An analysis of abuse of dominance of online platforms in the
digital market, with regard to breach of data protection law
Can the infringement of (personal) data privacy by dominant online platforms
in the digital market, result to an abuse of dominance under Article 102 TFEU?
Master Thesis
International and European Law – EU Competition Law & Regulation
Franka Cimbi
July 2018
Supervisor: Dr. K.J. Cseres
Abstract
The digital market is characterized by web-based entities which provide their services for “free”. However, through the collection and processing of personal data which users exchange to get access to these services, online platforms generate revenue through targeted advertisement and prediction of consumer behaviour. The emergence of data as a key competitive advantage in the digital market, rises new challenges to the traditional competition framework. This paper focuses on the role of data when establishing dominance of the online platforms in the market and when assessing whether an abuse of that dominant position exists. More specifically, the paper addresses the issue whether infringement of privacy of personal data by dominant firms in the digital market, can result to an abuse of dominance under Article 102 TFEU as well. It is argued that data protection rules and principles can serve as normative benchmarks when assessing the abusive behavior of dominant online entities. Lastly, it is discussed that the protection of personal data has emerged as a dimension of competition in terms of quality.
1. INTRODUCTION 1
1.1 BACKGROUND 1
1.2 THESIS SUBJECT AND STRUCTURE 2
2. DATA IN THE DIGITAL MARKET 5
2.1 THE FOUR ‘V’S 6
A) VOLUME 6
B) VELOCITY 6
C) VARIETY 6
D) VALUE 7
3. THE ESTABLISHMENT OF DOMINANCE IN DATA-DRIVEN MARKETS 7
3.1 MARKET DEFINITION 7
3.1.1 TWO-SIDED MARKETS OF ONLINE PLATFORMS 8
3.2 MARKET POWER OF ONLINE PLATFORMS 11
3.2.1 MARKET SHARES AND NETWORK EFFECTS 11
A) MARKET SHARES 11
B) NETWORK EFFECTS 12
3.2.2 POSSESSION OF (PERSONAL) DATA AS AN ASSET FOR MARKET POWER 14
4. DATA PROTECTION AND COMPETITION LAW IN THE EU 16
4.1 GENERAL OVERVIEW OF EUDATA PROTECTION LAW 16
A) DATA PROTECTION LAW FRAMEWORK 16
B) THE IMPACT OF THE COURT OF JUSTICE OF THE EUROPEAN UNION REGARDING DATA PROTECTION 18
4.2 SIMILARITIES BETWEEN DATA PROTECTION AND COMPETITION LAW IN THE EU 19
5. ABUSIVE BEHAVIOR OF ONLINE PLATFORMS, WITH REGARD TO DATA
PROTECTION 22
5.1 UNFAIR CONTRACTUAL TERMS IN THE DIGITAL MARKET 23
A) FACEBOOK/WHATSAPP 24
B) THE BUNDESKARTELLAMT FACEBOOK PROCEEDING ON ABUSE OF DOMINANCE 26
5.2 PRICE DISCRIMINATION IN THE DIGITAL MARKET 28
5.3 NON-PRICE PARAMETER OF COMPETITION: QUALITY IN TERMS OF DATA PRIVACY 30
5.4 ESTABLISHING ABUSE OF DOMINANCE THROUGH DATA PROTECTION LAW 33
5.4.1 EXCESSIVE PRICING IN THE DIGITAL MARKET, WITH REGARD TO DATA PROTECTION LAW
34
5.4.2 DATA PROTECTION RULES AND PRINCIPLES AS NORMATIVE BENCHMARKS IN ABUSE OF
DOMINANCE ASSESSMENT 35
6. CONCLUSION 37
1. Introduction
1.1 Background
“Personal data is the new oil of the internet and the new currency of the digital market.”1 With
the rapidly developing technology, the world market is no longer solely founded on the need for access to tangible goods. Circulation of data has created new business models, target consumers as well as digital products, therefore departing from the traditional industrial age, giving way to a new information era. Because of such significant changes in the market character and the introduction of new online trade platforms, important competition issues need to be addressed. Businesses have created a whole new digital market economy in which they compete and introduce their products to consumers.
The digital market is characterized by companies which collect large amounts of personal data, as a result of the contemporary technological development which enables the analysis and storage of information.2 The data can be obtained from different sources including through voluntary consent via social media, captured through web cookies or derived from other data.3 Search engines and social media platforms, such as Google or Facebook, respectively provide their services such as internet browsing or social networking for free, in order to attract users. However, in return for granting access to these free services, they gather data about the users’ profile, interests and behaviour. Such information allows these online platforms to win over advertisers who want to present their products to the consumers that are most likely to be interested in them, a phenomenon also referred to as “targeted advertisement”.4 This way,
advertisers gain from significantly higher profits compared to the more conventional methods and it makes them ‘dependent’ on online platforms, hiring them to reach targeted audience and to extract consumer behavior data to predict their future behavior and habits. In return, these online platforms capitalize their position through charging fees in exchange to targeted advertising. Clearly, the volume and quality of data is a key basis of competition between
1 Speech by M. Kuneva – European Consumer Commissioner, Brussels 31 March 2009. Available at http://europa.eu/rapid/press-release_SPEECH-09-156_en.htm
2 Speech by J. Almunia – Vice President of the European Commission responsible for Competition Policy, Brussels 26 November 2012. Available at http://europa.eu/rapid/press-release_SPEECH-12-860_en.htm 3 W. Kerber, ‘Digital Markets, Data, and Privacy: Competition Law, Consumer Law and Data Protection’, No. 14, February 2016, p. 856.
