LLM International and European Law: European Competition Law and Regulation, Thesis
Product Market Definition Within
Data Economy Concentrations:
A study considering the European Commission’s product market definition, within
data economy concentrations — under the scope of the EU Merger Regulation, with
case studies Facebook/Whatsapp and Microsoft/LinkedIn.
Gabriel Gorayeb de Almeida
Student no: 11312432
14th August 2017
Supervisor: Rein Wesseling
Research Question: How effective is the Commission’s current product market definitions, within
assessments under the EU Merger Regulation of data economy concentrations?
Abstract
This study is an assessment of the effectiveness of the European Commission’s current product market definitions, in concentration assessments under the scope of the EU Merger regulation, namely those within the data economy. This study first addresses, the limitations of market definition and difficulties faced by the authorities when conducting this market assessments in this new phenomenon, that is the data economy. It illustrates the limitations in the Commission’s market assessments in two high value concentrations, Facebook/Whatsapp and Microsoft/ LinkedIn, mainly regarding the Commission’s conservative mindset. With the use of data analysis, a recent Germany claim against Facebook, opinions from the OECD and using principles from the United States’ Free Trade Association, this study draws inspirations for potential reforms that could be used in European Competition policy. This study ultimately finds the Commission’s product market definition of markets within the data economy is limited in its effectiveness.
Abstract 2
1. Introduction 3
2. Market Definition and Data Economy 2.2.1. Market Definition
2.2.2. Market Definition Limitations 2.2 Data Economy
5 5 6 7 3. Case Studies: Facebook/Whatsapp and
Microsoft/LinkedIn 3.1. Facebook/Whatsapp 3.2. Microsoft/LinkedIn 3.3. Comparative Analysis 9 9 11 15 4. Market Definition Reform
4.1. Data Transfer, and Value Within Competition Law
4.2. Facebook v Bundeskartellamt (Germany)
4.3. OECD Roundtable: Market Definition 4.4. US Horizontal Merger Guidelines
18 18 19 20 21 5. Conclusion 22 Bibliography - Books - Journals
- Journals issue by public authorities - Websites - Speeches - Case List 25 25 25 25 25 26 26
1 Introduction
On the 3rd of October of 2014, the Commission published the merger procedure case of Facebook’s 1
acquisition of Whatsapp, valued at USD 19 billion, which the Commission approved. On the 6th of December of 2016, the Commission also published the merger procedure case of Microsofts’ acquisition of 2
LinkedIn, valued at USD 26 billion, which the commission also approved. For both Facebook and Microsoft, these were historically their largest ever acquisitions. Pursuant to Article 4 of the European Union’s Merger 3 4
Regulation , Facebook and Microsoft both notified the Commission of their plans to form these 5
concentrations . The purpose of the EU Merger Regulation is for the Commission to assess any and all 6
potential harm to a competitive market that any concentrations may cause. These are two important cases, in recent competition law developments, because the Commission tackles issues regarding technological and data reliant industries which previously had not been assessed to the same extent. As first established in 1973 , for a competition authority to analyse any potential harm, it has an obligation to firstly establish a (or 7
multiple if needed) relevant product market, and the relevant geographic market. By doing so the relevant authority will be able to establish market power of the undertaking, identify any competitors and create an effective analysis of whether such behaviour is anti-competitive, and whether it may harm the market. This study will seek to identify and analyse how the European Commission currently defines the relevant product markets, specifically regarding concentration assessments of undertakings within the data economy.
Recently, a weekly magazine-format newspaper, published an article regarding a new concept they 8
identified as ‘Data Economy’. It was suggested that data, specifically personal data, has become the most valuable asset in the world. This statement was supported by the fact that in 2017, the five most valuable 9
companies world wide are are technological companies, that rely heavily on data, big data, as it is often referred to. This has become a fact that has also been stated by other finance media outlets . Data economy, 10
refers to an industry where undertakings use data to generate income. It has been argued that the top five 11
most valuable companies in the world at the moment may be getting too large, and too dominant in their 12
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014.
1
Case No COMP/M.8124 – Microsoft / LinkedIn 06 Dec. 2016.
2
Provided Union dimension is fulfilled under article 1 of the EU Merger Regulation, acquiring undertakings must notify the
3
European Commission, or their plan to acquire another undertaking, along with a proposal. Article 4 outlines the procedure required to fulfil this notification procedure.
EU.
4
Council Regulation (EC) No 139/2004.
5
Article 3 of the EU Merger Regulation, defines a concentration in detail, in short one can summarise a concentration as a potential:
6
mergers, acquisitions, or a “joint venture performing on a lasting basis all the functions of an autonomous economic entity…”. Case 6/72 Europemballage Corpn and Continental Can Co In v Commission [1973] ECR 215.
7
The Economist, 'The world’s most valuable resource is no longer oil, but data' (Economistcom, 6th May 2017) <https://
8
www.economist.com/news/leaders/21721656-data-economy-demands-new-approach-antitrust-rules-worlds-most-valuable-resource> accessed 20th May 2017.
Ibid.
9
J Desjardins, 'Ranking the World's Most Valuable Brands' (Chart: Ranking the World’s Most Valuable Brands, 28th July
10
2017) <http://www.visualcapitalist.com/chart-valuable-brands-world/?
lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BpTL1pKB4Qr%2BmlW1v%2FucJYw%3D%3D> accessed 30th May 2017. N Sherman, 'Are Google, Amazon and others getting too big? ' (Are Google, Amazon and others getting too big?, 9th June
11
2017) <http://www.bbc.com/news/business-39875417?
lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BuLj7MNYGR6SLLkpvLEoyQg%3D%3D> accessed 10th June 2017. Google, Apple, Microsoft, Amazon, and Facebook.
respective markets. Although authorities have attempted to ensure that anti-competitive behaviour is not tolerated this has not prevented these companies from growing economically. However as one will discover in the this study, authorities have arguably struggled to establish the potential harm that the dominance of these undertakings may have on markets, within this data economy. One might suggest this may come down to how relevant products are defined, which outlines the importance and purpose of this study as it is a topical issue that the authorities, consumers and competitors are currently facing.
