: broad and narrow welfare standard of EU competition law.[156] The narrow welfare (or economic welfare) concentrates on productive efficiency, growth, market output and total welfare. In contrast, the broad welfare is understood to be an alternative/additional aim of competition law, which might encompass economic democracy, consumer welfare or density of the common market in a broad sense. Alternatively, there is a debate about non-efficiency and non-welfare factors. Yet, this could be potentially rejected as introducing further the debate as to why we do have competition law at all. Yet, often non-efficiency and non-welfare factors are used to further prove that competition law could be used as a political factor, which aims at, amongst others, reduction of poverty or welfare redistribution. Yet, on the other hand, non-welfare and non-efficiency factors might exclude several aspects of the competitive market.
A key issue is what weight is given to particular efficiency standards: while economics consider social welfare,[157] EU competition law focuses on consumer welfare.[158] Yet, the economic efficiency is not the sole objective considered by enforcement authorities. Firstly, the EU competition law has a central objective of promoting economic integration between the different Member States.[159] The overarching goal of the EU was indeed a creation of the single market, where intra-Community trade barriers would have been abolished.[160] The case of Consten and Grundig pointed out that the integral market might have been compromised if an agreement between undertakings was designed to partition markets along national lines.[161] Yet, the analysis of Article 102 TFUE is potentially an area of competition law, where there is a least of economic theory applied. Geradin demonstrated that such an argument might be supported by the decisional practice of the Commission, which places an emphasis on application of per se prohibition to different conducts of dominant firms.[162]
From a prism of the digital economy, the protection of economist structure might offer an independent mandate for intervention, detached from a direct effect on consumers. Yet, it does not necessarily have to result in more aggressive enforcement, but arguably more effective approach in the digital economy scope. In addition, there is a focus on the competitive process and its potential likelihood to be impacted by the use of networks, data pool as a potential expansion to raise rival’s costs or introduce barriers to entry. Hence, there is an increased significance of data in markets recognised due to its influence on competition distortion. The EU competition law is not limited to the above. It has been recognised that to ensure that the market functions properly, efficiency and innovation is also vital.[163] Although there has been a debate on the scope and measurement of gains of efficiency, which could take different approaches,[164] efficiency certainly plays a central role in the competitive assessments.[165]
However, the question is how do role efficiencies impact privacy protection, if any? The theory of free digital services and products, which based their business model on data acquisition, efficiency could not be a focal point. The inherent efficiency nature might be somehow assessed in the case of Microsoft, concerning a tied Windows Media Player product to its operating system The line of Microsoft defence was based on an argument that trying two products resulted in a cost-saving since it was no longer required to set up a different channel for media player distribution. In this respect, customers would face a decreased price, as well as would spend less time on installing a media player channel. Yet, the EU Commission indicated that an argument on efficiency could be potentially irrelevant, as the software cost remains low and might be replicated by little effort. In this respect, the Commission focused on the different aspects, including innovation and consumer choice rather than the efficiencies. In respect, the usage of the free digital services and products might disseminate without any effort of the users. Hence, the aspects of efficiencies might be considerably playing a smaller role in cases involving privacy protection. Similarity, the BKA’s case proved that data processing is not necessary for efficiency.[166]
To ensure a healthy market function, efficiency[167] and innovation are also vital.[168] The digital economy demonstrates a need for dynamic efficiencies (innovation), as allowing to stimulate dynamic markets, enhance consumer welfare while diminishing marginal returns. Innovation should not be ignored by the competition authorities, as it is unquestionably a key driver for competition and markets. Competition policy plays a vital role in fostering competition in innovation,[169] by safeguarding free market and efficiency maximisation. Then, the question on how to support innovation goes either to Arrowian or Schumpeterian assumption.[170] In simple terms, consumer welfare and efficiency might be interlinked, while considering the privacy concerns in the competition law assessment. Yet, with the EU Charter implementation, the EU Commission is bound to facilitate its provisions, including the privacy breaches.[171] However, in the form of being reluctant to intervene in the cases with direct harms to consumers in the form of excessive pricing, there are equally no reasons why the lower privacy available to end-users should be a means for the competition authorities to intervene.[172] The question should be therefore necessary indicative that the gap is not necessarily whether the competition law’s application is inadequate in assessing the privacy concerns, but the problem lies within the GDPR application as it is lacking an adequate regulation. The public policy should not be therefore based on the assessment of efficiency and competition since the competition law should not be extended beyond their natural limits. Yet, this point would be indicative that market forces, as well as competition law, are not adequate and sufficient to promote the level of privacy.[173]
Conclusions
The above discussion demonstrated that the debate of the relationship between privacy and competition law is more complex than the primary debate suspected. Big Data might indicate certain promises as well as risk in society. This corresponds with findings of that the literature on two-sided markets corresponds with the literature of network effects: this model appears to bring different market participants to the market, where normally they would not have interacted with each other.