4 D. Geradin and M. Kuschewsky, ‘Competition Law and Personal Data: Preliminary Thoughts on a Complex Issue’, February 2013, p. 2. Available at https://ssrn.com/abstract=2216088
based companies.5 Although targeted advertisement and improved quality of online services
have a lot of advantages in the everyday life of individuals, privacy of personal data is in significant jeopardy. More than 4 out of 5 individuals who use internet believe that their personal data is used without their knowledge and/or shared with third parties without their consent.6
The emergence of data as an asset for market competitors operating in the digital economy raises many legal, ethical and moral questions. From a strict legal point of view, data falls within the scope of data protection law. However, if data is collected to obtain a dominant position in the digital market or to abuse it, competition concerns arise. Additionally, data itself may reflect the non-price parameters of competition, namely quality, choice and innovation.7 The debate about data protection in competition analysis regarding online platforms has continued since the Google/DoubleClick8 merger and redrawn attention from a competition law perspective when Facebook announced its attention to acquire WhatsApp in 2014. The major challenge competition law is facing today consists on how to establish dominance in data-driven markets. This is mainly because of the multi-sided market nature of these platforms and the lack of monetary transactions. These two characteristics of online businesses make it very difficult for competition law enforcement to apply the traditional competition rules. The other major dispute relates to whether reduction of privacy by dominant firms in the digital market can be an (exploitative) abuse of dominance, besides a violation of data protection law.
1.2 Thesis Subject and Structure
This paper focuses on the role of data in the competitive process between online platforms, which for the purpose of this analysis, the term ‘online platforms’ covers a broad category of online companies, such as social networks and search engines. The main legal question this paper aims to address is whether infringement of (personal) data privacy by dominant online platforms in the digital market, can result to an abuse of dominance under Article 102 TFEU as well.
5 Ibid.
6 Speech by M. Kuneva – European Consumer Commissioner, Brussels 31 March 2009. Available at http://europa.eu/rapid/press-release_SPEECH-09-156_en.htm
7 F. Costa-Cabral and O. Lynskey, ‘Family ties: The Intersection between data protection and competition in EU Law’, Common Market Law Review 54 (1), 2017, p. 3. Available at
http://eprints.lse.ac.uk/68470/7/Lynskey_Family%20ties%20the%20intersection%20between_Author_2016_LS ERO.pdf
In order to reach such a conclusion, this paper is devided in two main parts by following the traditional competition assessment with regard to Article 102 TFEU. In the first section a brief introduction of what data is and its characteristics are discussed. Then, considering that when evaluating alleged abusive behavior competition authorities start their analysis by putting forward a market definition, the establishment of dominance in data-driven markets is addressed by firstly analyzing the relevant market. Apart from Twitter, which licenses data to third parties, other providers of online platforms do not trade data. Their privacy policies show that data information is only used as input to provide relevant services to users and advertisers.9 Thus, no demand and supply exists, because the substitutability of the data cannot be assessed and no relevant market is identified. However, in its abuse of dominance investigation against Google, the Commission seems to distinguish two interrelated markets regarding Google’s search engine: internet search for users and online search advertising for advertisers.10 It is important to examine how traditional competition rules and market definition specifically fit into the new data-related industries.11
After analyzing the relevant market, an assessment of the market power of online platforms follows. More specifically, this section aims to analyze how the existence of a dominant position in a market for data can be established and how value can be attributed to data. The usual and more objective technique to measure the competitive position of companies in data-driven markets is to see their ability to monetize the collected data.12 However, this issue becomes complicated when such providers offer their services for free (although it is in exchange of personal data), since data is only used as an input for services with no direct profits, value cannot be attributed.13 Nevertheless, it is important that in its Microsoft/Skype merger decision, the Commission indicated that “market shares only provide a limited evidence of competitive strength because of the dynamic nature of the internet consumer communications services in which market shares can change quickly in a short period of time.”14 Through analyzing the Commission’s decisions on the most important and relevant
9 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer Law
International, 2016, p. 109.
10 Case No COMP/M.4731 Google/DoubleClick C [2008] 927 final.
11 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 104.
12 Ibid. 13 Ibid.
mergers, and also by referring to the great impact of network effects in data-driven business models, this section attempts to establish that data is a significant asset of online platforms, thus its possession may be a strong indicator of dominance in that market.
Furthermore, the paper also focuses on the question whether the infringement of privacy of (personal) data by dominant online companies, can result in an abusive behavior caught by Article 102 TFEU. In order to analyse the connection of data and data privacy with the abuse of dominance from a competition perspective, the types of abuse which are related to data-driven markets are explored in the next paragraphs, such as the unfair contractual terms, price discrimination and excessive pricing. In addition, in March 2016 the Bundeskartellamt announced the opening of proceedings against Facebook on suspicion of having abused its possible dominant position in the market for social networks.15 It is suspected that its terms of service are in violation of German data protection law and thereby represent an abusive imposition of unfair conditions on users.16 This is a very important investigation which further supports the view of this paper that relying on data protection law – specifically violating privacy of personal data – can be a standard for assessing whether exploitative behavior of a dominant firm should be considered anti-competitive under Article 102 TFEU. This is a first attempt by a competition authority to integrate data protection interests into competition assessment. Considering that privacy of personal data is a growing concern, the next section tries to explain how quality in terms of data privacy is an important parameter of competition in online environment. Consequently, it will be demonstrated that the protection of personal data has emerged as a dimension of competition on the internet.17
Lastly, as a closer cooperation between the data protection authorities and competition authorities is also proposed by the European Data Protection Supervisor in its Preliminary Opinion on ‘Privacy and competitiveness in the age of big data’,18 the last section proposes an
approach to assess whether a particular data accumulation process may be excessive under
15 The Bundeskartellamt proceedings against Facebook, March 2016. Available at
https://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/19_12_2017_Facebook.ht ml
16 Ibid.
17 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 306.
18 Preliminary Opinion of the European Data Protection Supervisor, ‘Privacy and competitiveness in the age of big data: The Interplay between data protection, competition law and consumer protection in the Digital Economy’, March 2014. Available at
Article 102 TFEU through the interaction between data protection and competition law. It suggests using quality as an essential parameter of competition in the assessment of exploitative abuses, rather than the traditional approach based on price. In addition, it involves the use of data protection principles as a point of reference against which the abusive behavior can be examined, such as Article 5 (1) (b) of the GDPR (General Data Protection Regulation) which contains the purpose limitation principle and/or data minimization principle under Article 5 (1) (c).19 These data protection principles may assist in the competition analysis under Article 102 TFEU, in the form of indicators in the existence of abuse of dominance.20 In order to argue that the breach of one area of law, in this case data protection, can lead to a violation of competition law as well, AstraZeneca and Allianz Hungaria cases will have particular attention, since the Court of Justice recognized this specific judgment in these cases.