As above mentioned, this study will seek to identify and analyse how the European Commission currently defines the relevant product markets, specifically regarding concentration assessments of undertakings within the data economy. To do so, this paper will seek to identify the key issues regarding current product market definition within this industry. This paper will consider the Commission’s,“Notice on the definition of relevant market for the purposes of Community competition law,” a notice published by the Commission, 13
codifying the principle of market definition defined and developed by the European Court of Justice in 14
previous cases. This paper will also analyse the two previously mentioned high valued cases, that have now established benchmark principles, for future concentrations within the high technological data industry. Lastly this paper will attempt to suggest possible reform solutions, which could be considered in future concentration assessment cases. Ultimately attempting to answer the question:
How effective is the Commission’s current product market definitions, within assessments under the EU Merger Regulation of data economy concentrations?
OJ C 372, 9.12.1997, p. 5–13
13
ECJ.
2 Market Definition and Data Economy
2.1.1. Market Definition
For the purpose of this study and considering that the concept of market definition has grown dramatically in the past twenty five years , one needs to first identify this concept before analysing its application within 15
new data reliant markets, also known as Data Economy. Market definition, was a concept that was first identified in a first appeal in the year 1973 related to consolidation of manufacturers of food cans where, 16
the current, Article 102 of the Treaty on the Functioning of the European Union was in question. This 17 18
case established that a relevant Product Market would have to be identified, to establish a dominant position in an specific market, and consequently, how much harm that dominance would be causing to the market. Ultimately, the European Court of Justice , found that this had been very important for the case, and that the 19
Commission had completely failed to identify the Product Markets. As a consequence the ECJ ruled that the Commission’s previous decision on this case should be revoked as a whole. This case however set some of the groundwork for definition of the relevant market, as it is used today, it highlighted the importance of substitutability. In short, a market can be established by finding, and in a way grouping, products or services that can be or are replaceable by one and the other, allowing different options for consumers to take alternative purchase decisions, for example within the same product or by replacement in the same category of use finality. This concept of interchangeability was further developed in cases that came in years shortly after the Europemballage Corpn. For example in a case , regarding the sale of fresh fruits and bananas, the 20
undertaking involved argued that bananas and the rest of the fresh fruits were in the same relevant product markets. The ECJ ruled that, products need to be completely interchangeable and that they cannot be interchangeable only by, “a limited extent,” but rather completely interchangeable with no distinct special 21
features. This established a very narrow threshold for defining relevant product markets.
Moving forward to contemporary times, as stated previously defining the relevant product market has development significantly. Since 1973, defining the relevant market, is a requirement in all aspect of European Union Competition law, and consequently the amount of markets that the Commission had to define increased significantly. When defining a market, currently, the relevant authority mainly considers two questions, the demand-side substitutability and the supply-side substitutability , both which have been 22 23
codified in a Commission notice and by the ECJ. Demand-side substitutability considers, to what extent the consumer finds products replaceable by another, thus recognising that all the products that could be replaced by other would fall into the same market. Specifically for demand-side interchangeability, the Commission has established a quantitative test, which also is upheld through the Commission’s notice, and has been upheld by the ECJ. This test is called the ‘Small but Significant Non-transitory Increase in Price’ test, in 24
R Whish and D Bailey, Competition Law (8 edn, Oxford University Press 2015) page 27
15
Case 6/72 Europemballage Corpn and Continental Can Co In v Commission [1973] ECR 215, paragraph 32.
16
This article creates a prohibition for dominant undertakings, to take any part in any forms of abusive competitive behaviour.
17
TFEU.
18
ECJ.
19
Case 27/76 United Brands v Commission [1978] ECR 207.
20
Ibid, paragraph 22.
21
Commission Notice on the definition of relevant market for the purposes of Community competition law OJ [1997] C 372/5,
22 paragraphs 15-19. Ibid paragraphs 20-23. 23 SSNIP. 24
which the Commission surveys consumers. In this survey the Commission creates a hypothetical monopoly for the product A, (the product market which is being considered) and raises the price of product A, by five to ten percent, and if this were a hypothetically unprofitable move, because the consumers were ready to substitute this product with product B, then that would mean that product A and product B were in the same market, because of the interchangeability. However if the five to ten percent raise in price of product A, was profitable, that would benefit the undertaking that supplies product A, in a dominant position for the relevant product market for product A. Supply-side substitutability involves how prepared, or what are the limitations imposed, if any, for the supplier to switch from product A to product B. Supply-side substitutability considers factors like costs of productions, facilities, research and development amongst others. There are many different ways in which the Competition authorities would get information to consider the interchangeability of products and services, including but not limited to, evidence from past cases, quantitative tests, consumer and competitors surveys, studies or the markets amongst others.
Having said the above, the most important part of market definition is its purpose, which is to create a clear scope of a relevant product and geographic market, so the competition authority can establish market power, thus allowing the competition authority to establish the effects certain behaviours may have on the competitive market. This is particularly important for this study which focuses on concentrations under the EU Merger Regulation . This is when two undertakings form a concentration, a merger, joint venture or 25
acquisition, the Commission will assess the concentration, under the, and provided this transaction falls under the, scope of the above mentioned regulation; this assessment will consider any potential harm to the competitive market, and this heavily relies on how much market power an undertaking will have once the consolidation is in place. Thus the market definition is ultimately a tool used to assess, market conditions and assess any consequences that may arise from any concentrations, as per the Merger Regulation. Accurate product market definition is also key for a competitive assessment, because if a market is defined too broadly, this will result in misleading market powers, which would lead to flawed market analysis, thus it might seem like the undertaking has less market power than they have ex post.
2.1.2. Market Definition Limitations
Product market definition when used to its full potential, is a very effective mechanism, and can thus be used to assess the relevant market in depth, however, it has some limitations, in some jurisdictions and cases market definitions have started becoming more of a formality than an actual analytical tool. Firstly the main difficulty of defining a product market involves a lot of initial market research, consumer and competitor surveys, and consistent answers from the undertakings concerned in the specific case. Needless to say this can turn in to a real difficulty for the reliability of the defined product market. A common found limitation in product market definition is when making use of the SSNIP test. If product A was already maintaining an ab usive price, thus higher or lower than market standards, and the SSNIP test is applied, the competition authority has no real way of identifying whether the reaction of the consumer is responding to the demand-side substitutability of the product or reacting to the price because it is an abusive high or low price. This is known as the ‘cellophane fallacy’ and although mostly identified in cases regarding Article 102 TFEU, it can also be applied to cases when applying the EU Merger Regulation. This is shown when the SSNIP test is applied to Article 101, Article 102 and the Merger Regulation as identified in the Commission’s Notice. Defining the relevant product market becomes further limited when products and services may not have values at all, as found in example such as social network services. As a result of these limitation it has been recognised that globally, and even at national level, market definitions have become a formality and in cases, no longer a requirement when analysing competitive markets. An specific example of this is the 2010 USA Horizontal Merger Guidelines, which recognises that product market definition is a tool to assess competitive harm, but it is only one of many different tools that do so. Thus showing that in horizontal mergers, defining relevant markets, for all the markets that the merging undertakings are involved in do not even need to be identified. The European Union (EU) however still strongly supports and upholds the principles of market
Council Regulation (EC) No 139/2004.
