Big Data, Old Oil & New Enrichment

Data can be any unit or collection of personal/non-personal/anonymized information. Big Data may be defined as large amounts of different types of data, produced at high speed from multiple sources whose handling and analysis require new and more powerful processors and algorithms [1]. Big data analytics refers to the data undergoing any processing including but not limited to segregation, deduping, surrogation, and enrichment, etc.

“The world’s most valuable resource is no longer oil but data” – The Economist [2].

The above quote is not only correct but also hits close to home as upGrad cited the above quote in their YouTube ads to advertise their data science course.

Before we get into the role and impact of data with competition law, let us first look at the distinct elements of that makeup big day are its volume, velocity of being sourced/processing, qualitative variety, veracity/accuracy, the value of being enriched/processed for further use.

USA: Being the jurisdiction with perhaps the oldest and strictest antitrust laws, a different view was taken by the FTC in the merger of Google & DoubleClick [3] where privacy issues arising from their post-merger control of data cannot by themselves block the transaction which is independent of the parties’ obligations under their respective cross-border data protection and information technology laws.

Control may not always be through data. A unique example of this in the USA is Tinder which was launched in 2012 with barely any hold of internal or externally purchased data, but even in a matured market, it skyrocketed in popularity, users, and data wealth in such a short span of time not because of its data but rather its concept, user interface, and experience.

Germany: The Bundeskartellamt passed an order against Facebook [4] who was found to be abusing its dominant position in the market by considering its already vast user database when coupled with external databases purchases from third parties and the data of their affiliate companies of WhatsApp & Instagram which was also met with other violations and discrepancies. Here combining data from internal and external websites as data aggregators were prohibited along with the practice of external third parties using Facebook Analytics to process their visitor data that flowed to or from Facebook and its affiliates. It has been further elaborated upon the concentration of data in the hands of a few enterprises leading to lower competition created by this higher barrier of entry [5].

Indian Context: Currently, there are no explicit provisions regulating or linking the ownership, control, and sharing of data under the Act especially since CCI laid down those violations under the IT Act, 2000 violations are not within its purview. CCI must assess big data’s impact on control before we can interpret the charging/triggering provisions of S.19 of the Act. However, the Competition Law Review Committee is currently reviewing to expand the definition of control to include data along with its pre-existing elements [6]. Although the CCI has passed orders that revolve around data. When airlines could not furnish data as to the uniform setting and revision of fuel surcharge and cargo freight rates by use of profit-making algorithms, their conduct was found to be abusive of dominant position [7]. Since Google-owned in algorithm and was able to change it at its discretion, its automated function derived from its existing data, analytics, natural language processing capabilities, and predictive technology was found to be altering the search result rankings that resulted in a search bias which was found to be an abuse of its dominant position [8].

In my opinion and industry issues faced via personal experience, in addition to the existing law, compliance, and clarifications issued by their respective regulatory authorities, CCI needs to clear the ambiguity with respect to S. 19 of the Act regarding the following data-centric agreements:

1. Web aggregator agreements: When companies, especially those who are in the business of non-banking financial products/services like insurance enter into distance marketing/promotion agreements with web aggregators, there is much ambiguity on this arrangement’s impact on the competition. Ex- A large insurance provider enters into such an agreement with Policy Bazaar where the website does not show the final product premium till the time the user does not insert their contact information. As soon as they drop off from the website, Policy Bazaar’s team uses this inserted and consented information to promote and sell this party’s insurance products via promotional e-mails/targeted ads/outbound calling. This may raise potential competition impact issues if the engaging entity’s market presence is large enough and this agreement has clauses that prohibit the aggregator from entering into similar agreements with peer group companies.

2. Cross-sell agreements: When group companies have similar lines of business, the potential impact on market competition issues may arise when these lines of businesses enter into agreements with each other to sell their respective products/services to each other’s customers. They do this by mutually sharing their respective customer information to the extent permissible under law to assess the potential of selling inter-related products to each other’s different set of customers. For example- There exists a holding co. whose subsidiaries have different lines of businesses-like life, health, general insurance, insurance broking, housing finance, mutual fund, pension management, etc. these subsidiaries, like life and health insurance, enter into cross-sell agreements with one another to mutually share data to develop customer propensity models and sell their products/services to them which at an individual business level may seem purely for strategic reasons but when the entire group engages in this practice, it may lead to this group competing for the market as a whole rather than in the market as a competitor. HDFC Bank and its subsidiaries/affiliate companies being the primary example of this practice.

3. Data enrichment agreements: If an entity with a sizeable market share enters into a data enrichment agreement with a credit bureau/rating agency like TransUnion CIBIL/CARE/CRISIL, they can share their existing customer data by providing such bureau with their customers’ existing product information, investment, demographic information, age, etc. and enrich it through surveys, surrogate information (Third-party data purchase agreements like acquiring Amazon customer information and contact/address-matching the customer through their database to verify the customer. This bureau then provides this information along with credit scores to the engaging entity to build propensity models to further sell to these customers based on newly enriched data which could result in competition issues due to large-scale enrichments to target/acquire more market share and differential enrichment rates.

Amendments via provisos to the existing sections may be required that cover the above points along with exceptions including but not limited to proprietary, critical/essential enterprise, and downstream data required for sales, manufacturing, or inter-dependent functions/industries, etc with some form of contractual structuring restrictions as seen through merger-control capping in the Act or in the style of layering as seen under the Companies (Restrictions on a number of layers) Rules, 2017.

[1] (2014) EU, Preliminary Opinion of the European Data Protection Supervisor, Privacy and competitiveness in the age of big data.

[2] https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data.

[3] (2007) FTC Statement File No. 071-0170.

[4] Facebook Inc. Ireland & Deutschland v. Verbraucherzentrale Bundesverband (2019) B6-22/16 paras 878-913.

[5] (2015) Monopolies Commission Report Special Report No. 68 paras 411 & 489.

[6] (2019) Report of the Competition Law Review Committee, Chapter 7: Combinations.

[7] Express Industry Council of India & Jet Airways, Go Airways, Air India, Indigo, Spicejet (2013) CCI Case No. 30 paras 29, 88, 103, & 112.

[8] Matrimony.com (2012) CCI Case No. 7/30 para 174.

Art: "Pushing the Edge" by Gary Crouch.