Mahima Nair, Threcy Lawrence[i]
The recent ambitious deal between the social media giant Facebook, and the retail giant Reliance Jio caught worldwide attention when Facebook invested $5.7 billion to obtain a 10% minority stake in Jio. Questions have been raised, leading to a scrutiny of the deal by the competition watchdog, Competition Commission of India (“CCI”). While the deal promises seamless integration of different markets, legitimate concerns have been raised by authorities as well as other stakeholders regarding its implications on the competition regime of the country. Such integration will witness the proximate working of Facebook’s messaging app, WhatsApp along with the retail venture of Jio, JioMart. This deal is aimed to provide a modern solution to the e-commerce sector, wherein customers will be able to access the nearest kirana shops working in partnership with JioMart, where they can place orders via WhatsApp.
It should come as no surprise that the combined might generated by the deal is sufficient to drive out the existing competition in the market. The retail sector is flooded with competition including Amazon and Flipkart amongst many others, who have already established importance. But the situation is bound to change once the deal goes through, as it proposes an e-commerce platform that is readily accessible, efficient as well as user-friendly, which will see the participation and partnership of millions of farmers as well as small and medium enterprises. The involvement of India’s most preferred messaging service would play a vital role in ensuring that the process becomes smoother than what is already being offered in the market. Therefore, it is only logical to conclude that competition in the retail sector is bound to increase in the near future.
However, all eyes are currently on the telecom sector, where some of the players may find it increasingly difficult to compete with the expansion brought about by Reliance Jio. The stress generated in the sector could lead to an ouster of players such as Vodafone or Airtel, who already face ample difficulty in generating revenue from the Indian customer base. The expansion poses a threat to their current status as important players in the market due to the burden of litigation costs amongst many other factors. The deal has also created ripples on a global level, presumably due to the involvement of Facebook, as a result of which talks have emerged that Google is planning to buy a 5% stake in Vodafone Idea. This does not seem enigmatic under the present climate, pointing out to the fact that companies have already predicted a possible barrier to entry as a result of the deal, and a hence disturbance of competition in India.
Big Data – An antitrust concern?
While this marks the entry of Facebook into the Indian telecom sector, leading to its titanic expansion, the potential consequences cannot go unnoticed. Similar deals have grabbed attention in the past five years, some of the most popular ones being the Bayer-Monsanto deal or Walmart’s acquisition of Flipkart. While the controlling share in these deals was higher in comparison to the Facebook-Jio deal, why is it that the deal has generated scrutiny for its implications on the competition regime of the country? It is undeniable that the deal brings with it the largest foreign direct investment in the technology sector, but due notice should be given to the colossal acquisition of data that accompanies it, in the form of customer details. Currently, Facebook has a user base of over 328 million in India, apart from its messaging app, Whatsapp, which has a whopping 400 million. As a result of the proposed deal, this vast user base will see an amalgamation with Jio, which is by far the largest telecom service provider in India. The creation of a grand e-commerce platform in the form of JioMart could potentially be used to tap into the large volumes of data accumulated as a result of the deal.
Does Big Data have the potential to disrupt the competition in the market? The answer is yes. An unprecedented amount of data could be used to analyse user preferences as well as patterns, which gives companies an unequivocal advantage over their rivals. Data can be used to alter or modify the preference in the market, which has been emphasised by the CCI in the recent judgment of Re Matrimony. Com v. Google. Such an aggregation of data could potentially give rise to a situation of ‘abuse of dominance’. Having access to a monumental amount of data does not simply indicate the existence of a ‘dominant position’ in the market. Certain other factors also have to be considered, for example, whether the competitors have access to the same data, or whether the data concerned can be analysed and monetised, which may affect its competitors detrimentally. In the present scenario, the chances of abuse occurring are not negligible. The creation of a digital ecosystem that can analyse consumer behaviour can be made possible through targeted advertising on Facebook. This could be supported by the platform that Reliance has to offer, through Deep Packet Inspection (DPI), with the capability to monitor browsing histories. If this is done strategically, it could lead to the commercialisation of a huge amount of data, creating barriers to entry to other competitors. This would cause an appreciable adverse effect on competition (“AAEC”), thereby making the agreement anti-competitive.
An in-depth analysis of the implications of Big Data was made by the EU in the Apple/ Shazam case. As per the judgment, the kind of data being acquired, its uniqueness, and its capability to create barriers for its rivals need to be considered when deciding on the abuse of Big Data. Furthermore, a joint study published by French and German competition authorities points out that abuse of dominance can be attributed to a particular firm’s access to data, the volume of which cannot be matched by its competitors. In the present deal, it should not be forgotten that Facebook is a social media giant, with access to information of all kinds. At this juncture, it is pertinent to take notice of the fact that the German Bundeskartellamt, in a recent judgment ruled that Facebook was liable for acquiring data from users without obtaining fully informed consent. If the same standard is applied to the present deal, the situation becomes mildly precarious, raising a cause for concern.
The way forward
The increasing instances of Big Data need to be taken into account and given the due importance that it requires. Currently, there is no existing data protection authority that can effectively handle competition concerns arising from the mass accumulation of data. However, attention should be drawn to the west, where attempts at modifications or incorporations have been made. Such modifications factor in possession of data while redefining the relevant market, which is integral to determine dominance in the market. Section 19(7) of the Competition Act talks about the “price of goods or services” as a criterion to determine the relevant product market. However as far as digital technologies are concerned, which are multi-sided markets, the price of free online services is often compensated by the unlimited access to personal data. It is undeniable that data forms a vital part in boosting a firm’s market power, as the consumer base and information that comes with it is unparalleled, leading to the enjoyment of an amplified economic power. However, there are various limitation that exist in the legal framework that needs to be carefully navigated through, to ensure smooth functioning of competitive conduct.
The CCI has in recent times, acknowledged the burgeoning importance of access-related market power and its exploitation by various tech giants. This is evident from an understanding of the Google case, wherein the CCI observed how the role of data and its varied usage could create disruptions in the market. However, the CCI has refrained from indulging in a discussion wherein the ramifications of Big Data becomes the central theme. The authority also held in the case of Vinod Kothari v. Whatsapp Inc, that any concerns relating to privacy is outside the purview of the Competition Act, 2002, and should be exclusively dealt with by the Information Technology Act, 2000. Therefore, even though the importance of privacy related competition concerns has been highlighted in the past, no attempt has been made to understand its implications strictly from the point of view of the Competition Act. In the absence of the same, and in light of the collaboration by combining the synergy of Jio’s reach and Whatsapp’s ubiquity, there continues to remain unpredictable behavior as well as an attempt from the perceived dominant entity to engage in anti-competitive conduct, all of which will have to be adequately addressed by the CCI. Perhaps the deal in question could be construed as the perfect opportunity for CCI to lay down a framework to effectively deal with the problem of Big Data as an antitrust concern.
[i] The authors are third year students at NLU Delhi, working as student associates at the Centre for Innovation, Intellectual Property and Competition (CIIPC), at NLU Delhi. They are seasoned mooters, with several publications in investment and commercial arbitration, competition law as well as IPR. For further discussion/comments, they can be contacted via mail, email@example.com, firstname.lastname@example.org This article was reviewed by Bodhisattwa Majumder and Yagnesh Sharma. Preferred Citation: Mahima Nair, Threcy Lawrence, “Facebook-Jio deal: Analyzing the implications of Big Data on the competition regime of India”, Arbitration & Corporate Law Review, Published on 27th June, 2020. Keywords: Facebook-Jio, Competition, Big Data, Anti-trust.