Therefore, by analyzing the relevant case law and the academic literature, this paper intends to argue that infringement of privacy of personal data by dominant firms in the digital market, can result to an abuse of dominance under Article 102 TFEU as well. In order to provide a well-based evaluative conclusion, a descriptive and explanatory methodology shall be used.
2. Data in the digital market
The term ‘data’ does not have a single definition; it is defined differently depending on the circumstances. For instance, computer scientists define it as a term which describes the storage and analysis of large complex datasets, via different techniques, such as programming.21 On the other hand, privacy experts consider it as data about one or a group of individuals, that might be analysed to make inferences about individuals.22 However, in the wider sense it is referred to any information or representation of information, usually being stored in a computer.23 Big data is characterized by the so-called four ‘V’s, namely the volume of data, the velocity which it is collected, the variety of information aggregated and the value of data.24
19 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016.
20 Ibid.
21 O. Törngren, ‘Mergers in big data-driven markets – Is the dimension of privacy and protection of personal data something to consider in the merger review?’, Stockholm Univeristy - Faculty of Law, 2017, p. 7. 22 M. Stucke and A. Grunes, ‘Big Data and Competition Policy’, Oxford University Press, 2016, p. 15. 23 Autorité de la Concurrence & Bundeskartellamt, ‘Competition Law and Data’, 2016, p. 4.
2.1 The four ‘V’s
a) Volume
The volume of data concerns the amount of data which is accumulated and processed. Initially, the huge amount of data gave rise to issues regarding storing and processing it, considering that its size was beyond the capacity of typical database software tools which capture, store and analyse data.25 Nevertheless, the increase in volume of data has contributed to reducing the
costs of collecting, processing, storing and analysing the data.
b) Velocity
The velocity of data concerns the speed at which it is generated, processed and analysed.26 The impact of the velocity of which data is analysed, is significantly affecting the everyday life of individuals. Through real-time monitoring and real-time ‘nowcasting’, companies are able to extract real-time data in order to predict future events and consumer behaviour. This way, companies can come up with more consumer-friendly products/services. Furthermore, time is a crucial element in the velocity of data, because in general the older the data, the less valuable it becomes.27
c) Variety
The variety of data concerns the unstructured databases of different sources, such as social media, mobile communications, web logs, sensors and financial transactions.28 Linking these diverse databases together is also a feature of the variety of data. Similarly to the velocity of data, its variety also enables companies to collect different kind of data which help them to reach targeted consumers, due to the ability of tracking individual’s preferences and daily activities. The more variety of data they can collect, the more accurate business decisions they can take.
25 OECD, ‘Data-driven Innovation for Growth and Well-being’ Interim Synthesis Report, October 2014, p. 11. Available at https://www.oecd.org/sti/inno/data-driven-innovation-interim-synthesis.pdf
26 Ibid.
27 M. Stucke and A. Grunes, ‘Big Data and Competition Policy’, Oxford University Press, 2016, p. 20-21. 28 OECD, ‘Data-driven Innovation for Growth and Well-being’ Interim Synthesis Report, October 2014, p. 11. Available at https://www.oecd.org/sti/inno/data-driven-innovation-interim-synthesis.pdf
d) Value
The value of data comes from using big analytics, which means using “technical means to extract insights and empowering tools to better understand, influence or control the data objects of these insights.”29 Gaining such insights, such as social systems or natural phenomena, adds value to the data since companies better understand individual behaviour and use this knowledge to their benefit. Clearly, the other three V’s contribute to the value of data. The volume of data enables companies to collect large amounts of information. The variety of data enables to extract more detailed information from the data obtained. The velocity of data can rank the companies the first to analyse the gathered data. As a consequence, companies can compete effectively by being the first to predict the changes in the market.
3. The establishment of dominance in data-driven markets
3.1 Market definition
Dominance, within the competition law context, is defined by the CJEU in the United Brands case as follows: “a position of economic strength enjoyed by an undertaking which enables it to hinder the maintenance of effective competition on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors and customers and ultimately of the final consumers.”30 In other words, the undertaking enjoys such market power to the extent that it can control prices and conditions of a product/service sale. In this situation market entrants face tremendous difficulties to effectively compete in the market.
In a traditional competition law analysis, the first stage when assessing whether a company has a dominant position is to define the relevant market where that company operates. The main purpose of market definition is to define the products which are substitutable to that level that the companies which produce them can be considered as competitive towards each-other.31
The most common tool competition enforcement applies in order to identify the relevant market is the ‘Small but Significant Non-Transitory Increase in Price test’ (SSNIP test). The
29 Ibid., p. 4.
30 Case C-27/76 United Brands Company and United Brands Continentaal BV v Commission of the European
Communities [1978] ECLI:EU:C:1978:22, para 65.
31 L. Filistrucchi and others, ‘Market Definition in Two-Sided Markets: Theory and Practice’, Tilburg Law
aim of the SSNIP test is to estimate whether customers would switch their purchases from the hypothetical monopolist’s market to that of a competing supplier after the price would be increased by 5-10%. 32The effectiveness and significance of the customer’s demand substitutability constitutes the most immediate indicator with regard to decisions taken by suppliers of a product (particularly pricing decisions) and it is assessed by the SSNIP test.33 Thus, if customers are able to simply switch to a competitor, the supplier of that product cannot change prices in a significant extent.34 Moreover, in order to correctly define the relevant market, both demand and supply must exist.35 In data-driven markets it is quite challenging to apply the SSNIP test and to assess demand and supply, because most of online platforms clarify it in their privacy policies that they only use data as an input to provide relevant services to users and advertisers, meaning no monetary compensation.36 This way, substitutability of the data cannot be assessed, resulting in a non-existence of demand and supply. Another key issue which makes the definition of the relevant market more delicate is the so-called ‘two-sided’ nature of online platforms, which will be explained in the next paragraph.
3.1.1 Two-sided markets of online platforms
A two-sided market is a market under which an undertaking supplies to two different groups of consumers and the supply/demand of one group of consumers, depends on the supply/demand of the other group.37 In other words, these undertakings are active towards more than one group of customers, as for example online platforms are active in two sides of the platform, namely the users and the advertisers. This characteristic of online platforms raises the question of whether one or two separate markets should be defined when establishing the relevant market.
