Data is a buzzword popular in the media today. Most often we hear or read the word in conjunction with a breach of a major retailer or healthcare company. It is also used by companies to target us with behavioral advertising. But it also has become the new coin of the realm. Being neither a physical asset nor intellectual property, data has become the engine that powers much of our new commerce. And for precisely that reason, access to data is becomingly more of a competitive, and hence an antitrust, concern.
The issue was highlighted by a recent case filed by Authenticom against CDK Global and Reynolds and Reynolds. Car dealerships increasingly use sophisticated tools to run their business, including tools to suggest additions to inventory and where to find those vehicles, price their vehicles (both used and old) and understand the car preferences of the demographic they serve, to name a few. Car dealerships also use dealer management systems (DMS) to manage their vehicle and parts inventory, service appointments, payroll and other aspects of their business. Dealerships need their DMS to connect with the other sophisticated tools they purchase so the systems and product can communicate with each other. More importantly, these sophisticated tools are data-driven and they must have access to the dealer’s data in order to perform the analysis required. More broadly, their performance is linked to the breadth and depth of the data to which they have access across dealerships.
Authenticom is an information liaison for car dealerships seeking to purchase these sophisticated tools as a supplement to their DMS. Essentially, it integrates these add-on tools with the dealer’s DMS. Critical to Authenticom’s success (and existence) is the ability to access the dealer’s DMS. But dealers themselves don’t have the key to their DMS. Together, defendants CDK and Reynolds provide DMS platforms to roughly 75 percent of car dealerships nationally. Of critical importance here is the fact that that the dealers’ data, to which third party software vendors must connect in order to sell their feature products to car dealerships, is stored on CDK’s and Reynolds’ own servers. In this way, the DMS companies serve as data gateways for information they do not own. Because Authenticom relies on gaining access to DMS data in order to perform its data integration services for its vendor clients whose software is purchased by car dealers, it needs CDK and Reynolds to open the door for them. Beginning in 2015, however, Authenticom alleged that CDK and Reynolds withheld access to the needed data, despite Authenticom having authorization from dealers to access the data.
Authenticom alleged that even though Reynolds began blocking Authenticom’s access to its DMS in 2009, CDK offered an “open system” for its data until 2015. At that time, CDK and Reynolds entered into a reciprocal data exchange agreement, which provided that CDK and Reynolds would permit each other’s in-house data integrator to poll the other’s DMS data. In other words, CDK’s applications could access Reynolds’ DMS and vice versa, exclusively through their respective in-house data integration platforms. The defendants argued that the agreement is an attempt to protect the operational and data security integrity of their respective DMS systems.
Originally, Authenticom convinced a federal judge in Wisconsin to issue a preliminary injunction that would prohibit CDK and Reynolds from blocking Authenticom’s dealer-authorized access to their data platforms. On emergency appeal, however, the 7th Circuit deferred the imposition of a preliminary injunction and agreed to expedite the DMS companies’ appeal.
It should come as no surprise that data, and access to it, is critically important. And as technological products become ever more dependent on data for their existence and performance, expect to see competitors attempt to prevent that access. Stay tuned….