On 30 May 2017, the Italian Competition Authority, Communications Authority and Data Protection Authority opened a joint Sector Inquiry on the so-called “Big Data”, aimed at identifying potential competition concerns and defining a regulatory framework able to foster competition in the markets of the digital economy, to promote pluralism within the digital ecosystem and to protect privacy and consumers.
Big Data consist of large amounts of different types of data, produced at high speed from multiple sources, whose handling and analysis require new and more powerful processors and algorithms – the so-called three “V”s (Velocity, Variety and Volume). In other words, Big Data are characterized by the quantity of information they contain, the continuous updating of that information, the possibility of instant analysis through the use of complex algorithms and the differentiation of content and formats.
Big Data represent a huge informational asset and play a strategic role for firms, since they can help digital companies to improve the quality of their services, to exploit new business opportunities and to provide services that are more individualised for each customer, such as behavioural targeted advertising, the posting of on-line ads aimed at specific users based on (comprehensive) profiles generated by observing their surfing habits. However, the use of Big Data can also create specific risks for the preservation of users’ privacy, given that new technologies and new forms of analysis may allow to “re-identify” an individual through apparently anonymous data. Moreover, from a competitive perspective, the collection and exploitation of Big Data may raise barriers to entry and reinforce market transparency, which may impact the functioning of the market, or facilitate anticompetitive practices.
The access to a large volume or variety of data is important to ensure competitiveness on the market; therefore, the collection of data may result in entry barriers when new entrants are unable either to collect those data or to buy access thereto, in terms of volume or variety, in the same way as incumbent players.
The increasing collection and use of digital data produce greater on-line transparency, and have a strong impact on the functioning of markets. On the one hand, a greater transparency may benefit consumers, who are able to compare more easily prices or characteristics of competing goods or services; moreover, in some cases, greater transparency can facilitate entry by new competitors who have more information about consumer needs and market conditions. On the other hand, however, the greater volume of information resulting from expanded data collection, especially about competitors’ pricing, may be used by undertakings in ways that could limit competition, facilitating collusive practices (tacit or explicit).
Finally, access to and collection of Big Data may lead to anticompetitive practices. To obtain better access to data, for example, a company may decide to acquire other companies owning large datasets or merge with them. Moreover, firms may prevent or refuse access to data to competitors, through discriminatory and selective agreement, or other exclusionary conducts.
For such reasons, the Italian Authorities intend to determine whether, and under which circumstances, access to Big Data might constitute an entry barrier, harm the right to data protection and facilitate anticompetitive practices.
The Italian sector inquiry follows the final report on the e-commerce sector inquiry published by the European Commission on 10 May 2017. The e-commerce sector inquiry was launched in May 2015 in the context of the Digital Single Market strategy and aims at identifying business practices that may restrict competition in European on-line markets.
In 2016, also the French Competition Authority (Autorité de la Concurrence) opened a sector inquiry on Big Data in order to assess data processing in the on-line advertising sector, while the German Competition Authority (Bundeskartellamt) started in March 2016 an investigation into a potential abuse of dominance by Facebook arising from its privacy policies.