According to Evans, the relevant market analysis under competition law, with regard to two-sided markets, must take into account both sides of customers that an undertaking supplies to,
32 A. Amelio and D. Donath, ‘Market Definition in recent EC Merger Investigations: The role of empirical analysis’ Law & Economics Concurrences (3) 2009. Available at
http://ec.europa.eu/dgs/competition/economist/merger_investigations.pdf 33 Ibid, para. 13.
34 Ibid.
35 European Commission, ‘Commission Notice on the definition of the relevant market for the purposes of
Community competition law, [1997] OJ C372/5
36 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 104.
37 L. Filistrucchi and others, ‘Market Definition in Two-Sided Markets: Theory and Practice’, Tilburg Law
because otherwise it may lead to an incorrect assessment.38 However, current competition law
standards can define a market for data only if the information is traded, such as Twitter which licenses data to third parties.39 It seems that the provision of data by users in exchange to the services provided by online platforms does not constitute an economic transaction, thus a separate market for personal data is quite complex to establish.40 So far, the European Commission has had to deal with several cases which involve online platforms.
In its Facebook/WhatsApp merger decision, which was met with a great deal of media attention, it was expressly stated by the Commission that there was no investigation regarding a possible market definition for personal data.41 The reasoning behind this stance was that neither of the parties were active in this kind of potential market. Facebook used the private data of its users only for purposes of targeted advertisement, without selling private data to third parties. On the other hand, WhatsApp did not collect any personal data of the users or store any messages sent through this application. Clearly, from this line of argumentation it can be presumed that current competition rules are able to define the relevant market based on the services that online platforms offer to its consumers.42 This means that the main attention does not fall on the means of payment, as one could argue that users are actually ‘paying’ with their personal data for the free services, but it falls on the kind of product/service offered by an undertaking. The Commission analysed the proposed merger by taking into account consumer communications services, social networking services and online advertising services, as sides of the market which could potentially be affected by this transaction.
However, the Commission did consider the question of whether one or two separate markets should be defined with regard to multi-sided market nature of some undertakings. In the decision of MasterCard in 2007, several relevant markets for payment card systems were defined, not just one. The Commission stated: “Two-sided demand does not imply the existence of one single ‘joint product’ supplied by a ‘joint venture’.”43
38 D. Evans, ‘The Antitrust Economics of Two-Sided Markets’, 2007, p. 63. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=332022
39 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 81.
40 Ibid., p. 80-81.
41 Case No COMP/M.7217 Facebook/WhatsApp C [2014] 7239, para 70-72.
42 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 81.
For the first time, the Commission applied competition law rules to internet search in the Microsoft/Yahoo merger case.44 The main focus in the case with regard to market definition
was the legality of the transaction in the online advertising market; there was no mentioning of a separate relevant market on web search.45 However, it was important enough that the Commission took into consideration the link between the user and the advertiser side by exploring potential anti-competitive impacts of the transaction on innovation of internet search to users.46
Nevertheless, three years after the above-mentioned case, the Commission distinguished two interrelated markets in the abuse of dominance investigation against Google, namely the web search market and the online search advertising market.47 It seems that this approach follows the line of reasoning by Filistrucchi et al., which explains that the two main reasons why two-sided markets should be separated as two relevant markets are the following: firstly, although a certain product/service is provided for free, the number of people receiving it in the platform grows in such amount that although the platform suffers a loss on one side (users side), it makes higher profits on the other side; secondly, the two sides are connected in such a way, making it very likely to affect users on one side due to the platform’s behaviour in the paying side of the market.48 These reasons make it very obvious why the argument which connects the price
with the definition of the relevant market is not suitable in two-sided markets.49
Another example where the Commission follows the same approach is the merger decision of Microsoft/LinkedIn, which is the most recent data-related decision delivered by the Commission in 2016.50 Microsoft, which is a technology, software and services company, sought to acquire LinkedIn, which is a social network service for professional connections. The Commission identified three separate product markets, namely: professional social network services, customer relationship management software solutions and online advertising services.51 With regard to professional social network services market, the main competition
44 Case No COMP/M.5727 Microsoft/Yahoo! Search Business C [2010] 1077. 45 Ibid., para. 85-87.
46 Ibid., para. 202-226.
47 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 86.
48 L. Filistrucchi and others, ‘Market Definition in Two-Sided Markets: Theory and Practice’, Tilburg Law
School, 16 March 2013, p. 9.
49 Ibid.
50 Case No COMP/M.8124 Microsoft/LinkedIn C [2016] 8404 final. 51 Ibid.
concern was the strengthening of market position of LinkedIn in such a level that it would create very high entry barriers to potential competitors, following this merger. Specifically, the Commission addressed the concern of the combination of datasets of both merging parties, as well as the fact that LinkedIn would become a pre-installed application for the Windows operating systems.52 Issues such as market tipping53 and network effects54 were considered by the Commission, as these competition concerns appear to create obstacles to competitors’ chances of expanding their customer database or entering the professional social network market.55 The market of customer relationship management software solutions was examined by the Commission regarding the impact this merger would have if the access to the joined database is denied. It was concluded that the combination of the databases of the merging parties was not a key facility, because competitors can have access to similar databases, and as a consequence the denial of access would not impede effective competition.56
Thus, the services that the majority of online platforms offer do not have monetary value, decreasing the importance of the price factor under which traditional competition tools mostly rely upon. In order to properly define the relevant market in data-driven markets, a shift to non-price characteristics of these services, such as innovation and quality in light of data protection/privacy must be of outmost importance. Therefore, it is crucial to explore the role of (personal) data’s possession as market power, in establishing dominance of online platforms in data-driven markets.