definition and this was identified by the former European Commissioner of Competition, where he states, “let me simply recall that market definition is a cornerstone of competition policy.” 26
2.2 Data Economy
As previously mentioned in this study, the world economy is changing tremendously fast, and it is, and already has moved to a digital economy, practically a borderless market place. According to Visual Capitalist the world’s most valuable companies are all companies who are heavily invested and mainly 27
focus on the technology industry with a strong reliance on digital data. Within these companies, are Facebook and Microsoft, Microsoft who has already been found to have been too dominant position in 28
several markets and Facebook who is currently under investigation for a potential abuse of dominant 29
position. With the constant growth of this new technological, online, and data reliant industry, come markets that are constantly developing. The current manner in which the Commission has recently dealt with defining these product markets, is questionable, and certainly at the moment, difficulties are presenting themselves. Firstly with the fast pace nature of technology, defining markets might have altered slightly regarding both demand-side and supply-side interchangeability. Secondly, nowadays a lot of services online do not have a value, and hence market enquiries are much less conclusive. Lastly if the market is double, if not further multi, sided, in the respect that both the consumers are the suppliers and the supplier is also a consumer and eventually in this case both parties are providing the other with data. Having said the above, the EU has taken, and continues to take a conservative outlook on market definition, which will be analysed in this study.
In this day and age, technology and digital platforms for data is growing, now faster than ever. This presents an issue for competition law, and on a narrower scope, for definition of relevant product markets regarding concentrations, under the Merger Regulation. As suggested by the Organisation for Economic Co-operation and Development (OECD), it is difficult to accompany the constant change of technology, they state that, “for industries exhibiting rapid innovation, the boundaries of any defined market can be unstable and market shares may therefore change rapidly over time.” This study will attempt also to understand whether a 30
broader defined product market, that might try and cover any potential technological or business advances in the near future, might be the most effective manner of dealing with this. Carefully considering that a market should not be defined as too broad.
Currently the Commission and competition authorities, are still establishing principles as to how to cope with product market definition, within this digital online industry. The Commission has previously struggled to define markets that lack economical value, mainly because in an example like Facebook, the undertaking is providing the consumer with a service for ‘ social networking’ , but there is no direct value gained or lost. 31
In initial cases of this sort, the Commission focused on the economical values that could be raised, such as 32
‘advertising services.’ The Facebook/Whatsapp case, later discussed in this paper, analyses the manner in SPEECH/01/439 Market Definition as a cornerstone of EU Competition Policy.
26
J Desjardins, 'Ranking the World's Most Valuable Brands' (Chart: Ranking the World’s Most Valuable Brands, 28th July
27
2017) <http://www.visualcapitalist.com/chart-valuable-brands-world/?
lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BpTL1pKB4Qr%2BmlW1v%2FucJYw%3D%3D> accessed 30th May 2017 Case t-201/04 Microsoft Corporation v Commission of the European Communities.
28
Bundeskartellamt, 'Bundeskartellamt initiates proceeding against Facebook on suspicion of having abused its market power by
29
infringing data protection rules'(Bundeskartellamt - Home page, 2nd March 2016) <https://www.bundeskartellamt.de/SharedDocs/ Meldung/EN/Pressemitteilungen/2016/02_03_2016_Facebook.html>accessed 10 May 2017
Policy Roundtables Market Definition 2012 DAF/COMP(2012)19 11th October 2012, page 11.
30
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014.
31
Case No COMP/M.5727 – Microsoft/Yahoo! Search Business, 18 Feb. 2010.
which the markets within that concentration are defined, looking at both those with and without direct economic value. Further, one will notice when consumers are using those free services, there are questions regarding how ‘free’ the usage really is. When a user is engaging with those online platforms they are supplying data to the company, so they can use that data, most likely for advertisement services as well as profiling behaviours of potential buyers for several industries to generate their income. This creates a double sided, and can even create multiple sided markets, because the supplier, becomes a consumer of data, and at the same time the supplier is still supplying the online services, in the above named case it was defined as social network services. The OECD also recognises this issue by stating, “market definition is difficult to apply in two-sided markets, which involve platforms serving distinct groups of consumers in the presence of indirect network effects.” This difficulty arises, because it is difficult to say how interchangeable other 33
services might be and how interchangeable different people’s data’s might be for the suppliers of the digital services. Although the Commission manages to resolve the issue of non-pricing markets, in the below mentioned case studies, they do not manage to resolve this double-sided market, and how exactly to create a specific enough relevant product market.
Policy Roundtables Market Definition 2012 DAF/COMP(2012)19 11th October 2012, page 11.
3 Case Studies: Facebook/Whatsapp and Microsoft/LinkedIn
The Commission has recently made decisions pursuant to the EU Merger Regulation , specifically two high 34
profile mergers or/and acquisitions made by undertakings who hold a strong presence in multiple technology markets as identified in the decisions and most specifically those technological markets with a strong focus in data, of all forms and natures. In Facebook’s acquisition of Whatsapp, valued at USD 19 billion, and Microsoft’s acquisition of LinkedIn, the Commission decided not to oppose the notified transactions respectively. Although is it worth noting that the Microsoft LinkedIn acquisition was only approved on the basis of a commitment with the Commission. Even though these concentrations were approved, these decisions present an opportunity for an analytical study of the Commission’s definitions of the various relevant markets. The identified relevant markets, by their technological nature are under constant development, which makes the Commission’s decision to identify markets with conservative outlook as pointed in both decisions, a debatable point. Furthermore the Facebook/Whatsapp decision was two years 35
before the Microsoft/LinkedIn decision; it is worth considering how much the Commission’s analysis 36
would have developed in those two years, notably regarding industries that are ever growing with regards to both the aspects of the product supplies and the product demands.
