Intellectual Property and Competition Law

Lorena Tealdo

• Publisher: Youcanprint
• Year: 2021
• ISBN:
  9791220317436
• Topic: Law
• Subtopic: Intellectual Property Law
• Index: Law

It is important to say that innovation influences the market and its operators, especially about competition conditions. One of the most significant technological advances relates to the possibility of capturing a huge amount of information and the rapid processing thereof (two of the main features that make up the phenomenon known as big data). This not only entails the emergence of specialised operators in these activities, but also makes a "data economy" possible. In this regard, it expands the profitability of business models based on data and gives more strategic value to the collection thereof. The increased possibilities of obtaining revenue from the information lends greater efficiency to the strategy of setting a price of zero in one of the markets on which platform-type (two-sided) business models depend. However, the market in which an operator offers its service at zero cost is not free from possible competition problems in parameters other than price (significantly, quality: whether understood as adequately classified information or the level of privacy offered to users). Therefore, the competition authorities must necessarily abandon a price-centric perspective and enter into an assessment of other parameters already foreseen in the Competition Act. Some of the most recent and significant changes that technology has stimulated in the economy have included the appearance of multiple operators that base their business model on the processing of information and can access it thanks to (i) increased digitisation (conversion of physical assets into information), which has enabled digital interactions (unlike physical interactions, they leave a record – information), and (ii) a large volume of information (Internet and sensors). These changes have not only allowed the proliferation of business models based on information processing but rather, in particular, they can be found in those operators that have achieved the most significant success recently (from Google to Facebook, WhatsApp or LinkedIn, through to Uber and Airbnb). From the industrial revolution and until well into the twentieth century, the most important competitive advantage of economic operators was based on their ability to produce and distribute goods or physical products. However, in recent decades, a particular phenomenon has emerged of the transformation of physical goods (atoms) into information (bits). In other words, the physical format is becoming less relevant while the importance of data continues to grow. A trend which, far from disappearing, it seems will become ever more entrenched, with the eventual widespread use of 3D printers. Thus, the most important competitive advantage appears to have moved from production and distribution to information (data) and its management. Multiple economic operators, aware of the growing importance of data, have invested in aspects related to it, particularly in its collection and processing. This has led to the phenomenon known as big data, characterised by the "4 Vs": volume, variety, velocity (of processing) and veracity. In any case, without addressing at this time privacy considerations, data collection requires an investment meaning that any operator that has such data enjoys a competitive advantage. These large data sets are becoming a core asset in the economy, fostering new industries, processes and products and creating significant competitive advantages.

1. Competition Policy, Tech, and the Data Economy

 

1.1 Catalan      Competition      Authority,      THE      DATA-DRIVEN      ECONOMY. CHALLENGES FOR COMPETITION

 

It is important to say that innovation influences the market and its operators, especially about competition conditions.

 

One of the most significant technological advances relates to the possibility of capturing a huge amount of information and the rapid processing thereof (two of the main features that make up the phenomenon known as big data). This not only entails the emergence of specialised operators in these activities, but also makes a “data economy” possible.

 

In this regard, it expands the profitability of business models based on data and gives more strategic value to the collection thereof. The increased possibilities of obtaining revenue from the information lends greater efficiency to the strategy of setting a price of zero in one of the markets on which platform-type (two-sided) business models depend.

 

However, the market in which an operator offers its service at zero cost is not free from possible competition problems in parameters other than price (significantly, quality: whether understood as adequately classified information or the level of privacy offered to users).

Therefore, the competition authorities must necessarily abandon a price-centric perspective

and enter into an assessment of other parameters already foreseen in the Competition Act.

 

Some of the most recent and significant changes that technology has stimulated in the economy have included the appearance of multiple operators that base their business model on the processing of information and can access it thanks to (i) increased digitisation (conversion of physical assets into information), which has enabled digital interactions (unlike

physical interactions, they leave a record – information), and (ii) a large volume of information

(Internet and sensors).

 

These changes have not only allowed the proliferation of business models based on information processing but rather, in particular, they can be found in those operators that have achieved the most significant success recently (from Google to Facebook, WhatsApp or LinkedIn, through to Uber and Airbnb).

 

DIGITISATION:

From the industrial revolution and until well into the twentieth century, the most important competitive advantage of economic operators was based on their ability to produce and distribute goods or physical products. However, in recent decades, a particular phenomenon has emerged of the transformation of physical goods (atoms) into information (bits). In other

words, the physical format is becoming less relevant while the importance of data continues to grow.

 

A trend which, far from disappearing, it seems will become ever more entrenched, with the eventual widespread use of 3D printers.

 

Thus, the most important competitive advantage appears to have moved from production and distribution to information (data) and its management.

 

Multiple economic operators, aware of the growing importance of data, have invested in aspects related to it, particularly in its collection and processing.

 

This has led to the phenomenon known as big data, characterised by the “4 Vs”: volume, variety, velocity (of processing) and veracity.

 

In any case, without addressing at this time privacy considerations, data collection

requires an investment meaning that any operator that has such data enjoys a competitive advantage.

 

These large data sets are becoming a core asset in the economy, fostering new industries, processes and products and creating significant competitive advantages.

 

Some have argued that data is like crude oil (a basic input, perhaps essential, for the functioning of the economy as a whole and of significant economic value).

It should be noted that a consideration of data as a basic or essential input has very significant legal consequences.

 

In particular, if the data are effectively conceptualised as an essential element, the competition authorities may, under certain circumstances, impose on whoever has such data the obligation to ensure access to such information for their competitors.

 

In order to consider this an essential input, the following circumstances must be present: (i) absence of alternativesand (ii) obstacles of a technical, legal or economic nature which make it unreasonably difficult for any other operator to compete with whoever holds the key input if it does not obtain access to the input that is in its power22.

 

However, although the data/oil simile seems correct based on the characteristics given in relation to their importance, it does not adequately capture other elements that distinguish data and which are, perhaps, the cause of some confusion. Thus, unlike oil, data carried with it the problem of privacy, and, furthermore, information is a right, not a rival.

 

That is, collection by a particular company does not prevent the collection of the same information by a competitor, unlike oil, which can only be consumed by one company and never two at once.

 

However, the “non-rivalry” of data does not prevent those who obtained it from excluding or attempting to exclude competitors from their data store. For this reason, an increasing number of merger operations can be explained by the collection of information.

 

 

 

 

 

 

The value of the data essentially derives from its later use; usually for advertising purposes.

 

Consequently, in an economy increasingly led/characterised by data, it is becoming more common to see operators offering free services and goods with the aim of attempting to obtain the largest number of users and interactions possible, while bearing the losses arising directly from this strategy, aware that they may overcompensate them from the exploitation of the data obtained.

 

In this scenario the price is significant; at least in relation to one side of the market – in which free goods or services are offered – on which these platforms operate (which as stated are relatively common and frequent structures).

 

Data are also crucial for network effects.

 

1.2 Enter the data economy: European policies for a thriving data ecosystem

Data are defined as information organised for use by information technologies.

Between 1550 and 1750, Europeans experienced an ‘information explosion', during which they

complained of feeling overwhelmed by data.

Global explosion of data: More data is being collected or generated, at new scales and by new actors. Huge amounts of data are now produced daily: some of this is linked to new societal uses of technology, such as:

- devices quantify individuals' health,

- social media platforms record the minutiae of daily life,

- companies across sectors produce data to improve their products and processes,

- the ‘Internet of things’ (connected cars, utility meters and...