3.2 Market power of online platforms
3.2.1 Market shares and network effects
a) Market shares
Traditionally, market shares and price levels or profit margins of an undertaking are considered to be a strong element when establishing dominance under competition law. However, market shares cannot always be the main indicator to measure market power, especially with regard to 52 Ibid, para. 302. 53 Ibid., para. 347-348. 54 Ibid., para. 339-344. 55 Ibid. para. 346. 56 Ibid., para. 226.
multi-sided/two-sided markets, such as online platforms.57 Moreover, high market shares do
not necessarily imply market power in dynamic and innovative markets, considering that these markets change rapidly in a short period of time.58
This issue was addressed by the Commission in the Microsoft/Skype merger case, where it was stated: “Market shares only provide a limited indication of competitive strength in the consumer communications services markets. Consumer communications services are a nascent and dynamic sector and market shares can change quickly within a short period of time. Furthermore, almost all communications services are offered free of charge.”59
Companies engaged in such innovative and technological markets are unable to maintain a high market share stable considering the quick change of these markets in a very short period of time (Blackberry serves as an example).60 New entrants in innovative markets grow rapidly and leave behind other platforms, such as for example the replacement of MySpace by Facebook, or Nokia by iPhone. One essential element that strengthens the market power of online platforms are network effects, which will be discussed in detail below.
b) Network effects
By definition, network effects exist if users in one side of the platform are interested in the participation and usage decisions of users in the other side.61 Network effects can be
distinguished between direct and indirect network effects.62 The former exists in one side of
the platform (among users), while indirect network effects arise between the two sides of the platform (between the users on one side and the advertisers on the other side).63
57 OECD, ‘Measuring Market Power in Multi-Sided Markets’, DAF/COMP/WD(2017)35/FINAL, 14 November 2017, p. 6. Available at https://one.oecd.org/document/DAF/COMP/WD(2017)35/FINAL/en/pdf
58 GSMA Association, ‘Resetting competition policy frameworks for the digital ecosystem’, London: GSMA 2016, p. 20.
59 Case No COMP/M.6281 Microsoft/Skype C [2011] 7239, para. 78
60 GSMA Association, ‘Resetting competition policy frameworks for the digital ecosystem’, London: GSMA 2016, p. 20.
61 P. Belleflamme and M. Peitz, ‘Platforms and network effects’, University of Mannheim/Department of
Economics Working Paper 16-14, September 2016, p. 2.
62 G. Surblyte, ‘Competition Law at the Crossroads in the Digital Economy: Is it all about Google?’, Max
Planck Institute for Innovation and Competition Research Paper Series No. 15-13, p. 11.
Network effects are highly relevant to attributing market power to online platforms, often leading to overly concentrated markets. Since online platforms are two-sided markets in nature, they are the perfect example of exhibiting network effects: the more users follow these platforms, the more valuable and attractive they become.64 Consequently, network effects significantly enhance the possibility of triggering the so-called market tipping.65 Market tipping is the phenomenon whereby one side of the platform is so desirable from the users, until it reaches a point that switching or using another similar platform becomes pointless.66 Moreover, as the OECD has observed, “Big Data favours market concentration and dominance. Data-driven markets can lead to a ‘winner takes all’ result where concentration is a likely outcome of market success.”67 One of the major downsides of market tipping is that as a consequence the incentives for both dominant and small platforms to invest in innovation or quality may decrease significantly. A smaller platform would be deterred from investing funds and effort in innovation knowing that larger competitors would match their form of investment at a significantly lower marginal cost. Thus, not only barriers to enter the market would be very high, but consumers would be affected by a poor innovation or quality incentive by platforms operating in the digital market.
Moreover, network effects could create entry barriers for potential competitive platforms.68 It
would be much costly for users to switch to another platform, thus market entries are less frequented by users.69 For example, in an investigation against Google, the Commission found
that the platform’s strength in the online advertising market was partly due to the fact that it was unable for most of market players to switch to an alternative online search advertiser.70
64 House of Lords - The Select Committee on the European Union, ‘Online Platforms and the EU Digital Single Market’, Evidence Session No. 5. Available at
http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/eu-internal-market-subcommittee/online-platforms-and-the-eu-digital-single-market/oral/24274.html
65 Ibid., p. 26. 66 Ibid.
67 Organisation for Economic Co-operation and Development, Data-Driven Innovation: Big Data for Growth
and Well-Being, Paris: OECD Publishing 2015, p. 7.
68 House of Lords - The Select Committee on the European Union, ‘Online Platforms and the EU Digital Single Market’, Evidence Session No. 5, p. 28. Available at
http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/eu-internal-market-subcommittee/online-platforms-and-the-eu-digital-single-market/oral/24274.html
69 The Bundeskartellamt, ‘The Market Power of Platforms and Networks’, Working Paper, June 106, p. 46. Available at https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Berichte/Think-Tank-Bericht-Zusammenfassung.pdf?__blob=publicationFile&v=4
70 House of Lords - The Select Committee on the European Union, ‘Online Platforms and the EU Digital Single Market’, Evidence Session No. 5, p. 28. Available at
http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/eu-internal-market-subcommittee/online-platforms-and-the-eu-digital-single-market/oral/24274.html
One may argue that switching costs should not be an issue if the service of a platform is provided for ‘free’, since there are no real monetary costs. On the contrary, it can be more difficult for a user to let go of a ‘free’ service than one which he/she pays for, as it requires less effort. Besides, online businesses have their own strategies on switching costs and lock-in, even if it takes the form of spending excessive time to learn how the new platform works, or merely the fact that most of the user’s friends are on Facebook.71 In this regard, it would be extremely
difficult for a new platform to overcome the lock-in and switching costs issues, making the barriers to enter the market very high.
Additionally, network effects can also influence the pricing strategy of these businesses. As the Bundeskartellamt argues in its working paper regarding market power of platforms, “one user group’s influence on another, due to indirect network effects, affected the degree at which a price increase on both sides would be profitable of the platform operator on account of price elasticity on the demand side.”72 In other words, platforms can raise the price on either of the two sides and still make profits due to the network effects that have significant impact on price elasticity on the demand side. Besides network effects, merely possessing a certain amount of data may highly increase the dominant position of online platforms in the digital market. The next section addresses the role of data in building up market power.
3.2.2 Possession of (personal) data as an asset for market power
As it has been discussed, data gathering and analysis plays an important role in the competitive process of online platforms, thus its possession may be a strong indicator of market power and dominance. The OECD has stated in one of its papers that: “market power in digital markets is frequently linked to a firm’s ability to accumulate the personal information of users.”73 Because of this significance of possession and use of data, competition authorities of Germany and France have published a joint report called ‘Competition Law and Data’.74 With regard to
market power, it is pointed out in the report how leading online platforms have enormously
71 M. Stucke and A. Grunes, ‘No Mistake About It: The Important Role of Antitrust in the Era of Big Data’, The
University of Tennessee Legal Studies Research Paper Series, No. 269, May 2015, p. 8.