3.1 Facebook/Whatsapp
The Facebook/Whatsapp acquisition, which the Economist suggested to be, at the time , the acquisition 37 38
with the largest ever ‘price-tag’ on a venture-capital-backed company, merged two digital platforms, which arguably held and currently holds dominant positions in multiple markets, within the high technology and Big Data industries. During the Commission’s assessment of this transaction, the Commission often refers to previous decisions; previous decisions assessing concentrations that were heavily involved in the high technology markets, more specifically to digital platforms that focused on the transferal of all sorts of data. Following precedence the Commission takes a, what is often referred to, “conservative” outlook. The Commission identifies three main features that that need to be assessed in their assessment of relevant markets. Firstly ‘functionality’, which considers what users use the various platforms for, secondly ‘operating systems’ considering what software supports the platforms, and lastly ‘devices’ which considers whether an end-user can use the respective platforms on mobiles phones, computers, tablets or any other gadgets. Following market investigation, consumer and providers’ interviews and taking into account the notifying party’s view, the Commission identified several relevant markets. These market definitions will be assessed and cross referenced with the Commission Notice on market definition, previous decisions and 39
other secondary legal sources.
‘Consumer Communication Application for Smartphones’, commonly referred to as App, is the first relevant product market definition in this commission acquisition assessment, this was decided on the basis of the platforms, the products are used on. Initially and as suggested by the Notifying Party the product market is 40
defined as ‘Consumer Communication Services’, Facebook encourages this, and emphasises that this should Council Regulation No 139/2004
34
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014.
35
Case No COMP/M.8124 – Microsoft / LinkedIn 06 Dec. 2016.
36
The Economist, 'The world’s most valuable resource is no longer oil, but data' (Economistcom, 6th May 2017) <https://
37
www.economist.com/news/leaders/21721656-data-economy-demands-new-approach-antitrust-rules-worlds-most-valuable-resource> accessed 20th May 2017.
2014.
38
Commission Notice on the definition of relevant market for the purposes of Community competition law (97/C 372/03).
39
Facebook as identified in the Commission Decision: Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014, paragraph 2.
not be further specified, considering “the pace of development and blurring between the targeted use,” of 41
these communication services. It is important to note that Facebook have identified both, the fact that technological advancements could take place, on the side of the supplier, and as a consequence the demand of the functionality might change with it. As a result of the market investigations the Commission found 42
that the regardless of the operating systems and functionalities, as most of them overlap, consumers still consider these various consumer communication apps, as products in the same market. The Commission justifies that traditional phone communications should be in a different market due to the different user experiences and functionalities between consumer communication apps and traditional communication services. Also highlighted in this assessment was the fact that the pricing conditions between consumer communication apps and traditional phones are completely different, which can be considered to be a key economic factor. This economic fact, is key in this market definition, because it points out that the communication services both Whatsapp and Facebook, are free services. Consequently this rules out the 43
possibility of using the Small but Significant Non-Transitory Increase in Price Test; a test the Commission 44
and National Competition Authorities strongly rely upon when defining markets based on demand 45
substitution. Arguably another justification as to why, in this product market definition the Commission decided to focus on a supply substitution element of the market. The Commission, recognised that Telecom Operators who took part in their questionnaires, “consistently” outlined that consumer communication apps 46
created a competitive restraint on the traditional communication services, albeit this did not happen the other way around. The Commission responded to this by stating that consumer communication apps and traditional communication services could not be in the the same market albeit the competition restraints that may affect potential competitors, as it might create too broad of a market. A broad market may create an inaccurate assessment of the market, thus failing to meet of the purpose of defining the market in the first place. Along with the before mentioned, the Commission was pleased to define this product market in the narrowest of manners, as it did not identify any, “serious doubts with its compatibility with the internal market.” This was concluded as such, because the Commission did not think either of the two undertakings had significant enough market power to create a monopoly in the defined product market. One must consider whether it might have been more effective for the Commission to follow the Notifying Party’s view of defining a broader product market, because although it might identify larger market, thus potentially identifying less market power, it might have created a more accurate representation of the actual product with respects of both demand and supply substitution and effects on potential competition Especially considering the constant development in technology and a consequential blur in products and their functionality, their operational systems and their devices.
Although ultimately left open, as the Commission did not feel this created serious enough doubts to compatibility with the internal market, the second defined product market was ‘Social Networking Services’. This market was defined based on its functionality. Both the notifying party and the Commission recognised that Social Network services provide a richer user experience, whereas communication applications are much more intended for one to one messaging and real time conversations. The functionality, which can be considered as a criteria that would fall into demand substitution, seems to be evidence that social networking services should be in their own separate market, even though the two markets do overlap with each other and the Commission has indeed recognised that these services are starting to blur. This, similarly to the previously mentioned product market definition, allows one to wonder whether this recognition of the blurred markets, should encourage a broader market definition to allow for the development of the product
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014, paragraph 19.
41
The Commission conducted market investigation by conducting questionnaires, with consumers and possible competitors.
42
Including Facebook Messenger.
43
SSNIP
44
Competition commission and office for free trading , 'Merger Assessment Guidlines' (, September 2010)<https://www.gov.uk/
45
government/uploads/system/uploads/attachment_data/file/284449/OFT1254.pdf> accessed 10 May 2017, page 29. Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014, paragraph 32.
and its uses, as addressed previously. This should be especially considered because of the nature of the application of the Merger Regulation and defining the markets therein. Unlike market definition in cases regarding Article 101 and Article 102 of the TFEU, the assessment of a concentration under the Merger Regulation is an ex ante assessment, as affirmed by Kauper , albeit incredibly difficult to accurately assess 47
this, one should consider technological advancements, their impact and competitive restraints that they might bring, especially when establishing an analytical methodology such as market definition.
The final defined market was done in a broad manner; following previous precedence of concentration 48
assessments under the Merger Regulation, the defined market was ‘Online Advertising Services’. It is important to note that the Commission concluded that this market definition should not be defined any further as it felt that this transaction would not constitute serious doubt of compatibility with the internal market, thus there was no need for any narrower market definition. For this market definition, one notes, that Facebook is the only party involved in the advertising, and seemingly Whatsapp would not have any intention to enter this market. Despite the fact that this market is left open, the Commission does go into detail with the use of market questionnaires and previous precent to highlight the differences between different types of online advertisements. This is an interesting and effective approach of fulfilling the purpose of assessing a concentration under the Merger Regulation. The Commission adequately identifies that, not necessarily for this transaction but for future business acquisition assessments it is important to identify the further segmented market of online advertisement services. The Commission identifies that Search and Non-Search advertising, should be classed as different markets, due to their lack of possibility for substitution and following the successful findings of a SSNIP test. The Commission also remarked upon Facebook’s use of personal data for the purpose of identifying the various types of advertising, however it is clear that in this assessment of Market Definition, and including the previously mentioned markets the Commission only identifies data transferral for the purposes of identifying functionality, and not as a market as such, which would allow to identify market power through the use of data. During that product market definition the Commission goes on to further check the various devices that online advertising may be conducted at, but because of highly mixed view from questionnaires, and what one can assume to be a lack of necessity for this transaction, the Commission does not make a conclusion on this point. The Commission does identify and recognise the importance of doing so is the distinction between online and offline advertising, previously established in other concentration assessments . This defined product market definition, 49
reaffirms previously established principles, and recognises their importance, although arguably there is no real analysis of the market, the reasoning behind this would be the fact that Whatsapp is not involved in the broad advertising market and thus this market definition might not have an effect on this transaction.
