Algorithms and big data are reinventing competition issues but also creating new headaches for regulators dealing with mergers and acquisitions in the tech space, according to Australian Competition and Consumer Commission (ACCC) chair Rod Sims.
Speaking at seminar run by law firm Gilbert+Tobin, Sims said the ACCC is “very well placed to deal with a range of future data issues”, though he noted the commission faces several challenges at present.
Most of these relate to how the ACCC assesses the future impact of mergers between digital companies, particularly where hyperscale operators snap up small, almost unknown players.
In cases where a merger or acquisition would create a “hypothetical monopolist”, the ACCC already looks at what impact a price increase - or a reduction in quality - would have on the market.
But Sims said the ACCC has also been asked to explore other factors when assessing market power, including how joining two companies would change “access to competitively relevant data, innovation driven competitive pressure” and other potential impacts.
“[We] have not yet reached a view on [this],” Sims said.
Sims also said the ACCC - like other regulators - faced challenges in effectively predicting the future when dealing the M&As by hyperscale operators.
It’s an issue also reverberating in UK regulatory circles, Sims noted: that is, how do regulators make a call on whether or not to allow a merger or acquisition to proceed, when it’s unclear in the long term how the arrangement might boost a hyperscale operator’s market power?
“That is a difficult task indeed. Imagine if someone had asked you to predict in 2008 how Facebook would operate in the market in future, for example,” Sims said.
Sims said the ACCC is “very much alive to the significance of data, the implications of the network effects associated with these platforms and the potentially far-reaching consequences of acquisitions of smaller rivals.”
“The broader lesson, of course, is for regulators to retain a very healthy scepticism concerning statements of fact or intention made by merger parties and their advisors,” Sims said.
Having said that, Sims said that many enforcement issues around big data that the ACCC dealt with were “basically fresh incarnations of the same issues that we encounter in market definition and merger assessments.”
“There is nothing new under the sun, after all,” he said.
Sims cited court proceedings against Trivago, which concern how algorithms present search results to consumers.
“In some respects, this is consumer protection 101; there is nothing new in allegations that a company says one thing, expressly or by implication, but does another either overtly or surreptitiously. But the new way in which this conduct is emerging does raise some challenges in terms of identifying matters and investigating the black box,” Sims said.
Beyond algorithms, Sims said the ACCC had taken an enforcement interest in how platforms gathered and used data, the terms and conditions that allowed them to do it, and arrangements for data sharing between organisations.
Sims said the ACCC has “invested in an internal team, our Strategic Data Analysis Unit, staffed with the right expertise and focus to contribute to investigations and assessments.”