Flags of the European Union / Photo: jorisvo/Shutterstock.com

The European Commission has opened two separate preliminary competition investigations into the data practices of Google and Facebook.

The Commission is seeking information about how data is gathered, processed, used and monetised by the companies, including for advertising. The Financial Times suggests that a key question relates to whether Google has used its dominant position to withhold the supply of data to its competitors.

For Google, the latest investigation follows three EU competition law infringement decisions in as many years (Google Shopping, Google Android and Google Adsense).  The Commission is also investigating the governance and membership structure of Facebook's cryptocurrency, Libra.

Meanwhile, New York's attorney general and other state attorneys general in the USA are investigating Facebook's data collection practices and other regulators have investigations into Google's online search practices. Google is also the subject of an investigation by the US Department of Justice.

The most recent EU investigation reflects the growing interest among antitrust authorities in harm to competition and consumers linked to data. The term 'big data' has been coined for the aggregation, analysis and increasing value of vast exploitable datasets of unstructured and structured digital information. The main antitrust concern – although not always well articulated – is that control of such data can create barriers to entry and market power, particularly where the company holds a unique dataset that cannot be replicated by rivals.

The focus on the quality of uniqueness of data requires closer examination. A polemic continues around the economic characteristics of data sometimes summed up in the phrase that "data is the new oil". Like oil, data must be refined before it is useful, i.e. it has to be turned into information, knowledge or action.

However, unlike oil, the potential for data to be exploited for economic value is not necessarily to the exclusion of other operators. Perhaps the more important attributes of data for competition purposes include who is collecting it, on what subjects, whether comparable data can be obtained from other sources, and the economic value of data now and over time.

A company that is dominant in a relevant market has a special responsibility not to abuse market power or it faces fines and/or corrective orders under Article 102 of the Treaty on the Functioning of the EU and national law equivalents. The EU case law is well-developed in terms of exclusionary or exploitative practices involving, for example, exclusivity, refusal to supply, discriminatory access and tying. It is conceivable that any one of these typical categories of abuse might form the basis of an allegation of abusive data practices.

Mandatory access to data could be an appropriate remedy if the data constituted an essential facility according to the stringent conditions in the European Court judgments in Microsoft, IMS and Bronner.

However, the Commission's current probe appears to be much broader. It is likely that as it develops its thinking, it will be looking more closely at the substitutability between data for different purposes. Related issues such as the use of algorithms could also be considered following themes in other antitrust investigations including the Commission's probe into Amazon.

Antitrust interest in digital markets is not relenting. National competition authorities in the Benelux have urged the Commission to allow remedies to be imposed on companies in the digital sector without a finding of a breach of competition law. Their joint memorandum published in October highlights that a challenge with the current EU regime is that the sanctions apply ex post once there has been a finding of infringement. They argue that intervention may come too late in digital markets once the market has tipped in favour of a dominant player.

Any call for tougher enforcement action or bespoke regulation faces the objection that although data practices are a newer phenomenon, the legal issues are not all new. A balance needs to be struck in ensuring that any interventions including access obligations do not stifle the innovation and investment that are a key input in the evolution of digital markets.

It is also hoped that antitrust does not unwittingly become a regulatory tool to remedy the actual or perceived deficiencies in data protection laws where personal data is concerned.

Professor Suzanne Rab is a barrister at Serle Court Chambers specialising in EU and competition law.