3.2 Microsoft/LinkedIn
Microsoft’s recent acquisition of LinkedIn, which was found to be Microsoft’s largest acquisition valued 50 51
at 26 billion US Dollars, was a concentration that involved two arguably dominant undertakings. This acquisition, which has an EU dimension as required by the Merger Regulation, deals with market definition with a similar approach to the Facebook/Whatsapp assessment. Following principles laid out in the Commission’s notice of market definition, demand substitutability and supply substitutability are considered when defining the specific product markets. These undertakings are both heavily involved within the high technology and big data industries, consequently two years on, the Commission has followed the same
T.E. Kauper, ' The Problem of Market Definition Under EC Competition Law' [1996] 20(5) Fordham International Law
47
Journal, Article 10, page 1726.
Google / DoubleClick and Microsoft / Yahoo! Search Business.
48
Case M.6314 – Telefónica UK/Vodafone UK/Everything Everywhere/JV 04 Sept. 2002.
49
The EC approved the acquisition in December 2016, and the acquisition was followed shortly after.
50
Reuters, 'Why Microsoft Is Expected to Win EU Approval for LinkedIn Bid' (Microsoft, LinkedIn: EU Expected to Approve
51
precedent principles applied in the Facebook/Whatsapp Concentration Assessment for product market definition, considering the concept of functionality, operating systems and in what devices the various products can be used. This case defines various product markets, heavily relying and upholding previous established markets, which is effective for maintain consistency; however may not be as efficient in a high tech industry where technology is constantly growing and more importantly markets are overlapping each other more and more, as recognised by the Commission in the Facebook/Whatsapp case . Some of the 52
defined product markets in this case will be analysed using the Commission Notice on market definition, 53
previous decisions and other secondary legal sources.
The Commission’s assessment of ‘personal computer operation systems’, is concise and one could argue 54
extremely consistent with previous decisions and cases. Microsoft suggests that this market definition should be left open, although it must be recognised that both PC operational systems and mobile operational systems are constraint to each other, which further suggests that due to economic development, demand of consumers and functionality these previously established markets are starting to overlap each other. The Commission however proceeds to firmly uphold previous market definitions. In 2004 the Commission published a decision regarding the application of Article 82 of the European Community Treaty, in which 55 56
Microsoft was under investigation for potential abuse of dominance, in this decision the Commission had found that PC operating systems, were in a different market to other operation systems that might be in client appliances. This was established following investigations of demand substitutability , which refers back to the guidelines on market definition. This same opinion was further upheld in more recent cases , these 57
conclusions were drawn from the evidence that they were not clear supply substitutions because of different performance capacities and hardware that may be necessary for it to function. The Commission thus upheld a defined market that was established initially in 2004 decision. Albeit the notifying party suggested that PC and Mobile operating systems may create constraints upon each other, the functionality and devices that these operating systems are used on prevent them from being on the same market.
In defining the market of ‘productive software for PC’s’, the Commission heavily considers the idea of functionality and demand substitution. Following the Oracle/Peoplesoft decision, where the Commission 58
decided that there was a clear difference between consumer software and business application software, and on a deeper level within business application software, one can further segment it to personal productivity software and enterprise application software, functionality being at the heart of these issues. In this defined product market the Commission also carefully considers whether devices should be differentiated, following the same precedent used in the Facebook/Whatsapp decision . The Commission also feels the need to point 59
out, it is worth questioning whether use of these softwares are for individual consumers or for commercial use. Ultimately the Commission decides to follow the principals of functionality and devices establishing the previously named product market. However it is worth noting that the Commission does state that it does not feel a need to further establish the market, due to lack of competition constraints. Which allows us to consider whether it would be more effective for the Commission to define a market to its fullest, whether following a more conservative or a broader approach, and then consider the actual competition constraints, rather than doing so during the product market definition.
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014 paragraph 52.
52
Commission Notice on the definition of relevant market for the purposes of Community competition law (97/C 372/03).
53
PC.
54
Case COMP/C-3/37.792 Microsoft 24 Mar. 2004.
55
Now article 102 of the Treaty on the Functioning of the European Union., covering the abuse of dominance by undertakings.
56
Case M.6381 – Google/Motorola Mobility 13 Feb 2012 and Case M.7047 – Microsoft/Nokia 04 Dec. 2013.
57
Case M.3216 – Oracle/Peoplesoft 26 Oct 2004.
58
Case M.7047 – Microsoft/Nokia, Commission decision of 4 Dec 2013, paragraphs 46-55.
Both the Commission and the Notifying party, take in depth assessments of a product market that is identified as ‘Customer Relationship Management Software Solutions’. Microsoft argues explicitly that the 60
Commission should not consider the functionality of this product, as a manner to subdivide the market any further. This is mainly because CRM software solutions depend mostly on how the end user engages with the software, as well as functions which are used in various industries, which can all be found in the product as it is, which would be considering demand substitutability. Further the one product itself is self-adapting, as it allows end users to use the product on one operating system and device, and it operates from a cloud based software system, allowing users to use the same product on multiple devices and operating systems, thus addressing the supply substitutability. The Commission uses previous precent to recognise that CRM 61
software solutions fall into a pillar of enterprise application software. Heavily relying on the market study questionnaires, the Commission address both the demand and the supply substitutability of CRM software solutions. It was found that small to medium size enterprises, may have more limited use than larger enterprises, which in itself changes the functionality of the CRM Software solutions. Supply side questionnaires actually showed that if suppliers decided to change the functionality of the CRM software in a short term basis, they wouldn't be able to do so without significant costs, thus limiting how substitutable it is from a supply aspect. This assessment deals with the development of software and considers, the evolution of it. Ultimately the Commission hinted that in future market definition assessments, they should consider the CRM Software solutions would have to be distinguished base on the type of industry of the customers , 62
and left the product market definition open as CRM software solutions. This is a worth mentioning development because the Commission may be creating future guidelines without a conclusive on the specific product market.