72 The Bundeskartellamt, ‘The Market Power of Platforms and Networks’, Working Paper, June 106, p. 48. Available at https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Berichte/Think-Tank-Bericht-Zusammenfassung.pdf?__blob=publicationFile&v=4
73 OECD, ‘The Digital Economy’, DAF/COMP (2012)22, 07 February 2013, p. 121. Available at http://www.oecd.org/daf/competition/The-Digital-Economy-2012.pdf
large database of users and information, calling into question the ability of any third party to match the same level of variety and volume of data.75 An example of how data can create entry
barriers in the market is the merger case of Bazaarvoice and its rival Power-Reviews, which was questioned by the US Department of Justice in 2014.76 These two companies operate in the market for ‘rating and review platforms’ and their merger would definitely result in a near monopoly on that specific market, due to network effects, switching costs and high entry barriers which were discussed in the previous paragraph.77
Additionally, the Dutch Authority for Consumer and Markets article emphasizes how large-scale data possession can result in a competitive advantage for online platforms.78 The same opinion is shared by the German Monopolkommission, which highlights that “having control over and being able to analyze large volumes of data can be a crucial competitive advantage, particularly as such data are frequently in the exclusive possession of individual companies.”79
Considering that data can be a competitive advantage in case it is an essential input in the production of services/goods, in the UK’s Competition and Markets Authority opinion, restriction of access to consumer data in these conditions may lead to market power.80 Besides
the limitation of access to data, the two-sided nature and the control over data which competitors cannot approach, are two additional factors which crucially lead to market concentration, and consequently to market power.81
It may be concluded that an online platform can gain market power by possessing a valuable dataset. The collection of data is a source of market power because it is an essential input regarding the end services delivered on online platforms, making it an asset in the competition process between them. Thus, in the data-driven markets where accumulation and use of data is
75 Ibid., p. 12.
76 DOJ, Antitrust Division, Competitive Impact Statement, 13-cv-00133 WHO, dated 08.05.2014, https://www.justice.gov/atr/case-document/file/488826/download
77 Ibid.
78 Autoriteit Consument & Markt, ‘Grote platforms, grote problemen? Een beschouwing van online platforms vanuit mededingingsperspectief’, Den Haag: ACM 2016, p. 5.
79 German Monopolkommission, ‘Competition policy: The challenge of digital markets’, p. 2. Available at https://www.monopolkommission.de/images/PDF/SG/SG68/S68_summary.pdf
80 Competition and Markets Authority, ‘The commercial use of consumer data’, CMA 38, June 2015, p. 89. Available at
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/435817/The_c ommercial_use_of_consumer_data.pdf
crucial, network effects and other characteristics of data lead to a high concentration and high market power.
4. Data Protection and Competition Law in the EU
The interplay between data protection law and competition law has been widely debated with regard to data, which is primarily subject to the former, but still questionable regarding competition law. One of the most important contributions regarding this issue is the Preliminary Opinion of the European Data Protection Supervisor.82
4.1 General overview of EU Data Protection Law
a) Data Protection Law Framework
First and foremost, the right to respect for private and family life, home and communications is laid down in Article 7 of the Charter of Fundamental Rights of the European Union (CFREU).83 Additionally, Article 8 of the CFREU enshrines the right to protection of personal data as a separate right,84 a distinction which emphasizes the importance of data privacy. It should be taken into consideration that since the Lisbon Treaty the Charter of Fundamental Rights has the same legal value as the treaties of the EU.85
The first legally binding international instrument, which concerns data protection, is The Council of Europe Convention 108.86 The objective of the Convention was the protection against abuses from private and public entities while processing sensitive data, and it was signed by all EU Member States. It also created the individuals’ right to be informed about the storage of personal data.
82 Preliminary Opinion of the European Data Protection Supervisor, ‘Privacy and competitiveness in the age of big data: The Interplay between data protection, competition law and consumer protection in the Digital Economy’, March 2014. Available at
https://edps.europa.eu/sites/edp/files/publication/14-03-26_competitition_law_big_data_en.pdf
83 Article 7 of The Charter of Fundamental Rights of the European Union 84 Ibid., Article 8.
85 Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community [2007] OJ C 326, article 6(1).
Influenced by the Convention 108, in October 1998 the first EU Directive with regard to data protection came into force.87 Under the 1995 Directive, Member States were required to
comply with (among other requirements) protection of privacy and prohibition to restrict the circulation of data between Member States.88 Through this Directive, Member States were required to establish an independent authority to monitor the compliance with the law and the harmonization of data protection within the EU would effectively be achieved.89 However, in order for the EU institutions to also respect data protection, the European Data Protection Supervisor (EDPS) was created with the primary aim to advise the EU institutions and bodies on matters concerning processing of personal data.90
The most important legislation regarding data protection in the EU is The General Data Protection Regulation (GDPR), which was introduced by the Commission in January 2012 and its application entered into force on the 25th of May 2018.91 This new Regulation was put forward as the most significant reform of data protection rules in 20 years, in order to fit the digital single market and to harmonize national legislations concerning protection of data in the EU.92 For the first time the Regulation defines personal data as “any information relating to an identified or identifiable natural person (‘data subject’); an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person.”93 This broad definition indicates that the term ‘personal data’
87 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data [1995] OJ L 281.
88 Ibid., articles 7 and 8.
89 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data [1995] OJ L 281.
90 EDPS was created by Regulation (EC) No 45/2001 Of The European Parliament And Of The Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the
Community institutions and bodies and on the free movement of such data [2000] OJ L 8/1. See also https://edps.europa.eu/data-protection/data-protection/glossary/e_en
