Some 45 per cent of Irish people now access news through Facebook, according to a survey published this week by the Reuters Institute. There is no charge, but is it really free? And are we as consumers getting a good deal?
In the online world, various services are offered to users for free. At least, that is the common perception. For example, email accounts, maps, social media are provided without monetary remuneration. Instead of our money, service providers collect, analyse and store data related to how we use such services.
Sometimes, especially in case of social media platforms, this also includes our personal data. Typically the collected data is used to improve the service and for advertising purposes.
The latter is the key to the business model. These “free” services are financed through advertising. The more the service providers know about you, your preferences and needs, the better they can target ads at you. Moreover, sometimes services providers also sell the collected data to third parties. Therefore, the data we provide and generate as users is valuable. Companies know how to and do monetise it. That is how they make money.
As pointed out by the EU competition commissioner, Margrethe Vestager, the provision of services in exchange for data are "business transactions, not free giveaways. So consumers have a right to be treated fairly, just as they would if they had paid in cash."
The question is then whether we, the consumers, are getting a good deal. Are we being exploited? Irish and European competition law prohibits dominant firms from charging excessive prices. Although the online service providers do not charge us in pounds or euros, they collect data.
It may well be that they collect too much of it in violation of competition law. It would be a challenging task to establish how much data is fair to collect, but it is not much different from finding out how high a price must be to be considered excessive. We are just substituting money with data.
Not surprisingly, cases involving the question of fair prices are troublesome. Although competition law prohibits dominant firms from charging excessive prices, at the EU level few cases of this nature have been brought. The domestic enforcers are more active in this area.
Data protection breach
The online providers may be in breach of law also by collecting users’ data beyond their consent. This would constitute a breach of data protection laws. In some cases, it may also constitute a violation of competition law. By collecting more data about users, a dominant firm may be illegally gaining a comparative advantage over its actual or potential competitors, and in this way, it may be further strengthening its already significant position in the marketplace.
Similar allegations were recently raised by the German competition authority the Bundeskartellamt (BKA) in relation to Facebook. In March the BKA opened proceedings looking into the alleged abuse of a dominant position by Facebook on the market for social networks. The German competition watchdog suspects that Facebook’s terms and conditions of service (T&Cs) are in violation of data protection rules.
While not all such infringements are relevant from a competition law perspective, in this case the BKA considers that by forcing users to accept its unlawful T&Cs Facebook breached competition law.
The theory is that Facebook did not adequately inform users about the type and scope of the collected data and its potential use. The firm was able to do so thanks to its dominant position on the market. In other words, thanks to its position, consumers could not simply say no to the T&Cs as there was no real alternative to Facebook.
The German Facebook case is controversial. Commentators in the US are likely to argue that Europeans are yet again picking on US tech firms. However, the fact is that there are some important substantive differences in competition and data protection laws between the US and the EU. Commenting on the BKA’s new proceedings, commissioner Vestager said “it is good it is being done. We can all learn from this case.” The BKA is known in
for testing the waters.
Regardless of the outcome of that particular investigation, it highlights some important questions sitting on the intersections of competition law and data privacy. They call not only for enforcement and remedial action in appropriate cases, but also for a broader public debate.
We, as consumers, should be aware of the nature of the online trade-offs we are facing when using “free” online services. We need to understand how we pay for them and what the price is. The respective agencies, on the other hand, need to have the necessary tools to make sure we are not being ripped off. Competition law is one of the systems that is in place to protect consumers from such exploitation.
Marek Martyniszyn is a lecturer in law at Queen's University Belfast