‘Sales Intelligence Solutions’, is a broad market first defined in this case assessment. Both the Commission and Microsoft have recognised that, a product that Sales Intelligence Solutions could also fall in, or rather be a part of other broader markets, such as sales accelerating technology. Microsoft does however state that it really should be included in a larger broader market, because of supply substitutability. Albeit the Commission learns from questionnaires that within Sales Intelligence Solutions there can be very differing products depending on their functionality, and further switching their uses usually involves new investment and development, and may be substitutable. The Commission ultimately decides to keep this broad scope on this market. On one hand, it could be said that the Commission, is actually stepping away from there before mentioned conservative assessments, and considering the possibility of defining broader defined markets because they are recognising how diverse and ever changing the market is from a supply side, and although it may take heavier investments and time, products can either be used or manipulated for similar functions, thus justifying why a broader market would have to be defined. Having said all that, this is not the case at all, the Commission actually already considers the lack of potential harm to competition, within this market, by stating that only one of the undertakings in the concentration assessment would even fall under this market. The commission states, “With respect to the segmentation by industry type, the Commission considers that for the purposes of this Decision such segmentation is not relevant as only LinkedIn is active in the provision of sales intelligence solutions…” Thus, the Commission explicitly states it can only accept this broadly 63
defined market because, it does not see any potential harm in competition. This is only questionable because the Commission has recognised how technological markets are developing rapidly, blurring, and recognising that suppliers can develop these new products. Especially when considering an undertaking, such as Microsoft, who has been found to be in a dominant position, in multiple markets, and having had abused that dominant position before . 64
CRM
60
Case M.3978 – Oracle/Siebel, 22 Dec 2005.
61
Case No COMP/M.8124 – Microsoft / LinkedIn 06 Dec. 2016, paragraph 47.
62
Ibid, paragraph 68.
63
Case t-201/04 Microsoft Corporation v Commission of the European Communities.
Uncertain as to whether the Commission does this because of heavy reliance on previous cases, or whether because this transaction does not raise any competition concerns, but the defined separate markets of ‘Consumer Communication Services’ and ‘Enterprise Communication Services’, do not generate an in depth market assessment. Contrastingly to the Facebook/Whatsapp case, where the Commission looked into depth as to whether the platform (which includes both the operate systems and devices), mattered for the purpose 65
of market definition, in this case, the Commission does not consider this to be, “appropriate” . The 66
Commission recognises that, in the Facebook/Whatsapp case, they ultimately decided to segmented the market based on the platform where the communications took place. The Commission states that this is not appropriate following their market investigation. One can suspect that the “blur” , which Facebook, had 67
mentioned, regarding the overlap in technology regarding operating systems, devices and the products that can be used in a multi-platform nature probably occurred, through either the questionnaires or other market investigation, the Commission must have recognised that. Although they have taken this new step, they have maintained precedent that was established in previous cases regarding the functionality of the 68
communication platform, and more specifically who is using them. This market is further segmented in to consumer use and enterprise use of the communication services. This decision comes down to the understandable varying purposes these two groups have when using the functions available in communication services. Having said both the Commission and the Notifying party, actually do not give so much importance to this market definition, as it is already established that this transactions will not raise concerns. This allows one to question whether the Commission gave this product market, some more importance, whether it would have maintained the conservative school of thought and sought a more specific product market definition.
During the definition of ‘Professional Social Networking’, the Commission identifies and further segments the market established in previous cases. A key development on this product market definition, is the Commission’s recognition that operating systems and devices would no longer be found to be an appropriate criteria, for this specific market definition. This development from the Facebook/Whatsapp case, is not actually justified by the Commission, however one can assumed that the blur and development in technology, which Facebook had mentioned during their case, which the Commission had recognised but did not act on , has developed and become key now. This development has thus left the Commission focusing more on the functionality of the of the product rather than the operating system or the device that the product is used on. Arguably, one could say that although this too could evolve, the technology, that is the platform, develops constantly. However the demanding function of the products does remains similar, or does not grow or change as fast as the operating systems and devices do, or rather the ability for the products to be used in multiple systems and devices. The Commission goes on to differentiate between ‘personal’ and ‘professional’ networking, it points out a specific answer from the demand questionnaires, specifically identifying the function, that is, “[A] ‘personal’ social network is used to ‘spend time’ whereas a PSN is used to “invest time.” The Commission takes a step further to identify and recognise that there are differences between 69
‘professional social networking’ and ‘enterprise social networking’, these decisions once again heavily relied on the market study questionnaires. The commission was effective in identifying that differentiating between ‘professional’ and ‘enterprise’ social networks were focused on the demand substitutability and functioning of the products. Although Microsoft agrees with the Commission, regarding the identifying of a segmented product market, ‘enterprise social network’, it warns the Commission that the social network, for personal use, and professional social network, are starting to overlap each other in their functions.
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014.
65
Case No COMP/M.8124 – Microsoft / LinkedIn 06 Dec. 2016, paragraph 80.
66
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014 paragraph 19.
67
Case M.6281 – Microsoft/Skype, Commission decision of 7 October 2011, Case M.7047 – Microsoft/Nokia, Commission decision
68
of 4 December 2013, and Case M.7217 – Facebook/WhatsApp, Commission decision of 3 October 2014. Case No COMP/M.8124 – Microsoft / LinkedIn 06 Dec. 2016 paragraph104.
Similarly to the Facebook/Whatsapp case, the final defined product market, ‘online advertising services’ in this concentration assessment, is ultimately left open because, this transaction did not raise any serious concerns for its compatibility with the internal market and consequently the Merger Regulation. In a forward thinking school of thought, Microsoft argues that for a broader product market definition that is, online marketing services, which is not further segmented into devices and operating systems, due to, “[Growing] convergence between these platforms in recent years.” Adding on, Microsoft further favours, a broader 70
market without further segmentation into target and non-targeted advertising, also due to technological advancements and because the more dominant suppliers only use targeted advertising currently, which is different from previous concentration assessments . As previously stated the Commission did not think that 71
this transaction raised any concerns for competition in the internal market, and consequently did not engage in such an in depth product market definition. Although it identified what potential markets, the Commission did not address the issue of technological development. However it is worth mentioning that within the geographic market definition of this assessment, the Commission does leave this open for national authorities to further speculate and decide on this matter, potentially opening the door for national authorities to engage in also attempting to define this whole market, that is both the product market definition and the geographic market definition.
