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03

May

2021

When does information become an essential facility?

Written by: Simon Brinsmead

 
 

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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About the Author: Simon Brinsmead

Office of International Law, Attorney-General’s Department (Australia)...

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