Knowledge Issues Privateness Weblog Reflecting on the UK Inaugural DaTA Convention: Prime 5 Tendencies to Watch as International Regulators Step up Enforcement in Digital Markets
Last week, the UK Competition and Markets Authority (CMA) hosted its inaugural Data, Technology, and Analytics (DaTA) Conference.
The CMA DaTa Conference has been hailed as a milestone as it convened for the first time regulators, data scientists, engineers, tech companies, and academics to discuss evolving challenges in digital markets. The conference coincided with London Tech Week, during which Chris Philp, UK Minister for Tech and the Digital Economy, unveiled a new UK Digital Strategy: the UK government’s vision for regulating digital markets, involving a monitoring framework and outcomes-focused regulation. The government has opened a public consultation, and stakeholders have until September 5, 2022, to offer their views on the proposed approach.
Against this background, here is our selection of the top five trends that stood out over the course of the CMA DaTa Conference.
1. Cross-disciplinary cooperation
As data protection, antitrust, and consumer protection laws expand and converge, there is a need for increased cooperation among the regulators. John Edwards, the UK Information Commissioner, emphasized that to be effective and achieve the right outcomes, regulators need to have a united front and must work closely to resolve potential tensions between different regimes.
In that context, interoperability and data-sharing obligations have been repeatedly mentioned as the main areas of tension. While the two remedies are being often seen as “silver bullets” in the eyes of competition authorities, they also raise a number of privacy and consumer protection issues. For example, contributors suggested that it would be almost impossible for messaging services to interconnect without compromising the end-to-end encryption and that such technical challenges merit a careful case-by-case assessment.
A number of speakers emphasized that to manage this careful balancing act between competition and privacy, the agencies must work closely together. The same sentiment was echoed last week by Commissioner Vestager, who emphasized the importance of maintaining “dialogue with data-protection agencies when data plays an important part of the competition assessment.” In the UK, the Digital Regulation Cooperation Forum (DRCF) — a body that brings together four UK regulators tasked with regulating digital services — will lead the way in such cross-disciplinary collaboration. At the EU level, Commissioner Vestager noted that the High-Level Advisory Group of the Digital Markets Act (DMA) could be a “useful forum” for future coordination.
As noted in a recent article by Sean Royall, co-leader of Sidley’s Antitrust and Consumer Protection practice, “As government agencies are now openly endorsing an interdisciplinary approach, law firms and in-house legal departments can also be expected to encourage closer interactions among antitrust, data privacy, and consumer protection specialists.” Indeed, to fully grasp and implement the ever-evolving suite of data and digital requirements, companies will be required to develop robust cross-disciplinary compliance and regulatory engagement strategies.
2. Cross-border cooperation
In addition to cross-disciplinary cooperation, it was suggested that international collaboration between competition and consumer agencies is imperative to ensure seamless digital regulation. While such cooperation tends to be more difficult, as regulators operate predominantly within domestic frameworks, this is gradually changing as agencies around the world are finding new ways of working together.
For example, Andrea Coscelli, Chief Executive of the CMA, said that the CMA will be looking to conduct joint market studies with competition agencies from other jurisdictions. Similarly, Olivier Guersent, head of the European Commission (Commission)’s competition department (DG Comp), and Benoit Cœuré, head of the French competition authority, reiterated calls to amalgamate EU data and engineering resources to create one knowledge pool for the benefit of all EU Member States.
Another example of successful cross-border collaboration includes a market data screening tool called Bid Viewer, which is being co-developed with over 15 competition authorities around the world. As explained by Jens Kultima, Data Science Specialist at the Danish competition authority, the tool uses computational screening methods including machine learning and artificial neural networks to uncover suspicious patterns in large public procurement datasets.
3. Collaboration between regulators and industry
As emphasized by Bill Kovacic, professor of law and policy at George Washington University, regulatory activity should not be confused with accomplishment. While, in recent years, competition agencies have been going to great lengths to investigate so-called “big tech” companies, they still lack the necessary technological expertise to fully understand the issues at play. In turn, these gaps in knowledge can result in vaguely drafted regulations that are difficult for companies to understand and comply with in practice.
