Support for the beleaguered Data Protection Regulation has come from an unlikely source; the Vice President of the European Commission responsible for Competition Policy. In a speech delivered yesterday, he has implied that mergers between organisations which then combine databases of personal information could raise competition concerns and that the failure to adopt the Regulation’s “right to data portability” will definitely do so.
With respect to the latter point, Vice President Joaquín Almunia, said
- “I believe that a healthy competitive environment in these markets requires that consumers can easily and cheaply transfer the data they uploaded in a service onto another service.”
- “The portability of data is important for those markets where effective competition requires that customers can switch by taking their own data with them.”
- “In those markets that build on users uploading their personal data or their personal content, retention of these data should not serve as barriers to switching. Customers should not be locked in to a particular company just because they once trusted them with their content.” (Full speech – see references)
This stance has also been accepted by the UK Government. In the Government’s Impact Assessment (reported last blog) is the following statement: “Data portability is also expected to lead to economic benefits by lowering prices and increasing competition for services, in line with the Government’s midata initiative” (see references).
In that last blog, I also reported that the costings the UK Government had calculated were “suspect” . Sadly, in the Assessment, the economic benefit of this portability right in relation to improved competition, although expressly identified, has not been “monetised” (a horrible word for “estimated”); this means that a major economic plus for the Regulation has been ignored. This casts further doubt on the reliability of the Government’s costings in the Assessment.
With respect to competition concerns arising from the massing of personal data via a merger, Commissioner Almunia implied that the jury is out. He noted that “So far DG Competition has not had to handle cases where the accumulation or the manipulation of personal data were used to hamper competition” but that it had looked at “the merger between Google and Doubleclick in 2008”.
The Commissioner noted that that “The effect of the increase in the amount of personal information obtained by the merger entity was considered” but “Following an in-depth investigation, the Commission eventually cleared the transaction on competition-law grounds”.
Note that any future merger, where dominance in the processing of personal data arises, could raise competition issues. So neo-monopolies like Google watch out, perhaps.
Last week, the Managing Director of John Lewis, Andy Street, said Amazon would “out-invest” and “out-trade” UK companies if the Government does not take action to force the online retailer to pay tax fairly in Britain. Clearly, “there is less money to invest if you are giving 27pc of your profits to the Exchequer” Mr. Street told Sky’s Jeff Randall.
Mr Street continued: “if you are domiciled in a tax haven you’ve got much more [money]. They [Amazon] will out invest and ultimately out trade us. And that means there will not be a tax base in the UK” and that both HMRC and the Treasury had to look at ensuring that money “earned in a particular country” was “taxed in that country”.
I think this misses the point. What is likely to happen is that after a hard day’s work, more and more customers will window shop on the Internet for the best deal. This will be picked up by the behavioural surveillance advertising industry which will then send messages to those that pay them (e.g. the likes Amazon). In other words, Amazon and other retailers are far more likely to pick up the customer’s wants and needs well before John Lewis and traditional retailers have a sniff.
That is why Amazon can “out-invest” and “out-trade” the competition in the high street; taxing Amazon will do little to redress that advantage.
References
Download the the Vice President’s speech here: Download BLOG_COMPETITION SPEECH
Details of the “midata” initative: see http://www.bis.gov.uk/policies/consumer-issues/consumer-empowerment/personal-data.
Impact Assessment at end of last blog: http://amberhawk.typepad.com/amberhawk/2012/11/data-protection-regulation-cost-of-compliance-has-the-uk-published-suspect-numbers.html
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