91 Regulation (EU) 2016/679 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) [2016] OJ L 119/1.
92 Jean-Claude Juncker - President of the European Commission, ‘A New Start for Europe: My Agenda for Jobs, Growth, Fairness and Democratic Change – Political Guidelines for the next European Commission’ (Opening Statement in the European Parliament Plenary Session, Strasbourg, 15 July 2014) p. 5. Available at
https://www.eesc.europa.eu/resources/docs/jean-claude-juncker---political-guidelines.pdf
93 Article 4 (1), Regulation (EU) 2016/679 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
includes all data which can be traced back to an individual. New rights are enshrined for data subjects with the main objective of being able to regain control over the way their personal data is accumulated, processed and used.94 For instance, data subjects have the right to be informed when personal data is extracted from them,95 they have the right of access to personal data96 and detailed conditions for consent to process their personal data are laid down.97 It also regulated one of the most controversial and important concepts: the ‘right to be forgotten’: “The data subject shall have the right to obtain from the controller the erasure of personal data concerning him or her without undue delay and the controller shall have the obligation to erase personal data without undue delay”, along with the conditions when it is applicable.98 The controllers are natural/legal person, or public agency, which determine the purposes and means of the processing of personal data99 and they are obliged to notify data subjects100 and the supervisory authority if there is a data protection breach.101 Moreover, the GDPR is applicable to all undertakings worldwide that process personal data of European Union citizens, a broad territorial scope which obliges companies to be very committed in guaranteeing high protection of data privacy.102 In the event of infringement of the Regulation, fines can rise to €10-20 million or 2%-4% of the total worldwide annual turnover.103
b) The impact of the Court of Justice of the European Union regarding data protection
In the Österreichischer Rundfunk case, the CJEU established that EU citizens are able to challenge national rules which are in violation of the provisions of the Directive 95/46/EC before national courts.104 Further, in the Lindqvist case, the Court had the opportunity to
address the concept of ‘processing data’, which in its judgement posting personal data online in an internet homepage falls within the scope of Directive 95/46/EC.105
94 Regulation (EU) 2016/679 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) [2016] OJ L 119/1. 95 Ibid., Article 13. 96 Ibid., Article 15. 97 Ibid., Article 7. 98 Ibid., Article 17. 99 Ibid., Article 4 (7). 100 Ibid., Article 34. 101 Ibid., Article 33. 102 Ibid., Article 3.
103 Ibid., Article 83 (4) and (5).
104 Joined Cases C-465/00, C-138/01 and C-139/01 Rechnungshof v Österreichischer Rundfunk and Others [2003] Court of Justice of the European Union, ECLI:EU:C:2003:294.
However, the cornerstone of data protection case-law is the case Google v. Spain.106 Several
issues regarding personal data were addressed in this case. Firstly, the Court ruled that Directive 95/46/EC was applicable to search engines, such as Google, because these engines were engaged in the ‘processing of data’.107 Secondly, Google argued that its company is based
in USA (non-member state) and the data is not processed in Spain, thus the Directive should not be applicable. But, the Court ruled that although Google is based in USA, the fact that it has a subsidiarity in Spain makes the Directive applicable and Spanish courts are competent to rule.108 The Court favoured a wider scope of application of the Directive, in order to raise the barriers of data protection of EU citizens, by including undertakings that are not based in the EU. This way, the risk of companies moving outside of the Union towards countries with more lenient data protection rules and still processing personal data of EU citizens, is reduced significantly. Thirdly, for the first time the Court introduced the ‘right to be forgotten’ notion, under which individuals have the right to request search engines to delete links that lead to their personal information.109 Certainly, in order to avoid any abuse or misunderstanding, this right comes with certain limitations namely, the information which individuals request to erase must be irrelevant, inaccurate or excessive for the purposes of data processing, and a balance between other interests, such as the general public interest in finding the information at stake, or the economic interest of the search engine, must be taken into account.110 As mentioned
earlier, the right to be forgotten is now regulated under the GDPR. Evidently, this particular case has had a huge impact in shaping the data protection regime in the European Union.
4.2 Similarities between data protection and competition law in the EU
Data protection and competition law both influence and aim to protect the general public and to advance the functioning of the internal market.111 While data protection law tries to protect
consumers with regard to the processing of personal data, competition law protects consumers against abusive and unlawful exercises of market power by undertakings.112 Thus, both of these
106 C-131/12 – Google Spain and Google [2014] Court of Justice of the European Union, ECLI:EU:C:2014:317. 107 Ibid., para. 1.
108 Ibid., para. 2. 109 Ibid.
110 Ibid.
111 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 332.
112 F. Costa-Cabral and O. Lynskey, ‘Family ties: The Intersection between data protection and competition in EU Law’, Common Market Law Review 54 (1), 2017, p. 5. Available at
legal fields share common objectives, such as promoting market integration, protecting individuals and their interests, and tackle power asymmetries.113 In other words, the material
scope of the two intersects. In several abuse of dominant position cases, such as Post Danmark114, Deutsche Telekom v Commission115 or TeliaSonera Sverige,116 the CJEU has highlighted how Article 102 TFEU does not cover only those practices that directly harm consumers, but also practices that harm consumers through their impact on competition.117 Through these judgments the Court has made clear that one of the fundamental objectives of Article 102 TFEU is to protect competition, so that consumer welfare enhances.118 Thus, it is essential in the assessment of Article 102 TFEU whether the reduction of competition caused by the behavior of a dominant company leads to consumer harm or not.119
However, although both data protection and competition law share the objectives of protecting consumer welfare and internal market, it should be noted that the means to achieve these objectives differ. EU data protection seeks to promote the internal market through positive integration, which means by adopting legislative measures that aim at harmonizing national data protection laws at an EU level; while EU competition law ensures that entities do not impede the competition process to the detriment of consumer welfare: negative integration.120
As already discussed in the previous paragraph, the territorial scope of application of the General Data Protection Regulation is extended to any data controller that offers goods or services and monitors the behavior of data subjects who reside in the EU.121 Similarly, EU competition rules apply to an undertaking’s conduct which could impede the internal market, irrespective of its place of establishment.122
http://eprints.lse.ac.uk/68470/7/Lynskey_Family%20ties%20the%20intersection%20between_Author_2016_LS ERO.pdf
113 Ibid., p. 8.
114 Post Danmark A/S v Konkurrencerådet, C-209/10, EU:C:2012:172, para. 20. 115 Deutsche Telekom v Commission, C-280/08, EU:C:2010:63, para. 176.
116 Konkurrentsverket v TeliaSonera Sverige AB, C-52/09, EU:C:2011:83, para. 24. 117 Post Danmark A/S v Konkurrencerådet, C-209/10, EU:C:2012:172, para. 20
118 I. Graef, ‘EU Competition Law, Data Protection and Online Platforms. Data as Essential Facility’, Kluwer
Law International, 2016, p. 331.
119 Ibid. 120 Ibid., p. 332.
121 Article 3 (1) and (2) of the Regulation (EU) 2016/679 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) [2016] OJ L 119/1.
