COMPETITION IN THE INFORMATION AGE

By James Mellsop, Mark Ponder, Veronica Postal, and John Scalf¹

Data is playing an increasingly central role in the modern economy. The large-scale collection and analysis of data has allowed firms to become more efficient while providing customers with improved product quality at lower prices. It has also allowed firms to tailor their product offerings to better meet the needs of disparate consumer segments. However, while acknowledging the procompetitive uses of this resource, antitrust authorities around the world have also raised concerns about its potential to harm competition. In this article, we examine three theories of harm that have emerged from recent antitrust enforcement in the United States: data as a strategic input for product development, the anticompetitive misuse of consumer data, and access to competitively sensitive data to unfairly disadvantage rivals. We explore the broader context of the economic principles underpinning these theories, and the related case law.

The digital revolution that has characterized the Information Age has resulted in a substantial share of economic activity moving online. This shift has been amplified by innovations in computer science and information technology over the past two decades, as mobile technology, more powerful computers, more sophisticated algorithms, and artificial intelligence ("AI") have become widely available and incorporated in many products adopted by consumers and firms. This transformation in the key locus of economic activity has been accompanied by an unprecedented expansion in the availability and usefulness of data. Many firms have started collecting and processing vast amounts of data, relying on the insights provided by these data to guide their decision making. Data affords firms a better understanding of what consumers demand, allowing firms to produce more desirable products at cheaper prices. However, concerns have been expressed that data can potentially also become an avenue to unfairly disadvantage rivals or a risk to consumer privacy. While the economic literature has not formed a clear consensus on how the unprecedented availability of data in the digital economy has impacted market structure or consumer welfare, regulators and policymakers have taken notice, and have started more closely scrutinizing how firms and digital platforms use data.

In his Executive Order on Promoting Competition in the American Economy, former U.S. President Joe Biden called on his Administration to "enforce the antitrust laws to meet the challenges posed by new industries and technologies, including the rise of large Internet platforms, especially as they stem from serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects."² Furthermore, the executive order called on the U.S. Federal Trade Commission ("FTC") to address "persistent and recurrent practices that inhibit competition" by exercising its statutory rulemaking authority specifically with regard to "unfair data collection and surveillance practices