3.3 Comparative Analysis
Both of these concentration assessments set benchmarks; showing the Commission’s product market definitions in industries that rely on constant technological development and dealing with data. It is clear that Small but Significant Non-Transitory Increase in Price test is not an effective manner of defining product market in these industries, which was addressed in the Facebook/Whatsapp concentration assessment and not even mentioned in the Microsoft/LinkedIn concentration assessment. The Facebook/Whatsapp assessment, established the principle of defining product markets in concentrations, which became specific to the technology and big data industry, and that was through considering the supply and demand substitutability through operating systems, devices which services can be used on, and their functions. Although it is worth mentioning, that appropriately, in the Microsoft/LinkedIn assessments the Commission did focus mostly on the function of the products. It is also valid to notice that in both cases the notifying parties, in almost all product market definition, argue for a broad market, broader than the ones the Commission may ultimately decide on. This may be done due to legitimate reasons, with interest in defining the most appropriate market. However as previously mentioned in this study, the Commission aims to study the narrowest product market, to ensure the competitive analysis is effective to current market conditions. The Commission mention that it maintains a conservative mindset in market definition, this can be justified because, as previously mentioned, if the product market is too broad then, the Merger Regulation loses its effectiveness, because of the established thresholds therein, and ultimately the market definition is a tool for the competitive assessment of a concentration.
As mentioned, the Commission effectively established to use the identification of the operating systems, the devices and the functionalities of the products, as instruments to define the product market in the ever changing technology and data reliant industries. This was effective for product market definition, but as argued by the notifying parties, in some instances this may have anchored the market definition down, whilst that might not have been applicable: this occurred more in the Facebook/Whatsapp case. Arguably a development and a recognition from the Commission, beyond market investigation questionnaires of the development the supply substitutability of the products, the Commission begins to rely more on the functionality of the product and services rather than the platforms it is on. This is something the notifying parties in both cases suggested due to the adaptive nature of products they supply. Further this is a recognition by the Commission of this blur, which Facebook, first suggested in its case assessments, and the
Case No COMP/M.8124 – Microsoft / LinkedIn 06 Dec. 2016 paragraph 155.
70
Case M.6314 – Telefonica UK/Vodafone UK/Everything Everywhere/JV, Commission decision of 4 Sep 2002.
overlap in products Microsoft mentioned in its case assessment. This is shown and, to an extent, accepted by the Commission, as seen in the Microsoft/LinkedIn merger assessment, where the Commission begins to recognise in some product market definitions, namely consumer communication services , which was a 72
direct development from the Facebook/Whatsapp case assessment.
Arguably the most notable development in these, whilst not explicitly mentioned, is the Commission’s recognition for the technological development which is rising at such a high rate. This is one of the most significant issues with current market definition in competition law at a global level; the evolution of legal concepts to be up to date and more accurate with relevant product markets, in a time where technology is moving and developing so fast, as suggested by OECD ; it is important to highlight that the Commission 73
has not mentioned this explicitly on their decisions, however one can conclude this. Out with either of these cases, the Commission has publicly stated, “ Future and Emerging Technologies go beyond what is known!” This statement agrees with the notifying parties in their repeated justifications that the market 74
should be slightly broader due to the fast pace technological development of products. This is most notable in the Facebook/Whatsapp case assessment, in the product definition of consumer communication applications for smartphones. Where part of the Commission’s main justification is the fact that these two products are used on different platforms, namely devices. Having said that, this justification expired less than two years following the case assessment when Whatsapp was now useable on smartphones, tablets just as well as on computers, as the same product, with the same functionality, as announced on their website . The 75
Commission could never have foreseen that, although it is worth mentioning that concentration assessments under the Merger Regulation are meant to be ex ante by nature along with the information provided to them 76
by the notifying party; the Parties had argued and attempted to justify why taking a broader market would be most effective, however the Commission decided to define a narrower market. It is certainly worth mentioning that ultimately Facebook and Whatsapp were available on all devices, and they further linked in the accounts of the Facebook and Whatsapp end users. This was something they said they would not do, and were eventually fined by the Commission for it . This however shows, that maybe the Commission should 77
have taken a step back and identified a broader market where they might have been able to assess the competitive nature and possibilities of the market after this acquisition was approved. It is worth stressing that the Commission, emphasised that the fine was not placed because of competitive effects, as they stood by the decision they made, it was a fine for the breach of the Merger Regulation, for not submitting all the correct information about the concentration. Having said that, even before the Commission fined Facebook for these advancements, the Microsoft/LinkedIn decision took place, and at this point the Commission already recognised that functionality, as one of the criteria set out in the Facebook/Whatsapp should preceding the other two criteria, namely devices and operating systems. This is a direct development, because the Commission updated the previous product market definition, and arguably done so because the Commission recognised technological advancement. This also triggers the question whether the most appropriate manner, to identify product market definitions in fast technological and heavily data reliant industries, is through broader markets, or even looking to other areas of law or whether other international law principles might be applicable; one could even argue whether law rulers and regulation makers could
Case No COMP/M.8124 – Microsoft / LinkedIn 06 Dec. 2016 paragraph 80.
72
Policy Roundtables Market Definition 2012 DAF/COMP(2012)19 11th October 2012, page 11.
73
European commission, 'Future and Emerging Technologies ' (Future and Emerging Technologies , 2016) <http://ec.europa.eu/
74
programmes/horizon2020/en/h2020-section/future-and-emerging-technologies> accessed 10th June 2017.
Whatsapp, 'Introducing WhatsApp's desktop app' (Whatsapp Blog, 10th May 2016) <https://blog.whatsapp.com/10000621/
75
Introducing-WhatsApps-desktop-app> accessed 13th June 2017.
As suggested in: T.E. Kauper, ' The Problem of Market Definition Under EC Competition Law' [1996] 20(5) Fordham International
76
Law Journal, Article 10, page 1726.
European Commission, 'Mergers: Commission fines Facebook €110 million for providing misleading information about
77
WhatsApp takeover' (PRESS RELEASES, 18th May 2017) <http://europa.eu/rapid/press-release_IP-17-1369_en.htm> accessed 18th May 2017.
utilise the interchangeability principle to respectively enforce or define e.g. that such products market definitions should always contain technological considerations and capabilities to allow substitution or open connectivity with competitors; this without prejudice of both costumer’s freedom of choice (demand) and supplier’s intellectual rights on new developments (supply).
