Recent M&A Transactions Involving Big Data Prompt Worldwide Antitrust Concerns

Recent large-scale transactions involving Big Data, like AT&T’s $85.4 billion merger deal with Time Warner – approved by Time Warner shareholders February 15 – and Microsoft’s roughly $26 billion acquisition of LinkedIn last year, have prompted worldwide concern amongst antitrust professionals. among some academics and policymakers.

Regulators and academics fear that big internet companies could monopolize their unique datasets.  A company that possesses sole access to a unique set of information could employ complex algorithms to gain key market and logistical insights.  These insights can confer substantial competitive advantage.  As these companies continue to leverage their large capital to strategically target data-rich companies, they have the ability to dominate both current and new markets, thus driving competitors out while barring entry to newcomers.  If unique datasets become consolidated into the hands of a select few, many fear that other companies (even those with better algorithms) will no longer be able to gleam the necessary insights to remain competitive.

European regulators have been particularly active in examining competition issues posed by big data.  Last November, for example, a meeting was organized by the Organization for Economic Cooperation and Development to discuss competition policies regarding big data.  Also, reports issued from both the European Commission and the British House of Lords examined how digital “platform” companies’ data practices shape the economy. Similarly, U.S. antitrust authorities have also begun to analyze big data issues pertaining to competition, though little action has been taken so far.

There may be difficulty, however, in enforcing competition laws against data monopolies, especially in the United States.  Some have pointed out that the very concept of a Big Data monopoly poses unusual antitrust legal questions.  Many internet services, for instance, are free or low cost, and therefore price is often not adversely affected.  Moreover, better user services and marketing schemes due to big data may be perceived as a public benefit, especially in the absence of any clear monopolistic behavior.  For example, IBM intends to utilize its trove of unique medical data, such as obtained last year from the company’s $2.6 billion acquisition of Truven Health, to improve the healthcare industry.

Nevertheless, as a small handful of tech companies lay claim to greater amounts of precious data, enhanced regulatory scrutiny will likely ensue.  As James Phillips, vice president for business applications at Microsoft, indicated, the combination of consumer data from LinkedIn, Office 365, and Bing will produce “a set of insights that [Microsoft] think[s] is unprecedented.”

Dina Bass et al., Salesforce Urges Microsoft-LinkedIn Probes Amid AI Concerns, Bloomberg (Sept. 30, 2016), https://www.bloomberg.com/amp/news/articles/2016-09-29/salesforce-to-urge-regulators-to-scrutinize-microsoft-linkedin?client=safari.

Barb Darrow, Why IBM is Dropping $2.6 Billion on Truven Health, FORTUNE (Feb. 2, 2016), https://www.google.com/amp/amp.timeinc.net/fortune/2016/02/18/ibm-truven-health-acquisition/%3Fsource%3Ddam?client=safari.

Joshua Jamerson, Microsoft Closes Acquisition of LinkedIn, The Wall Street Journal (Dec. 28, 2016),https://www.wsj.com/amp/articles/microsoft-closes-acquisition-of-linkedin-1481215151?client=safari.

Eric Kroh, AT&T-Time Warner Deal to Test Big Data Antitrust Theories, Law 360 (Oct. 28, 2016), http://www.law360.com/articles/856990?sidebar=true.

Steve Lohr, Data Could Be the Next Tech Hot Button for Regulators, The New York Times (Jan. 8, 2017), http://www.nytimes.com/2017/01/08/technology/data-regulators-google-facebook-monopoly.amp.html?client=safari.

Kira Radinsky, Data Monopolists like Google Are Threatening the Economy, Harvard Business Review (Mar. 02, 2015), https://hbr.org/2015/03/data-monopolists-like-google-are-threatening-the-economy.

Mike Snider, Time Warner shareholders OK AT&T merger, USA TODAY (Feb. 15, 2017), http://www.usatoday.com/story/tech/talkingtech/2017/02/15/time-warner-shareholders-ok-t-merger/97966564/.