Data in the Digital Economy: The “Anti-Hero” of Antitrust or Just “Bad Reputation?”

CPI Antitrust Chronicle, 2024

The proliferation of data available to companies has, for the most part, benefited consumers by facilitating improved quality or new technologies. However, an ongoing antitrust debate focuses on whether the use of data by businesses can confer a competitive advantage that distorts competition and, in turn, reduces consumer welfare. Additionally, the collection and control of massive amounts of data by technology firms has also raised antitrust concerns. In a new article, Vice President Kristof Zetenyi and Associate Dheeraj Chaudhary examine theories of potential anticompetitive harms and the current economic and legal approaches to dealing with allegations surrounding data as a source of anticompetitive outcomes.

In the article, the authors discuss theories of anticompetitive harm related to two use cases: data as a direct input into production of goods and services; and data used in firms’ strategic decision making, innovation, and development of new products and services. In the first instance, the authors discuss a lack of consensus that the collection and control of data is, by itself, a source of market power. The authors document research that examines the extent to which data exhibit diminishing returns to scale, as well as data analytics and capabilities as a form of competition. In the area of strategic decision making, the authors explore the concern that firms may be able to leverage their access to massive amounts of data to gain market intelligence about their actual or would-be competitors that would enable them to gain an unfair competitive advantage. The authors discuss different approaches that regulators in the US, the EU, and the UK are exploring to address this concern. Ultimately, the authors home in on the need for “sound economic analysis” to drive decision making in antitrust issues, weighing any potential procompetitive benefits against any potential anticompetitive harms.

The article, “Data in the Digital Economy: The ‘Anti-Hero’ of Antitrust or Just ‘Bad Reputation?’” is published in the February 2024 issue of CPI Antitrust Chronicle.

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Authors

Zetenyi K, Chaudhary D