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Big Data & Antitrust: 2020 in Review

A non-exhaustive review of some of the most relevant competition law cases held in 2020, featuring analysis of tech-mergers  and the use of personal data as a key advantage for monopolies. The foregoing, with the aim of setting up the discussion for what we believe will be the new competition law and regulation, one that incorporates a digital acumen nurtured by other legal disciplines such as privacy law.

By Juliana Novaes, Mario Tavares Moyron, Miljana Todorovic, Nathalie Alquati Bonisoli, Petar Pešić and Sahil Tharia

January 10, 2021

The competition law landscape and its judicial and administrative review were no exceptions for the global challenges faced during 2020. On the one hand, technological development demonstrated that antitrust policy needs to be enhanced and that aspects previously unnoticed, such as massive accumulation of data, should be part of the analysis of cases by the competent authorities, as this information could be essential for the business model of large technology companies. On the other hand, supervisors landed and started investigations against Big Tech in light of a crescent necessity to protect consumer and privacy rights of their citizenship.

Bundeskartellamt v. Facebook

In June 2020, the German Federal Court of Justice provisionally agreed with the Bundeskartellamt and confirmed the allegation of Facebook abusing its dominant position.

In the assessment of the unilateral behavior of Facebook, the geographical market was found to be Germany, and the relevant product market consisted of private social network services. Since Facebook holds 95% of the market shares it was defined as a dominant undertaking. As the market-dominating network operator, Facebook bears a special responsibility for maintaining still-existing competition in the social networking market.

Consequently, the German competition authority argued that using and implementing Facebook’s data policy, which allows Facebook to collect user and device-related data from sources outside of Facebook and to merge it with data collected on Facebook, constitutes an abuse of a dominant position on the social network market in the form of exploitative terms and conditions. In light of this assessment, the German authorities prohibited the data processing policy Facebook imposes on its users and its corresponding implementation under sections 19(1) and 32 GWB and ordered the termination of this conduct. 

It is interesting to note in this case the relationship between data protection and competition law since, from the facts of the docket, it would seem that it is a dispute related only to data protection issues. In this respect, the authorities sustained that a competition law assessment was necessary because the data protection boundaries outlined in the GDPR were overstepped as a consequence of Facebook’s dominant position. To that end, it was indispensable to examine the conduct of dominant companies under competition law also in terms of their data processing activities, as especially the conduct of online businesses is highly relevant from a competition law perspective.

United States’ Judiciary Antitrust Subcommittee Investigation

This year we witnessed a much-anticipated hearing in a major congressional antitrust investigation in Washington. On July 27th, the CEOs of Facebook, Amazon, Apple, and Google's parent company Alphabet, faced intense questioning, as a part of over a year-long investigation of the dominance of digital platforms and the adequacy of existing antitrust laws and their enforcement. Although the hearing had an underlying political tone, it was, nevertheless, a much-needed opportunity to request answers to important questions, which were supposed to help determine if those Big Tech had used their dominant position to repress their competition. 

The House Judiciary Committee’s Antitrust Subcommittee released in October a Report of over 400 pages, closing an excessive investigation that included, besides the famous CEOs hearing, the production of nearly 1.3 million internal documents and conducting hundreds of hours of interviews. 

The Report states that the four businesses enjoy monopoly power, it portrays the challenges due to their domination, and proposes possible remedies to restore competition in the digital economy, strengthen the antitrust laws, and reinvigorate antitrust enforcement. 

In the months that follow we shall see if this comprehensive report is going to be a roadmap to a more accountable future of digital platforms.

DOJ v. Google

2020 was undoubtedly marked by the beginning of a case which is already referred to as “a one time in a generation”, a “monumental case”. The USA, acting under the direction of the Attorney General of the US, along with the Attorney Generals of eleven States, lodged the action against Google LLC on 20 October. This civil antitrust lawsuit is brought under Section 2 of the Sherman Act, 15 U.S.C. § 2, to restrain Google from unlawfully maintaining monopolies in the markets of general search services, search advertising, and general search text advertising in the United States, through anticompetitive and exclusionary practices. 

As stated in the complaint, Google has used anti competitive tactics to maintain and extend its monopolies in three cornerstones of its empire. Some of these tactics are: entering into tying and other arrangements that require that Google is set as the default general search engine and entering into exclusivity agreements that forbid preinstallation of any competing search service. 

The complaint alleges that Google’s anticompetitive practices have had harmful effects on competition and consumers. Google has foreclosed general search engine competitors from gaining vital distribution, scale, and product recognition, which leaves them without any chance to challenge Google. 

By restricting competition in general search services, Google’s conduct has supposedly harmed consumers by reducing the quality of general search services and their options as it regards to their own  privacy and data protection, lessening choice in general search services, and impeding innovation. 

This complaint is the first step in a legal battle that is expected to last for years. It is Google’s quest to present its case and prove that it is not unfairly dominating the online search engine space and that its practices are not anti competitive under long-established antitrust law. At the very finish of the year, in a 42 pages document, Google rebutted accusations that its deals violated antitrust laws. 