4. Market Definition Reform
Although not many conclusions have been drawn thus far in this study, it can be argued with some certainty that, there is room for improvement, room to complement the progress already made by the Commission, regarding product market definition within this phenomenon, data economy, with specific focus to concentrations, under the EU Merger Regulation. It can be argued that EU competition policy can certainly learn and take inspiration from other areas of law and possible other jurisdictions, including those within the European Union itself. This chapter will explore other consequent areas of law that could assist the Commission, in defining specific product markets that focus on online platforms. It is worth noting that the Commission has previously and explicitly stated that it would not involve data protection regulation for any forms of market assessment, it strongly disagrees with this overlap, although it can be argued that this would actually be a logic overlap considering the nature of this industry. Adding on, it might be appropriate for an assessment of the transfer of data to take place rather, seeking to use actual data protection. Further specific legal opinions from the USA, Germany and the OECD round table will be used as inspiration. These 78
opinions will seek to broaden the horizon and consider other options that have worked in other jurisdiction and others which are being considered currently.
4.1 Data Transfer, and Value Within Competition Law
Thus far the Commission has never considered data analytics, transfer or control as indices for product market definition, and since the Facebook/Whatsapp concentration assessment, academics have raised 79
issues questioning whether some form of data assessment, would be appropriate to further define market definition. It is important to recognise, as previously stated, a data assessment would not be considering data protection, but rather the transfer of data, and any values that it may bring to the undertakings, and more importantly, what sort of effects it may have on the competitive market. In the Facebook/Whatsapp case the commission took a strong stance, regarding any form of data assessment. The Commission stated that it would not investigate any data analytics because Whatsapp did not collect any data, although Facebook does for its advertisement services. However in the Microsoft/LinkedIn case assessment, both parties are involved with data analytics, and still the Commission have decided to leave this market definition open because, this transaction did not raise any concerns with the internal market, related specifically to that product market. One can safely conclude that the Commission is yet reluctant to use data control as a tool to assist market definition. As suggested by academics , there are two criteria the Commission could follow to attempt and 80
use which would allow them to establish a relevant product market based on data transfer, whether possession of data would create an advantage in the market over other competitors, and whether the data collected from the consumers can be traced down to a direct source of income, from, for example advertising.
Could control or holding large amounts of data from end users, constitute a barrier to entry for other competitors, and in that respect would data analytics constitute a supply-side factor, as according to the Commission’s Notice on market definition ? It has been suggested , that especially in double sided 81 82
The Organisation for Economic Co-operation and Development
78
Case No COMP/M.7217 - Facebook/Whatsapp 03 Nov. 2014.
79
F Costa-cabral and O Lynskey, 'The Internal and External Constraints of Data Protection on Competition Law in the
80
EU' [2015] 25(1) LSE Working Papers and I Graaf, 'Market Definition and Market Power in Data: The Case of Online Platforms' [2015] 38(4) World Competition 473-506.
Commission notice.
81
D.S. Evans, Competition and Regulatory Policy for Multi-Sided Platforms with Applications to the Web Economy, SSRN Working
82
markets , network effects are created, and needless to say, as a consequence, this creates a snowball effect, 83
where by more users will be inclined to use one platform instead of the other. This raises the question whether this would qualify as supply-side substitutability, it is slightly out of the control of supplier, on whether they can trigger this network effect, but as a consequence due to the supply of a certain platforms other undertakings will struggle to compete at that level. In this regard, it would be important to note that even though undertakings like Whatsapp, which now belongs to Facebook, do not retain any of the data, the data is still be transferred through it as a product and platform. One must consider that although assessing data ownership and analysis, cannot in itself be a sole index of defining a product market, it would assist what the Commission currently has been putting into practice. The practising being, assessing digital markets based on the functionality and what platforms they are supplied on. This might have been an effective manner to assess the Microsoft/LinkedIn case, as in many of the defined product markets, both LinkedIn and Microsoft are heavily involved with data processing and transfer, to which they even justified , that it is 84
mostly all automatically done now, without restraints from the supply side.
Secondly an assessment method that could be used, which has already been studied by US academics , in 85
their merger regulation provisions, is considering how much income is sourced directly from the gathering of the data from end user. One will immediately notice this second criteria, is more limited, especially with services such as that of Whatsapp who does not source its income from the data that is transferred through it. However in other cases specifically in, Microsoft/LinkedIn this might have been an effective criteria for establishing the market, and possible competition restraints it might create. This might also create an indication of supply substitutability because it would consider the change in costs, an undertaking might have to incur to arrive at a stage which this data might generate a direct source of income for them. Similarly to the concept of controlling more data than competitors, which was mentioned above, this would be most applicable to a case of the same nature as Microsoft/LinkedIn, both undertakings which heavily rely on transferring data for their income. Again it is important to note, this solely would not be a criteria for defining a product market, but would be complimentary and might raise competition concerns. Attempting to give a value of the data, would also be effective in comparing market power, investigating and comparing, the income of different competitors on this basis.
4.2 Facebook v Bundeskartellamt (Germany)
On February 2016, the German Competition Authority , initiated proceedings against Facebook, on the 86
grounds of abuse of dominance. The Bundeskartellamt, has built a case against Facebook, stating that they are abusing their potentially dominant position in the market because they were not fulfilling their ‘special responsibility’ that dominant firms have under EU competition law. The claim, states that Facebook, with 87
its aim to generate more profit using people’s data, for advertising purposes, does not inform its end users well enough on what their data is actually is used for and what they are agreeing to. This case is interesting and will be key in the near future if and when it reaches the ECJ; the ECJ will have to once again decide whether data protection is an issue that they are willing to address and make a ruling on, or rather if this will come down to a consumer and competition law issue. However for the purpose of this study, the importance
Which as we have learned a large amount of undertakings in the data economy are.
83
Microsoft/LinkedIn Online Advertisements.
84
Harbour P.J., ‘Dissenting Statement of Commissioner Pamela Jones Harbour, Google/DoubleClick’, (FTC File No. 071-0170, 20
85
Dec. 2007) <http://www.ftc.gov/sites/default/files/documents/ public_statements/statement-matter-google/doubleclick/ 071220harbour_0.pdf> Accessed 18th May 2017, page 9.
Bundeskartellamt.
86
As established by the ECJ, in Case 322/81 Michelin v Commission [1983] ECR 3461, any undertakings who have a dominant
87
