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EU faces tough battle over Big Tech's hold on data

European regulators have set their sights on cracking open the data silos that have helped to reinforce the power of the dominant tech companies.

Article originally published by The Financial Times. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

It is 10 years to the week since Brussels began its first competition investigation aimed at restraining the burgeoing online power of Google. If you wonder what the EU trustbusters have achieved in all the cases and the years that followed, you are not alone.

The search company’s rivals in that first case — into online comparison shopping — still complain about the ineffectiveness of the supposed “remedies” the EU ordered, and Google’s appeal against a €2.4bn fine was only heard this month. In the meantime, the company’s revenues have grown sevenfold and its influence on online activity continues to grow, seemingly unrestrained.

That makes the new data-sharing principles laid out by the EU this week all the more important. European regulators have set their sights on cracking open the data silos that have helped to reinforce the power of the dominant tech companies. But while forcing more sharing of information to open up digital markets may sound like a good thing, it will be extremely difficult to break the hold of the dominant tech platforms.

What Brussels has sketched out is a two-pronged attack. One targets classes of data that can be unlocked to ensure competition in very specific, high-value markets that might otherwise fall under the sway of Big Tech. There is a direct parallel here with personal banking information, which must already be shared under European rules.

The clearest example concerns the many different types of health and wellness data. Someone with a hoard of personal information generated by a fitness tracker, for instance, might want to make that information available to another health app. With the right level of user control, this could open the way for innovative companies to build new services on top of the digital economy’s most important raw material.

This is all well and good, and a Data Act planned for next year will lay the ground rules. But it does not deal with a more fundamental problem of Big Tech’s data power, and one which will require action on a different front.

As the EU described it this week, the largest online platforms derive huge benefits from the “richness and variety of the data they hold”. Their power comes from the range itself, rather than any single class of data, with different types of information being combined to yield insights. Volume also matters: the power of big data lies in being able to discern patterns and train machine-learning models.

Opening this kind of data up to promote greater competition would be neither easy, nor particularly desirable. Much of the data collected by Big Tech concerns how individuals interact with their services, or other information gleaned from observing online behaviour. It will be legally challenging to force companies to hand over data like this that they generate themselves, and rightly consider a valuable corporate asset. The same goes for the insights they derive from their observations.

Trying to free up this kind of information to promote greater competition also risks running headlong into the rival goals of privacy regulators. Europe is less than two years into its GDPR crackdown on the permissive data-sharing economy — something that risks hampering freer competition.

This is clearest in the limits that have been put on the use of third-party data, or information that a company has not collected itself. Such rules play into the hands of a company such as Google that has no shortage of first-party data, thanks to its ownership of several services that each reach more than 1bn people. The search company said recently it plans to outlaw third-party cookies in its Chrome browser within two years. That may give users more confidence they are not being tracked, but it will make life much harder for Google’s rivals.

Even if it was possible to force Big Tech to share the troves of data required to yield deeper insights, there are other reasons that consumers might not see it as welcome. The only thing more sinister than a giant tech company that knows everything about you is the thought that half a dozen giant tech companies will know everything about you — and they will all be fighting for your attention.

Brussels says it will deal with this wider data issue in the context of its broader review of the dominant online platforms. That is a looming battle that is starting to assume titanic proportions — though past experience suggests that, when it comes to limiting the power of Big Tech, it might be best not to expect too much.

richard.waters@ft.com


This article was written by Richard Waters from The Financial Times and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by The Financial Times. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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