T-Mobile/Sprint Merger

The year 2020 marked the conclusion of one of the longest awaited mergers. Two telecommunications giants in the US began talks about merging in 2013, when Sprint was evaluating an idea to acquire T-Mobile but dropped it as they were not sure whether they could gain regulatory approval. In 2017 though, the situation changed and this time it was T-Mobile that wanted to acquire Sprint. After initial talks fell off, only a year later talks were resumed and they reached a merger agreement.

That opened up a long wait for the regulatory approval in the US. The deal brought a heavy discussion on whether it should be approved, with a variety of reasons being mentioned in favour of one or the other. FCC approved the merger in 2019 by a 3-2 vote on condition of deploying a 5G network to 97% of US citizens within three years and 90% having speed of at least 100mb/s. The Department of Justice approved the merger on the condition that certain divestitures are made.

That didn’t prevent 13 different Attorney Generals  from suing back trying to block the merger. In February 2020, the merger was approved. Sprint ceased its operation in August this year and T-Mobile became a third big player in the US market next to AT&T and Verizon. A so-called 4-2-3 merger was argued on the merits as beneficial for the US consumers and one which would create a new and more powerful competitor to the big players. Use of the network, better quality of services and lower prices alongside improvement in 5G network are some of the reasons that prompted the judge to approve the merger. It remains to be seen whether a condition T-Mobile agreed on before FCC will be achieved in the timeline proposed. 

EC vs Apple: a tax-based case

This past year was crucial for Apple. They have brought out a plethora of new products but also won their challenge of the European Commission’s ruling that Apple needs to pay Ireland back 13 billion euros in back taxes. This case, originated in 2016, focused on the alleged state aid that Apple received from Ireland for choosing them as their center of operations for the EMEA region. The Commission in its decision stated that Apple paid tax as low as 0,0005% in 2014 on corporate income. A very elaborate arrangement made by Apple in Ireland used all the deficiencies in the international tax system and the state of Irish economy. Apple and Ireland itself appealed, although Ireland was due to receive a seventh of its annual expenditure.

The General Court decided that the Commission has erred in its findings. In essence, the Commission did not assess the profits and income Apple’s companies in Ireland received, the mutual payments and whether they were in accordance with the “arm’s length” principle. According to the Court, the Commission did not prove that Ireland granted a selective advantage to Apple and that defects in the tax rulings do not prove that there is a selective advantage contrary to the EU State aid rules. 

The Commission already announced that they would appeal the judgement which would lead to the European Court of Justice who will have a final say on this matter.

Google’s acquisition of Fitbit

The past 17th of December the European Commission informed its decision to approve the acquisition of Fitbit by Google, under the condition of full compliance with the commitments package offered by Google. In June, the Australian regulator raised concerns that the deal would allow Google to further cement its position and raise barriers to entry for potential rivals. While the Australian Competition and Consumer Commission (ACCC) is undergoing its investigation of the deal, the European approval needs to be examined in light of the previous facts of the case.

In late 2019, Google announced to acquire Fitbit in a $2.1 billion deal. In June 2020, the European Commission opened an in-depth investigation on Google for this deal. The Commission noticed that the proposed acquisition would further entrench Google's market position in the online advertising markets by increasing the already vast amount of data that Google could use for profiling and personalisation of the ads it provides and displays. The Commission's investigation focused on the data collected via Fitbit's wearable devices and the interoperability of wearable devices with Google's Android operating system for smartphones.

Far before the above, In March 2014, Google announced its Android wear platform. Companies such as Motorola, Samsung, LG, HTC and Asus were announced as partners. LG watch and Samsung gear were the first ones launched under the new android gear platform.

Google partnered with all major hardware manufacturers and in October 2014, Google launched its health tracking application Google Fit, supporting almost every blend of Android devices and applications, but for Apple’s.

The facts stated above anticipated the intention of Google to dominate this market by means of such exclusive deals with all major hardware manufacturers in the wearable segment and in software synchronisation. This situation allowed a data monopoly across all devices and applications to Google. 

After Fitbit's acquisition and exclusive deals (such as with Fossil), Google has a dominant position in the wearables market. Google Fit and this acquisition could harm present competition for new rivals, provided that Google processes crucial health data for profiling and advertising as a result of Fitbit’s acquisition. As noted before, this deal has a multi-dimensional antitrust probe by considering factors such as “data advantage” over personalisation of ads and dominance in the market by providing Google Fit and WearOS with between  90 to 95 percent of the devices and apps.

Amazon vs. EU

The business model developed by Amazon is based on its dual role as a marketplace where independent sellers can sell products directly to consumers and as a retailer on the same marketplace. The European Commission has been investigating Amazon's dual role since 2019.

The European Union (EU) vs. Amazon formally started in November 2020 as a result of these investigations. A case was filed against the company based on allegations that Amazon violated competition laws by unfairly using non-public data from sellers that use its platform to gain unfair advantage. 

As a marketplace, Amazon processes large amounts of business data from sellers who are dependent on its platform, which provides insights on market trends that could be beneficial for Amazon’s strategy as a competing retailer. The conduct could be considered contrary to Article 102 of the TFEU, which prohibits the abuse of a dominant position. 

