Can a digital platform like Google Search,
Facebook, Instagram, Twitter or Uber become an essential facility, a sort of
information infrastructure? Digital platforms of various kinds are becoming
indispensable business partners for a plethora of businesses, including
proprietors of news content. Dominant platforms appear to be in a position of
‘co-opetition’ with news content providers, collaborating to make news content available
to users, e.g. through Google News or Facebook News, but also competing with content
providers to attract advertisers. Negotiations between dominant platforms and
content suppliers over access to content (if they occur) tend to heavily favour
the former.
Over time, the erosion of advertising
revenues could threaten the viability of traditional journalism – especially
for local news – which could in turn undermine the free, informed speech
necessary to maintain a democracy. Australia, for example, recently concluded
that the inequality of bargaining power between some very dominant platforms
and news media businesses justified the introduction of a statutory bargaining
regime, backed by mandatory arbitration if the parties cannot come to terms.
The EU has moved to address broadly similar concerns through clarifications to
its copyright regime.
On closer examination, the market power of
digital platforms derives from a variety of sources – network effects (we tend
to spend more time on a social media platform where our friends are); quality
of user experience; first mover advantages; but also, increasingly, from
platforms’ abilities to collect and interrogate vast quantities of user
engagement data. Control over data can buttress platform dominance in a
two-sided market: more and better user data means a more intuitive interface on
the consumer side, and better-targeted advertising on the producer side. Dominance
of both sides of the market can ‘lock in’ consumers and advertisers, and make
it more difficult for either group to switch to a rival platform.
Might this make data an essential facility? And
if so, should data monopolies be required to hand it over to their competitors
(or their co-opetitors) on reasonable and non-discriminatory terms? These are
thorny questions which are only beginning to be asked, but one threshold issue would
be who owns the data in the first place – is it the platform who collects it,
or the human whom the data concerns? Privacy laws will be of particular
relevance here – perhaps the data should be given to the user instead.
Another possible example of essential information
can be seen with so-called ‘rights to repair’. As computer and network
technologies become embedded in more and more consumer products, buyers are seeing
their repair options narrowing because independent repairers lack the technical
information necessary to carry out repairs safely. Repairs then become reserved
to the manufacturer and its affiliated repair houses, giving rise to concerns
of reduced competition, increased repair prices, consumer safety problems
arising from backyard repairs, and mounting waste from discarded products that
could have been fixed. Right to repair regimes for particular products (e.g.
motor vehicles) have thus far appeared in the EU, Australia, and in the United
States state of Massachusetts.
How can an access regime for essential
information be justified in public policy? One analytical lens comes from the
so-called ‘essential facilities doctrine’ in competition law. Although it
originates in Anglo-American law, the modern doctrine is best reflected in EU competition
law: where a firm with a dominant market position abuses that position to the
detriment of the competitive process and of consumers, including by refusing to
supply an indispensable product, service or suite of information, the law will
intervene, including by imposing a mandatory duty to supply on the dominant
firm. Some EU cases, including Magill TV Guide/ITP, BBC and RTE and the Microsoft
case, have required
dominant firms to share essential information with their competitors. In Microsoft,
for example, the eponymous defendant was required to supply protocol
specifications to other market players, to enable rival server operating
systems to interoperate with Microsoft’s dominant personal computer operating
system.
If regulators are disposed to mandate access
to essential information, one issue to address will be the assertion of
intellectual property – including patents, copyrights, designs and trade
secrets. In Microsoft, the European
Commission and Court of First Instance considered that Microsoft’s patents,
copyrights and trade secrets were not, in the circumstances, capable of
insulating Microsoft from liability for abuse of its dominant market position. More
recently, IP protection has been raised by industry participants as a reason
not to regulate digital platforms, or to refrain from introducing legislated rights
to repair.
Finding the proper balance in IP rules (including at the international level) between creators and users of essential information, and between incentives for initial and follow-on innovation, will be vital to the development of carefully calibrated measures to address digital dominance, including refusals to supply essential information.
The views expressed here are the personal views of the author, and do not necessarily reflect the position of the Australian Government.
Essential Interoperability Standards by Simon Brinsmead
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