This debate has demonstrated that consumer welfare might be viewed as a favourable goal within the sphere of digital economy assessments. Yet, by the nature of EU competition law goals, this might not be a self-standing goal. EU Competition law goals are seen to be interlinked between each other and in their very nature aim at securing the competitive processes of the EU, and the goals of EU.
The personal protection grated by the GDPR cannot be overstated, as by its key aim grants protection to consumers and digital users from any harm resulting from the unauthorised and/or excessive personal data use, protecting users from any potential negativity which could affect users’ dignity, which include different forms of discrimination (including price discrimination), identify theft, or harm to autonomy.[174] Essentially, the GDPR also ensures a balance between data controls and subjects, free flow of information and, at the same time, strengths the trust of the users that their data is handled with a reasonable expectation to ensure efficient maintenance of the market conditions, and realisation of the technological value.
The problem between competition law and privacy might be amounting to the structural production of ignorance, which is only focused on the notice-and-consent privacy models, based on the opt-in/opt-out scenarios, which are used for a coercive monopolistic scenarios. The myopic focus on privacy as an efficiency gain might be just seen as a temporary, and for the long-term pathologies of corporate concentration, there are no sufficient means to protect the process of competition. Hence, the identified elements such as a notice-and-consent privacy regime in its first analysing might create only temporary efficiencies, which are further emphasised on the consumers' judgement to enter into a one-sided contract, over the reflections to optimise the data flow for the long terms interests of consumers.
Simultaneously, the other side of the debate aims at the development of an interlinking relationship between competition law, which aims at developing holistic proximity between these fields. With several differentiating approaches to the privacy and competition law, it is important to focus on a more comprehensive vision, which develops a regulatory regime which develops a new orientation toward the process of competition law and privacy concerns and aims at detecting harmful behaviour and aims at market process improvement. Hence, it is evident that the further discussion would consider how the dominant digital undertakings, with the data orientated models, might be regulated, as the current regulatory regime is in itself limited in the digital gatekeepers. In this respect, potentially instrumentalisation of competition law might be legitimate, as witnessed by the telecoms instrumentalisation. The subsequent debate would be therefore aimed at analysing possible angles of regulatory intervention protection the processes of competition law, consumers, and the internal market in the age of digital era and include a potential scope for industrial policy measures.
About the Author
Arletta Gorecka is a Ph.D. in Law Candidate at the University of Strathclyde The opinions expressed in this article are those of the author. They do not purport to reflect the opinions or views of Indic Pacific Legal Research LLP or its members.
References
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[9] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation). [10] GDPR (n 10), article 4(2). [11] The GDPR defines a person as either natural or legal person. Ibid, article 4(1) [12] Ibid, article 4(7) [13] Ibid, article 7, recitals 32, 33, 42, 43. [14] The data controller is obliged to inform data subject about the anticipated purpose of data processes (Recital 42) and informs about a right to with withdraw their consent at any time, as per Article 7(3) GDPR. The GDPR is based on an understanding that individuals must be comprehensively informed about the purpose of the data processing (Recital 42). Their versatile consent ought to cover all activities arising from data processing (Recital 32). In this respect, the consent has to be clear, concise and should not involve any unnecessary use of the service in question (Recital 32; similar conditions apply for the documents involving specification of data processing purposes, Article 7(2) and Recital 42). [15] Ibid, article 6(1)(a) [16] ibid, article 6(1)(b-f) [17] Facebook case (2019) (n 1) paras 778-780. [18] European Commission, ‘Guidelines on the Application of Article 81(3) of the Treaty’ [2004] OJ C101/97, para 13. See also: David J Gerber, ‘The Transformation of European Community Competition Law?’ [1994] Harvard Intl LJ 97, 102; European Community for Coal and Steel, 'Rapport Des Chefs De Delegation Aux Ministres Des Affaires Etrangeres' (Spaak Report) (1956). [19] ibid. [20] Case C-501/06 P GlaxoSmithKline Services Unlimited v Commission and Others [2009] ECR I-9291, para 63; Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, paras 31, 36, 38-39; Council Regulation 1/2003 on the Implementation of the Rules on Competition Laid Down in Articles 81 and 82 of the Treaty [2003] OJ L1/1, Recital 9; European Commission, ‘Green Paper on Vertical Restraints in EC Competition Policy’ COM(96) 721, para 180. [21] Ariel Ezrachi, ‘Sponge’ [2016] J Antitrust Enforc 1, 18. [22] TFEU (n 8), article 9 refers to: ’the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health.’ [23] ibid, art 12; Art 38 Charter of Fundamental Rights of the European Union [2016] OJ C 202/389 (hereinafter ‘the Charter’). [24] ibid, article 168(1); the Charter (n 138) article 35. [25] ibid, article 8. [26] The transport industry was exempted from EU competition law regime application by the Treaty of Rome. For further discussion see: Lars Gorton, ‘Air Transport and EC Competition Law’ [1997] Fordham Int'l LJ 602, 608. [27] Ford/Volkswagen (Case IV/33.814) Commission Decision 93/49/EEC [1993] OJ L 20/14, para 36. [28] TFEU (n 8) article 11; Charter (n 27), article 37; see also: Julian Nowag, Environmental Integration in Competition and Free-Movement Laws (Oxford University Press 2016) [29] Mark Scott, ‘Cambridge Analytica helped ‘cheat’ Brexit vote and US election, claims whistleblower’ (Politico, 27 March 2018) <https://www.politico.eu/article/cambridge-analytica-chris-wylie-brexit-trump-britain-data-protection-privacy-facebook/> accessed 25 March 2020. [30] Renato Nazzini, The Foundations of European Union Competition Law: the Objectives and Principles of Article 102 (Oxford University Press 2009) 116; Consolidated Version of the Treaty on European Union, 2010 OJ C 83/01, article 3(3) [31] The abuse of dominance needs to take place within the internal market of the EU, as well as be identified between Member States. Such requirements are said to be purely jurisdictional threshold, and support in establishment of circumstances in which an abuse of dominant position becomes relevant under the EU law. ibid, 109. [32] For example, Merger Regulations and Guidance on the Enforcement of Article 102 use the term of ‘effective competition’ as opposed to the term ‘competition’. See: Commission, ‘Communication from the EU Commission — Guidance on the EU Commission's enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings’ (2009/C 45/02); Council Regulation (EC) 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (2004) OJ L24/1. [33] See: Eleanor Fox, ‘We protect competition, you protect competitors’ (2003) 26(2) W Comp 149. [34] Case C-95/04 British Airways plc v Commission [2007] ECR 1-2331, Opinion AG Kokott, para 68. [35] Case 6/72 Continental Can : Europemballage Corporation and Continental Can Co. Inc. v Commission [1973] CMLR 199 [36] British Airways (n 149) paras 103-108 [37] Eleanor Fox ‘We protect competition, you protect competitors’ (2003) 26(2) W.Comp. 149; R Bork The Antitrust Paradox: A Policy at war with itself (Free Press, New York 1978) 160. [38] David Gerber, Law and Competition in Twentieth-Century Europe, Protecting Prometheus (Oxford, Clarendon Press, 1998) 240 [39] Nederlandsche Banden Industrie Michelin NV v Commission of the European Communities (322/81) [1983] ECR 3461, para 57. [40] Consolidated version of the Treaty on the Functioning of the European Union Protocol (No 27) ON THE Internal Market and Competition. [41] TEU (n 145), article 3(3) [42] Guidance on the EU Commission's enforcement priorities in applying Article 82 (n 147). [43] Case AT.40428 Guess [44] See: AT.40424 Capcom or AT.40420 ZeniMax. [45] Case C-31/85 ETA Fabriques d'Ébauches [1985] ECR 3933 [46] Case AT.40527 Kuoni; Case AT.40525 TUI [47]Nazzini (n 151) 15 [48] Drystone Pipe & Steel Co v US 175 US 211 (1899) 15 [49] Nazzini (n 151) 15. [50] Ezrachi (n 137) [51] ibid 4-14. [52] Ezrachi (n 137) 17. 