CNIL’s Data Protection Law Enforcement in 2020



Most of the main technology companies, together with other champions from different markets, were subject to the inspection of Data Protection Authorities and even brought to the courts by breach of the General Data Protection Regulation (GDPR). Some other alleged monopolists were scrutinized by the Antitrust authorities whose investigations considered if specific behaviors from such companies, as data controllers, were performed in accordance with the GDPR.

Even though the national supervisory authorities in Europe varied in their approach to apply the GDPR, it is worth looking at a local example of enforcement to witness where privacy-oriented justice might be heading to.

The French Supervisory Authority, the Commission nationale de l'informatique et des libertés (CNIL) awarded a 60 million euro fine to Google LLC and a 40 million euro fine to Google Ireland Ltd, for setting up advertising cookies on computers from google.fr’s users without obtaining prior consent and without adequate information on the scope of the data processing activities –based on non-essential cookies. In addition, Google failed to guarantee the right of opposition by keeping a cookie stored in the browser even if the user had already opted-out from its collection.

The CNIL also served a 35 million euro fine to Amazon for invasive collection of metadata from user’s devices. The origin of the claim was due to the intervention of third-parties’ webpages featuring Amazon advertisement, whereby clicking on an ad would result in automatic harvesting of the device’s data, different from what would happen to the user if the access had occurred directly into Amazon’s main webpage.

The Carrefour group together with its Bank were fined by the French Regulator as well. Such penalty was determined by assessing that the companies failed to comply with their information obligation (displayed by a complex privacy notice), through excessive cookie gathering by default when accessing Carrefour Bank, in addition to a failure to comply with the obligation to limit their customer’s data retention periods. The overall fines reached only an amount of 3 million euro due to the existing efforts by the group to solve the referred compliance issues.

These events may not seem to impact the field of competition law. But as the antitrust trend confirms, one key input on dominance for alleged monopolists has been the availability of massive amounts of data. Particularly, user’s data associated with people’s activities. This data could be perceived as an essential facility, to a lesser extent, as a forecast of buying preferences, but to a higher extent it could also impact sensitive data, as that regarding users’ health or their financial situation. By allowing massive collection of data, the companies under investigation may have undermined customer’s privacy rights at the same time that they consolidate their business model and increase their profits. It is in such regard that Data Protection Authorities will play a vital role together with Competition Authorities, so that data-oriented businesses behave not only in accordance to competition law, but also in compliance with the data protection regulations.

European Court of Justice’s Schrems II decision

In July of 2020 the Court of Justice of the European Union (ECJ) ruled in favor of Max Schrems in the context of an action brought before the Irish High Court and originally deriving from an administrative procedure conducted by the Irish Data Protection Authority. Schrems’ initial complaint targeted Facebook for unlawful data processing and reached the US government, who was systematically running surveillance programs reaching data from the EU. As a consequence of that previous ruling, the first transfer mechanism known as the Safe Harbor was overruled as it did not fulfil the minimum standards of protection for individual’s data.

Concerning Schrems II, the Court invalidated the European Commission’s decision on the EU US Privacy Shield, an international instrument successor of the Safe Harbor, aimed to safeguard data transfers between the United States and the European Union –thereby making any transfer of data on the basis of the Privacy Shield illegal.

The foregoing, as such Privacy Shield, had allowed law enforcement and intelligence agencies in the US to access personal data from EU citizens. Finally, the Court confirmed the 2010’s decision from the European Commission on the Standard Contractual Clauses as a suitable mechanism for data transfers. However, the Court addressed that such mechanism would not guarantee per se the protection of the personal data at stake, but that the data importer and data exporter should assess the conditions of the transfer and provide adequate security measures which shall reach, at least, a level of protection for the data subjects as that required by the Charter of Fundamental Rights and the GDPR.

Schrems II falls into a similar situation as the data privacy cases mentioned above, as it does not directly address a competition law issue, but it certainly describes one dimension of the elements to consider in antitrust investigations and jurisdictional cases: potential undermining of privacy rights as a consequence of the abuse of dominance by Big Tech companies.

 
Closing remarks

The above mentioned are not the only cases where antitrust and data protection converge. For instance, just in December, Facebook was served with two different lawsuits, one from the DOJ of the US and another from the Federal Trade Commission. In China, Ant Group is under threat of divestiture and its sister company, Alibaba, may be soon subject to an inspection by the Chinese Antitrust Authority. A more robust analysis of such dockets will be required, but it certainly readdresses common practices that appear to be a trend amongst the Big Tech. As we start 2021 we already know that these areas of the law will derive into many debates and more than a couple of headlines. And we are looking forward to seeing where this puzzle leads to.

In the cycle of Big Data & Antitrust, we explore the conundrums of competition law in the digital sphere. Our commitment is to rethink antitrust policy and competition laws' interaction with other types of regulations while keeping pace with the latest technological developments. We endeavor to provide insight into normative and enforcement issues of data technology and competition law.