Abstract
In the modern economy, the boundaries between competition, customer, and data privacy have become increasingly blurred. This is particularly true when it comes to the laws that control online social media players’ activities regarding the storage and use of personal data. Big Data has evolved into a valuable resource and is now regarded as the global market’s currency. It allows companies to provide a wide range of goods to their clients while also ensuring digital market innovation and quality. However, the collected consumer data can be used in a variety of ways to influence free market competition. This topic has recently come to the fore, and consumers are raising concerns about the level of data and customer privacy provided by existing market leaders in the social media. In this article, we firstly discuss what is abuse of dominance and the problem of demarcation of relevant market while proving the abuse of dominance. Further, through the case of Bharat Matrimony vs. Google, we discuss how data is used as a tool of abusing the dominant position in disguise.
Finding out ‘Abuse of Dominance’
‘Abuse of dominance’ can be referred to a situation when a dominant firm or a dominant group of firms, in the market, indulges in a behaviour that seeks to either eliminate the existing competitor or prevents any entity from entering into the market in future so that the competition gets attenuated.[1] In India, Section 4 of Competition Act, 2002 governs the issue of dominance. The section does not ‘per se’ prohibit a company from enjoying market supremacy, monopoly, or a position of power. It merely seeks to forbid ‘abuse of dominance’. A three-step test has been devised to determine whether an enterprise or group has engaged in prohibited conduct under section 4. It is as follows:
- Analysing the relevant market
- Dominance
- Abuse.[2]
The ascertainment of first step itself is problematic. This is because the factors that constitute ‘relevant market’ are very contentious, despite the presence and adoption of some existing tests.
Relevant market
The demarcation of online and offline markets becomes of utmost importance while dealing with the issue of relevant market. Interestingly, the CCI in Ashish Ahuja v. Snapdeal.com[3] disregarded the need of segregation between the two markets. It stated that though the online platforms possess different channels but cannot be said to be exclusive of each other merely because of some differences in their features. The reasoning behind this was that, the freedom of choice between brick-and-mortar shops and online market rests with the consumers. However, adoption of this approach becomes troublesome in the case of multi-sided markets like Google and Facebook. While analysing the nature of competitiveness of multi sided platforms, the authorities may assess both the sides of the market while ignoring the comparison of all those sides with the other platforms. For example, in the case of acquisition of WhatsApp, CCI considered the messaging, video and voice calling service, under the broad head of messaging services. This, obviously, has a proclivity to adversely impact platform such as Skype.[4] After establishing the relevant market, the dominant position of the entity needs to be proved which is further followed by demonstration of the abuse of that dominant position. However, when the abuse is carried in an indirect way, it becomes difficult to hold the practice as anticompetitive. Here, in the next section, we discuss ‘data’ as a tool of carrying abuse of dominance in disguise.
Relevance of Data in carrying out anti-competitive practices
Data, in the broadest sense, can be defined as everything that provides some information.[5] In fact, the Court of Justice of the European Union (CJEU) in the Hoffmann-Ra Roche decision of 1979, held that the undertaking had a dominant position on the basis of its technological advantages including the ‘highly developed customer information’ that it possessed.[6] In the context of online marketing, it covers the customers’ preferences and their search information as well. A landmark moment in India’s recognition of the importance of data in competition regulation is Bharat Matrimony v Google case. While there were a number of allegations against Google in carrying out the anti-competitive practices, we will focus mainly on the ones that relate to the abuse of data.
Firstly, it was alleged that Google runs its core businesses of search and advertisements in a biased way. It favoured its own services and partners by manipulating the search results and promoted its own vertical search sites into its organic search results. For example, while searching for flights, it showed the priority links to its own service (Google Flights), rather than regular flight service search providers like MakeMyTrip. This leads to the creation of an uneven playing field. It affects the consumers by forcing them to see only those results in the priority that are favoured by Google and so the consumers may not be able to get access to the major service providers. This is clearly a violation of Right to Choose.
Secondly, the issue of discriminatory practice of google in advertisements was also raised. Google has a huge database of the users that obviously happens as a result of the users’ search preferences. Google’s House Ads, i.e., the ads for Google’s own products, hamper the level playing field for advertisers using Google’s AdWords program to advertise their products in the market. The Ad Rank of an advertisement is the factor that determines where a particular advertisement appears in Google’s ad space. Ad Rank is decided by an advertiser’s bid as well as auction-time forecasts of the ad’s validity and quality ratings. It was said that Google has access to “quality score ” assigned by the system to other websites, including those of rivals. Since Google is aware of these, it is in the capacity to ensure that its House Ads receive a higher quality score than its competitors’, and that its House Ads often appear in the top slots, above third-party ads, especially those of its competitors.
Conclusion
With the exponential growth of new media and the increasing importance of data in the digital market, it is critical that the CCI considers these trends when deciding an enterprise’s dominant position. Since we have made such a significant leap into datafication, it is a source of concern for anti-trust regulators because it can be used to deduce about consumer behaviour at low cost, allowing companies to gain a firm foothold in the market by collecting sensitive client information and preventing competitors from developing products that can provide competitive advantages. It cannot be ignored that given the accumulation and the use (or more precisely abuse) of ‘data’ by the companies to serve their own purpose, the authorities need to adopt a modified approach that is in consonance with these new tech-oriented malpractices. Due to the fact that data is not deemed a commodity under competition law, it may lead to the expulsion of small market players because of the advantage the big players get due to the collection of data who can target the consumers based on their preferences. The CCI can draw inspiration from the recent case against Facebook by Germany before it may be too late to rectify the misconception of the possibility of data as a tool of abuse of dominance.
[1]Zisha Rizvi, Decripting the concept of Abuse of Dominant market positions Trends in India and EU, SSRN, (23 April 2021, 00:10 AM), https://ssrn.com/abstract=3578864.
[2] Gazla Noor, Abuse of Dominance, LEGAL SERVICES INDIA, (24 April 2021, 00:10 AM, http://www.legalserviceindia.com/legal/article-3928-abuse-of-dominance-undercompetition%20act.html.
[3] Ashish Ahuja v. Snapdeal.com, (2014) CCI Case No. 17.
[4] Aryan Mohindroo & Rajat Mohindroo, Digital Economy & Competition Law: A Conundrum, ICLR 3, 83 (2018).
[5]Bruno Lasserre & Andreas Mundt, Competition Law and Big Data: The Enforcer’s View, Italian Antitrust Review 87, 88 (2017).
[6] Hoffmann-La Roche & Co. AG v. Commission of the European Communities, ECLI:EU:C:1979:36