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[58] See: R Nazzini, ‘Welfare Objective and Enforcement Standard in Competition Law’ in U Bernitz & A Ezrachi (eds) Private Labels, Brands and Competition Policy (OUP 2009). [59] Nazzini (n 151) 16. [60] Facebook/WhatsApp (n 34) [61] European Commission - Press release, 'Mergers: Commission approves acquisition of LinkedIn by Microsoft, subject to conditions', (IP/16/4284, 6 Dec 2016); Microsoft/Linkedin (n 36) [62] ibid. [63] Alessandro Acquisti, ‘Privacy and Market Failures: Three Reasons for Concern, and Three Reasons for Hope’ [2012] J on Telecomm & High Tech L 227, 227. [64] Economides, Lianos (n 112) 14. [65] Gene Kimmelman, Mark Cooper, ‘A Communications Oligopoly on Steroids—Why Antitrust Enforcement and Regulatory Oversight in Digital Communications Matter’ (equitablegrowth, 2017) <https://equitablegrowth.org/research-paper/communications-oligopoly-steroids/> accessed 3 May 2020. [66] European Commission, ‘Notice on the definition of relevant market for the purposes of Community competition law’ 97/C 372/03 [1997] OJ C372/5, para 2. [67] M Motta, Competition Policy (Cambridge University Press 2004) 102. [68] Aleksandra Gebicka, Andreas Heinemann, ‘Social Media & Competition Law’ [2014] World Competition 149, 158. [69] ibid 159. [70] V. Reding, ’The EU Data Protection Reform 2012: Making Europe the Standard Setter for Modern Data Protection Rules in the Digital Age – Innovation Conference Digital, Life, Design’ (Munich, 2012, SPEECH/12/26) <https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_12_26> accessed 19 March 2020. [71] Case AT.39740, Google Search (Shopping), decision of 27 June 2017 [72] ibid. [73] Damien Geradin, Monika Kuschewsky, ‘Competition Law and Personal Data : Preliminary Thoughts on a Complex Issue’ (2014) 37 World Competition 69. [74] Gebicka, Heinemann (n 183) 158 [75] For instance, users would have certain expectations from Google and any other vertical search engines to meet their behavioural expectations, considering the quality elements as an unavoidable feature. [76] Nazzini (n 151) 17. [77] Henrique Schneider, ‘From Deontology to Pragmatism: Dynamics in the Pursuit of Goals of Competition law’ [2017] CORE 245, 254. [78] Nazzini (n 151) 17. [79] M Dold, T Krieger, ‘The ideological use and abuse of Freiburg's ordoliberalism’ (2019) University of Freiburg Diskussionsbeiträge, No. 2019-04 [80] Christian Alhborn, Carten Grave, ‘Walter Eucken and Ordoliberalism: An Introduction from a Consumer Welfare Perspective’ (2006) 2 Competition Policy International, p. 199/200 [81] Nazinni uses the example as of fairness for consumer law and Article 6 of the ECHR context; Nazzini (n 151) 21-22. [82] ibid 22. [83] ibid 22; R Nozick, Anarchy,State,andUtopia (BasicBooks 1974); Case T-271/03 Deutsche Telekom AG v Commission [2008] ECR 11-47, for recognition of ‘equality of opportunities’. [84] See J Rawls, A Theory of Justice (Harvard University Press 1999). [85] Nazzini (n 151) 22 [86] ibid. [87] Ezratchi (2018) (n 169) 13. [88] European Commission, ‘Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions’ 2016 Annual Competition Report (COM(2017) 285) 2. [89] Case 27/76 United Brands v Commission [1978] ECR 207; Case C-177/16 Autortiesību un komunicēšanās konsultāciju aģentūra (AKKA)/ Latvijas Autoru apvienība (LAA) [2017] ECLI; Deutsche Post AG (Case COMP/C-1/36.915) Commission Decision 2001/892/EC [2001] OJ L331/40. [90] Case C-209/10 Post Danmark A/S v Konkurrencerådet ECLI:EU:C:2012:172, para 21: Article 102 does not ‘seek to ensure that competitors less efficient than the undertaking with the dominant position should remain on the market.’ [91] Tsai (n 12). [92] Facebook case (2019) (n 1). [93] European Commission, ‘Staff working document accompanying the Report on Competition Policy 2016’ SWD (2017) 175 final, 59. [94] F Bosco, N Creemers, V Ferasaris, D Guagnin & B Koops ‘Profiling: A persistent core issue of Data Protection and Privacy’ in S Gutwirth, R Leenes & P de Hert (eds) Reforming European Data Protection Law (Springer 2015) 10, 50. [95] See G Skoumu & L Leonard ‘On-line Behavioural Tracking: What may change after the Legal Reform on Personal Data Protection’ in S Gutwirth, R Leenes & P de Hert (eds) Reforming European Data Protection Law (Springer 2015) 45. [96] Data protection was noted to be outside competition law protection, see case of Asnef-Equifax (n 33). [97] The Office of Communications, ‘Measurement framework for media plurality: Ofcom’s advice to the Secretary of State for Culture, Media and Sport’ (Ofcom, 2015) < https://www.ofcom.org.uk/__data/assets/pdf_file/0024/84174/measurement_framework_for_media_plurality_st atement.pdf> accessed 14 June 2020. [98] ibid para 9. [99] ibid. [100] Facebook/WhatsApp (n 34) [101] Microsoft/LinkedIn (n 36) [102] Case C-42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009] ECR I-7633, Opinion of AG Bot, para 245; Case C-203/08 Sporting Exchange [2010] ECR I-4695, Opinion of AG Bot, para 58. [103] Ezratchi (n 137). [104] ibid. [105] Harry First, Spencer Weber Waller, ‘Antitrust’s Democracy Deficit’ [2013] Fordham LRev 2543. [106] Nazzini (n 151) 22. [107] Google/DoubleClick (Case COMP/M.4731) Commission Decision [2008] OJ C184/10 [108] Elias Deutscher, Stavros Makris, ‘Exploring the Ordoliberal Paradigm: The Competition-Democracy Nexus’ [2016] Comp LRev 181. 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