Does ‘big data’ provide a competitive advantage to firms: an antitrust analysis

Abstract

Today’s economy has transitioned from the traditional brick and mortar structure of doing business to that of digitalized economy. The latter functions with the aid of technological tools with ‘data’ being the most significant tool in today’s context. The issue has become even more critical with the advent of ‘big data’. It is argued that accumulation, analysis and usage of ‘big data’ enable creation of varied forms of entry barriers for new entrants and information asymmetries for customers which in turn affect ‘market competition’ adversely (Santesteban & Longpre The Antitrust Bulletin, 65(3), 459-485, 2020; Fast et al., 2021). Consequently, it is pertinent to revisit the traditional understanding of ‘market competition’ as stipulated in the antitrust laws across jurisdictions and specifically the Indian Competition Act, 2002. The existing regime being centred around neo-classical price theory is not equipped to comprehend the various dimensions of the digitalised world where ‘data’ is the new form of currency having effects on market power and, consequently, on market competition. Digital markets are multi-sided and non-linear in nature where ‘big data’ acts as a lubricant for their smooth functioning. Whether access to data provides any form of competitive advantage is the central question. A resource to provide any form of competitive advantage must be distinct, rare, inimitable, non-substitutable and valuable (Barney, 1991). If data carries such characteristics, the continuous percolation and usage of technology powered by ‘big data’ into the markets will affect the understanding of the basic competitive wrongs. Potential interdependencies between technology, data and market power also affect the understanding of ‘dominance’ as stipulated under the existing law. The unique challenges which ‘big data’ poses are not only restricted to competition policy but also extended to enforcement as they trigger overlapping constitutional concerns in relation to privacy. This demands for looking at the existing gap between competition law/policy and the ‘data’-driven challenges being faced in this ever-evolving digital economy.