A number of stakeholders noted an asymmetry of information between tech companies and competition authorities that needs to be bridged. For example, Brian O’Kelley, the founder of programmatic advertising technologies such as header bidding, described an initial lack of support from competition and consumer agencies when he tried to highlight privacy concerns in relation to advertising cookies.
To address such shortcomings, contributors suggested that regulators should engage in an ongoing dialogue with industry to develop a better understanding of the underlying technologies and potential issues. In that context, it was emphasized that companies should be allowed to exchange information in a safe environment where they would be able to explain their algorithms, technologies, and objectives. To encourage honest and candid discussion, competition authorities should have incentive mechanisms in place to induce companies to share their competences without fear of sanction.
4. Building technologists into competition and consumer agencies
In addition to liaising with industry, it was reiterated that competition authorities must invest in experienced staff and technologies to be able to engage in effective dialogue with the industry. For example, Andrea Coscelli noted that the public sector is lagging behind in applying digital transformation and automating internal processes. To address this issue, the CMA is planning to include experts in its senior leadership team to ensure that technology plays a greater role in policy discussions and has more prominent presence in the organization.
In that context, Stefan Hunt, Chief Data and Technology Insights Officer at the CMA, described the “technology-led transformation” taking place across competition and consumer agencies globally as they seek to better understand, and make use of, the rapid proliferation of digital technologies that shape our lives. The CMA’s new DaTA unit comprises almost 50 people, with roles covering (i) expert data and technology advice (with a recent emphasis on data privacy technologies); (ii) data acquisition and data science; (iii) data-driven tool developments; (iv) behavioral science, and (v) research, horizon scanning, and case pipeline development. The scope of work undertaken at DaTA is diverse, with recent examples spanning market investigations, merger control, antitrust cases, and consumer welfare studies.
At the EU level, Olivier Guersent noted that the Commission started a forensic IT lab to respond to sophisticated cartels 10 years ago. Today, 57% of DG Comp’s budget targets the digital sector, and this investment is expected to grow in the light of the DMA. The Commission is considering hiring a chief technology officer who would bring “state of the art” external knowledge. Guersent also explained that artificial intelligence and data centers are becoming part of the Commission’s daily work.
Further insight was provided by other in-house data and intelligence units across various international agencies. While some units are relatively new (eg, the Canadian competition authority hired its first data scientist only three months ago), there is a consensus among agencies that this area is a key priority. It was emphasized that these units will not only provide expert insight into digital markets; they also have the potential to change radically the way in which agencies approach their case work, from identifying targeted remedies to evidence building and accelerating investigation timelines. Two potential “gamechangers” were identified, namely the possibility for proactive case identification (as opposed to agencies reacting to complaints or merger applications) and code sharing for idea development among agencies who are eager to collaborate in this area.
Because it is evident that data and intelligence will almost become a critical aspect of the work of competition agencies, it will be important for agencies to ensure they are using these new tools in a robust and defensible manner as well as understanding their limits. In addition, agencies must continue to operate within the ambit of their powers. Finally, there were indications that this new emphasis on data marks a cultural shift within agencies, which will require a conscious effort from investigators to depart from their traditional approaches.
5. Looking to the future
Technology upends industries and swiftly moves on: Regulators face an immense challenge in trying to keep up with its pace and foreseeing the next issue for attention. Indeed, while regulators are only now reacting to issues inherent in e-commerce, ad tech, and social media, industry participants have already shifted their focus to crypto, quantum technology, and the metaverse. The only consensus from commentators who were asked, “What are the most important technologies or trends that competition and consumer agencies should pay attention to?” what that this question is very difficult to answer. As remarked by Benedict Evans, technology analyst and commentator, looking ahead 10-15 years takes you beyond the next product cycle to “entering the realm of science fiction.”
Contributors noted there is an “arms race” for technology and a growing need for agencies to act quickly to protect consumers and clarify regulatory intent. As outlined above, it will be crucial for agencies to collaborate with industry participants to understand and preempt upcoming issues as well as to create a regulatory environment that will foster innovation.