ICYMI: Delrahim Speech – “Big Data” Does Not Present A Barrier To Entry
On Wednesday, Assistant Attorney General Makan Delrahim spoke at the University of Haifa in Israel, saying “big platforms were once themselves start-ups,” and that regulators should “be cautious in any enforcement decision to not undermine the very innovation incentives that competition aims to protect.”
Delrahim focused parts of his speech on data, raising numerous points that counter the notion that data is the new oil and consumers don’t “pay” to use free services with their data.
Key excerpts are below.
Data improves products and reduces costs for consumers
“Because many online services are free for users, there has been a temptation to use ‘data’ as a proxy for price when determining the anticompetitive effects of a merger or conduct. Consumers, however, have different preferences with respect to sharing their data. As a result, there is no uniform value yet assigned to ‘data.’ It’s not necessarily the case that the more data a platform extracts, the higher the “price” on consumers. In some cases, more data can be better for consumers.”
“The accumulation of data can benefit consumers by improving the quality of existing goods and services and by creating new ones. Platforms and apps pair large amounts of data with technology to create some of the economy’s most important innovations, including in medical diagnoses, weather forecasts, transportation safety, and language translations. These innovations are having a significant impact on almost every aspect of our daily lives, making possible many of the conveniences we have begun to take for granted.”
“A firm that amassed data because it created a more innovative or efficient product should not be punished for its success by having to share the fruits of its labor and investment with competitors. Forced sharing of critical assets reduces the incentive to invest in innovation. As our Supreme Court has observed: ‘Compelling such firms to share the source of their advantage is in some tension with the underlying purpose of antitrust law, since it may lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial facilities.'”
Data is pro-competitive and does not present a barrier to entry
“First, data is often ‘non-rivalrous,’ which is a fancy term meaning that a consumer can share the same data with multiple firms. One firm’s use of the data does not diminish its availability to others. For example, there is no limit to how many times you can share your name and email address. The fact that you’ve given your name and email address to Google does not preclude you from also giving it to the Wall Street Journal, to Facebook, or to a brand new competitor. This is different from currency.”
“Second, data is often widely available and inexpensive to collect. These days, even small businesses can easily and cheaply collect data themselves or acquire data from third-party providers. Technological advancements also make it easier to collect, manipulate, analyze, and store large amounts of data.”
“Third, most data has a short shelf-life. While advertisers are very interested in what a consumer is searching for at the moment, that particular data is much less valuable a week, a month, or a year from now.”
“Fourth, for many online platforms and tech businesses, data is an input and not the product itself. As with other inputs like labor and capital, a new entrant may not need the same type of data or quantity of data to compete effectively against an incumbent. The amount of data alone does not make a product or service better. It depends on what a company does with the data.”
“Finally, mandated sharing of data between competitors leads to what Justice Scalia called ‘the supreme evil of antitrust: collusion.’ Antitrust authorities should instead encourage firms to compete aggressively against each other.”