Competition Policy in a World of Big Data

Big data is an important phenomenon injecting transformative effects into social and economic relationships. Consumers, firms and machines produce unprecedented amounts of data collected, stored and analysed by leveraging the synergic capabilities of mathematics, computer science and the Internet. With the full advent of the Internet of Things, even more data will be observed about, and inferred from, individuals’ everyday activities and habits. The implied promise of big data is that it is increasingly possible to gain valuable insights out of unstructured data collected from different sources. Firms in many industries are increasingly using computer algorithms and big quantities of data to handle problems of analysis and prediction, from market intelligence to strategic management and automated decision-making. Acknowledging the growing potential for big data to have an immediate and direct impact on a broad range of human interactions, conversations within policy circles are starting to focus on how this phenomenon should factor into the competition policy framework itself. While big data can enhance competition, improve product offerings, and create a marketplace where resources are allocated more efficiently, the Chapter argues that competition policy designers and enforcers are bound to deal with unprecedented data-related challenges. The Chapter starts with a description of the big data value chain, highlights in particular how data collection, storage and analysis are driving many of the multisided business models of the digital economy, summarises some well-known peculiarities of data as an economic asset and sets the framework for the analysis of the effects of big data on competition processes. The Chapter concludes by drawing a few preliminary implications for competition policy. In particular, big data could have the effect of making collusion more prevalent, stable and difficult to detect, of reshaping traditional relationships within a vertical supply chain by increasing forms of dependency and potentially restraining inter-platform competition and users behaviour, of increasing market concentration, and, finally, of enabling further abuses of market power.