Three shades of laws at the Bundeskartellamt

With this title, a reader might expect the revelation of a hot story about the German competition authority. Perhaps, there is one. I am afraid to say that this opinion is not about a love storytelling, but (really) about a beautiful meeting of laws.

On November 12, 2020, the Bundeskartellamt (BKartA) launched a sector inquiry into messenger services. It is defined as services that “enable consumers to send text messages, photos and videos or make telephone calls via the internet”.[1] This follows a similar inquiry published a month ago by their colleagues from the Australian Competition and Consumer Commission (ACCC) in the context of the Digital Platforms Services Inquiry (the report also updates the findings concerning the usage of search and social media platforms).[2]

While the German’s inquiry is only under consumer protection law, the Australian one is under competition and consumer protection laws. Moreover, both studies identify data protection law and interoperability issues. As regards the former, they do not explicitly mention that their inquiries are under data protection law. As regards the latter, the BKartA will investigate “to what extent improved interoperability could play a role in, for example, the consumers’ choice of suppliers which offer better data protection.” However, consumer choice and interoperability are common concerns under data protection, consumer protection and competition laws.

Indeed, consumer choice is not only a consumer protection and data protection objective, but also a competition one. Choice is an important parameter of competition that competition authorities assess[3] and that is significant in the digital economy as the assessment of price is irrelevant in zero-price markets.[4]

Interoperability is mentioned in all expert reports as a solution to promote competition in the digital economy. This is commonly referred as the ability of various products/services to interconnect together (e.g. an iPhone with an Apple watch).[5] Technically, providers agree on a common standard, namely an open standard, and implement this standard to work together. Services are thus able to interoperate with each other. Text messages are a common example of interoperability where consumers can send and receive messages irrespective of country and mobile carrier. In its report, the ACCC identifies a lack of interoperability with standalone services, namely services that enable online messaging as the primary function (e.g. Facebook Messenger, WhatsApp, Telegram, Line, Threema, WeChat, Apple iMessage, Google Chat).[6]

(when you write to your boss/client in this time of lockdown from the Bahamas thanks to interoperability)

In other words, while traditional SMS are interoperable, online messaging services are generally not. A consumer of an online messaging service must then use multiple services to reach a consumer that uses another provider. This is not a problem as long as rivals are in the market and that consumers can multi-home by the ease of switching to another provider.

However, this is not because the market shows these features, as recognized by the ACCC[7] and the Commission in Facebook/WhatsApp,[8] that there are no competition issues. Indeed, in the absence of interoperability, the size of the user base of a provider and the strength of its network effects matter to consumers as they will typically use the one with which they can reach the largest number of users. Multi-homing must therefore be significant (a meaningful share of users multi-home), effective (a meaningful share of users use actively more than one platform), and long-lasting (multi-homing must occur on a relative long period of time (several months)) to mitigate the impact of network effects. Otherwise, when one firm generates most of the activity of the market, the market might tip towards the incumbent and rivals are thus likely to leave the market as noted by the Commission in Microsoft/LinkedIn.[9]

(the tipping effect in the market)

The risk of tipping is a growing concern shared by all competition authorities around the world. In Europe, this is one of the rationales of the New Competition Tool (NTC) and the potential interoperability requirements in the Digital Service Act (DSA) against large online platforms acting as “gatekeepers”.[10] However, it makes no sense to limit interoperability only to large online platforms as consumers expect to interoperate with services irrespective of their size, as this is the case with mobile operators to send or receive messages.

The German’s inquiry will therefore surely raise competition, consumer protection and data protection issues. This interaction has already been highlighted in the Facebook case where, according to the BKartA, Facebook abused its dominant position in the German market for social networks through unfair terms and conditions. Facebook combined user data from Facebook-owned services and third-party websites and applications without users’ voluntary consent.[11] In this case, the authority applied data protection principles as a benchmark to examine the exploitative abusive. Moreover, in its sector inquiry into smart TVs, under consumer protection law, the BKartA found that consumers lack proper information about the collection and use of their data by Smart TVs. The President of the BKartA, Andreas Mundt, stated that “[d]ata protection must become a real competition parameter for smart TVs and other communication-enabled IoT devices.”[12]

It makes no doubt that the BKartA is at the forefront of an interdisciplinary approach between competition, consumer protection, and data protection laws as called for by some competition experts and regulators.[13]

Three shades of laws for a shared issue, namely giving consumers more control over their data as data is the blood of the digital economy.

(A last word from Trump)

[1] Bundeskartellamt (BKartA), press release, Bundeskartellamt launches sector inquiry into messenger services, 11 November 2020 (accessed 16 November 2020).

[2] Australian Competition and Consumer Commission (ACCC), press release, Surge in online messaging use as big digital platforms continue to expand, 23 October 2020 (accessed 16 November 2020).

[3] European Commission (EC), Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings (2008/C 265/07), 18 October 2008, para. 10.

[4] OECD, Quality considerations in the zero-price economy-Note by the European Union, 23 November 2018, p. 2.

[5] Furman, J. et al report, p. 71; Crémer, J. et al report, pp. 58-59; Schallbruch, M. et al report, p. 38; Stigler report, p. 113.

[6] ACCC, Digital Platform Services Inquiry-Interim report, September 2020, p. 2.

[7] Ibid, p. 11.

[8] COMP/M.7217-Facebook/WhatsApp, 3 October 2014, paras. 108-115.

[9] M.8124-Microsoft/LinkedIn, 6 December 2016, para. 343. See also, B6-22/16-Facebook, 6 February 2019, para. 424 and para. 432.

[10] EC, press release, Commission launches consultation to seek views on Digital Services Act package, 2 June 2020 (accessed 17 November 2020). could be through additional general rules for all platforms of a certain scale, such as rules on self-preferencing, and/or through tailored regulatory obligations for specific gatekeepers, such as non-personal data access obligations, specific requirements regarding personal data portability, or interoperability requirements.”

[11] BKartA, press release, Bundeskartellamt prohibits Facebook from combining user data from different sources, 7 February 2019 (accessed 17 November 2020).

[12] BKartA, press release, Bundeskartellamt demands better information for consumers on the data processed by smart TVs within the scope of its competencies in the area of consumer protection, 1st July 2020 (accessed 17 November 2020).

[13] Stucke, M. E. and Grunes, A. P., Big Data and Competition policy, Oxford University Press, 2016, pp. 325-334. European Data Protection Supervisor (EDPS), Privacy and competitiveness in the age of big data: The interplay between data protection, competition law and consumer protection in the Digital Economy, March 2014, pp. 37-38.


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