122 European Commission, ‘Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty’, 2004/C 101/07.
Moreover, all data controllers are subject to obligations to protect personal data of individuals, regardless of the size of the business at stake or whether it holds a dominant position in the market.123 Nevertheless, the European Court of Human Rights has stated that “The greater the amount and sensitivity of data held and available for disclosure, the more important is the content of the safeguards to be applied at the various crucial stages in the subsequent processing of data.”124 Analogously, in competition enforcement it is established by case law, that a dominant undertaking has a ‘special responsibility’ not to conduct itself in such as manner so as to distort the competition process.125
Additionally, under data protection law, “personal data shall be collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes.”126 This is the so-called purpose limitation principle, which requires that the purpose of the processing activities be clearly explained and expressed to data subjects (individuals) before personal data’s processing begins. The purpose limitation aims to ensure trust and legal certainty to individuals with regard to their personal data by data controllers and it is a legitimate requirement.127 Comparably, competition law applies the concept of ‘substitutability’ in order to determine which products/services are competing in a given market. However, in the digital market, a company can initially collect the data with the purpose of offering services in a given market, but it can also further process these data as input to provide another service in a distinct market. In this situation, in its Preliminary Opinion on ‘Privacy and competitiveness in the age of big data’ the EDPS argues that, the latter (second) service which uses the data collected for the first service as an input and belongs to a separate market, is considered to be non-substitutable with the service for which the data was collected in the first place.128 Would this practice be legitimate under data protection law, specifically
123 Preliminary Opinion of the European Data Protection Supervisor, ‘Privacy and competitiveness in the age of big data: The Interplay between data protection, competition law and consumer protection in the Digital Economy’, March 2014, p. 14. Available at https://edps.europa.eu/sites/edp/files/publication/14-03-26_competitition_law_big_data_en.pdf
124 ECtHR 13 November 2012, 24029/07, M.M v UK, para. 200.
125 European Commission, ‘Communication from the Commission – Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings’, C [2009] 864 final, OJ C 45, para. 9.
126 Article 5 (1) (b) of the Regulation (EU) 2016/679 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) [2016] OJ L 119/1
127 Ibid., Article 6 (1).
128 Preliminary Opinion of the European Data Protection Supervisor, ‘Privacy and competitiveness in the age of big data: The Interplay between data protection, competition law and consumer protection in the Digital Economy’, March 2014, p. 27. Available at https://edps.europa.eu/sites/edp/files/publication/14-03-26_competitition_law_big_data_en.pdf
with the purpose limitation concept? The same data is being processed for different and potentially incompatible purposes, for which the individuals who supplied the personal data are not aware. This outcome can be even more apparent when customers think of the two services to be very distinct.129 Thus, the application of competition law in data-driven markets, can help to reveal breaches of data protection law, or the other way around.
5. Abusive behavior of online platforms, with regard to data protection
Another important issue to address after establishing the dominance in the relevant market, is to examine whether an abusive conduct exists. Holding a dominant position is not in itself a ground to legally accuse a company of hindering the competition,130 but abusing that dominant position is what makes it contrary to competition rules, specifically Article 102 TFEU.131 Abusive conduct is distinguished in two main categories: exclusionary abuse, which refers to the behaviour that aims at excluding competitors by unfair means, and exploitative abuse, which refers to the behaviour that harms consumer welfare by putting them in disadvantage. The CJEU has defined ‘abuse’ in the case Hoffman-La-Roche in the following way: “an objective concept relating to the behaviour of an undertaking in a dominant position, which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products or services on basis of the transaction of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition.”132 Moreover, as briefly mentioned in the previous paragraph, it is established by the Court at Michelin I case that a dominant company has a special responsibility to not allow its conduct to hinder competition on a given market.133
129 Ibid.
130 C-322/81 NV Nederlandsche Banden-Industrie Michelin v Commission of the European Communities [1983] ECLI:EU:C:1983:313, para. 57.
131 Article 102 of the Treaty on the Functioning of the European Union.
132 C-85/76 Hoffmann-La Roche & Co. AG v Commission of the European Communities [1979] ECLI:EU:C:1979:36, para. 91.
133 C-322/81 NV Nederlandsche Banden-Industrie Michelin v Commission of the European Communities [1983] ECLI:EU:C:1983:313, para. 57.
Moreover, data-related mergers have increased significantly in the past years, as a matter of fact from 55 deals in 2008 to 164 ones in 2012.134 The importance of data-related mergers and
the concern of the dominance with regard to possession of databases by companies, was also emphasized by the European Commissioner for Competition M. Vestager: “The more important data becomes for competition, the more closely we need to look at mergers that bring together large sets of data. […] Controlling large amounts of data should not become a way to shut rivals out of the market.”135
In order to analyse the connection of data and data privacy with the abuse of dominance from a competition perspective, the types of abuse which are related to data-driven markets will be explored in the next paragraphs, namely unfair contractual terms, price discrimination and excessive pricing, which are typical exploitative conducts by online platforms in the digital market.
5.1 Unfair Contractual Terms in the digital market
The main focus of unfair contractual terms lies on whether the terms and conditions imposed by dominant online platforms to consumers are fair and appropriate, or whether these conditions that users must consent to are too excessive in nature. In other words, the way data is stored, processed and to whom it is accessible is considered, rather than the volume of data collected.
So far, the CJEU has not defined when a contractual term is considered to be unfair under Article 102 TFEU.136 The existing case law on this matter concerns industrial customers, but with the significant changes in the structure of the data-related market, unfair contractual terms imposed on users may be reviewed within the scope of Article 102 TFEU.137 Due to the
network effects and the other characteristics which contribute to dominance of online platforms
134 Organisation for Economic Co-operation and Development, Data-Driven Innovation: Big Data for Growth
and Well-Being, Paris: OECD Publishing 2015, p. 91.
135 Speech by M. Vestager – European Commissioner for Competition, Clearing the path for innovation, Web Summit: Lisbon 2017.
136 M. Botta and K. Wiedemann, ‘EU Competition Law Enforcement vis-à-vis Exploitative Conducts in the Data Economy Exploring the Terra Incognita’, Max Planck Institute for Innovation and Competition Research Paper No. 18-08, 2018, p. 58.
