The Digital Competition Expert Panel – announced by the UK government in September 2018 to better understand the state of competition in the digital economy – has published its report. ODI Director of Public Policy Peter Wells reflects on its recommendations and sets out other important factors the government should keep in mind when considering data's role in creating competitive markets
By Peter Wells
The Unlocking digital competition report recognises, as we highlighted in our response to the panel, also known as the ‘Furman Review’, that by increasing access to data regulators can encourage competition and make markets work better for consumers.
As it responds to the review's recommendations, set out below, we believe the government also needs to recognise some factors outside the scope of the review:
- Every sector relies on data: it is held both by the large technology firms everyone focuses on and by more traditional businesses
- Access to data has a role beyond promoting competition: there are wider societal and economic benefits of increasing access to data
- Other measures will be needed to create competitive markets
- When finding a balance between ensuring data access and data protection, there can be unintended side-effects which should be avoided
The Furman Review's data recommendations
The review recommends that a new Digital Markets Unit (DMU) – which could sit within an existing regulator, such as the Competition and Markets Authority – should establish a code of conduct based on a core set of principles.
If a firm breaches this code, or if it was decided that action needed to be taken for other reasons, then the unit would intervene to increase access to data to increase competition and raise market dynamism.
The review says that the DMU could use approaches like open standards, data portability, open data as well as data that is shared through collaborative data access models like data trusts. Data trusts provide independent stewardship of data for the benefit of a group of organisations, communities or people.
We were very glad to see that the report avoided the false promise of individual ownership of data to solve competition problems. Both we and a growing number of organisations, like the Royal Society, think that individual ownership would be unhelpful. Instead nations need to focus on strengthening rights over data.
These make up a good mix of approaches, building on lessons that we have seen in other sectors such as Open Banking. When the ODI helped to start the Open Banking movement in the UK we could see that greater access to data would help to both increase competition and lead to better services for consumers. The Competition and Markets Authority (CMA) recognised this when they mandated the creation of an open banking standard in 2016. This was a forward-looking move which has been increasingly followed by countries around the world. PWC recently reported that by 2022 64% of UK adults are expected to be using services that have been developed because of the increased access to data that the standard allows.
Government needs to think about more than competition
The review was asked to focus on what people sometimes refer to as ‘the digital sector’ – things like social media, e-commerce, search, and online advertising – but access to data is also a competition issue in other sectors.
This does not necessarily mean regulation: there are many roles that government can play, from convening the development of open standards – such as Ofgem's current work in the energy sector or the Open Active initiative in the physical activity sector – to stimulating innovation and raising productivity – such as the European Union-funded Datapitch programme. But in some sectors incumbents will need to be regulated in order to empower people as consumers, citizens and creators. We expect that the Smart Data Review led by BEIS will tackle this issue.
The report is focused on competition policy, and so it discusses the concentration in digital advertising markets, but it does not mention that data about advertising is hard to access, which hinders efforts to understand how data is being used.
What political adverts are being targeted at which people? What impact those adverts are having on people and on our democracies? Surely good consumer welfare needs good democracy? These are the sorts of important insights that we cannot know because we cannot access the data.
There are many other problems that academic researchers and civil society are trying to tackle, such as online bullying, that would be much easier to address with greater access to existing data held by the private sector.
But just as increasing access to data won't immediately build better democracies, neither will it necessarily increase competition or help all consumers. It could even make large firms more powerful as they have the resources to take advantage of new data sources.
Levelling the playing field will require other measures, such as better taxation regimes; investigations into whether firms are using data to carry out anti-competitive conduct; support for new entrants to gain the skills they need; support for people to start new firms that challenge incumbents; and targeted interventions to create sustainable services for consumers that the market sometimes neglects – such as vulnerable consumers or the digitally excluded.
As the team here at the Open Data Institute have learnt over the years, increasing access to data can lead to great benefits but it can also lead to harm to individuals and communities. We need to carefully experiment with approaches such as data portability, particularly where it involves more sensitive data such as social media, to discover what works and what doesn't.
We need to learn how to monitor the results and evaluate impact before deciding what to do next. Data will not only be used by innovators creating wonderful new services, it could also be used by malicious people who are comfortable with harming people to achieve their own objectives.
The UK can show leadership in making data work for everyone
Other governments are exploring similar measures to those recommended by the review. The European Union’s competition commissioner, Margrethe Vestager has said that increasing access to data can help. In the United States, the next presidential election could be dominated by debate over how to regulate technology. The Digital Competition Expert Panel's report could allow the UK to lead the way in trialling new methods at scale, just as the UK's CMA previously led the way on Open Banking, but the UK government will need to act fast and collaborate with others to get this right.
Our vision is of a world where data works for everyone. As data moves from being scarce and difficult to process to being abundant and easy to use there are a lot of lessons we need to learn, such as how to create a healthy private sector while protecting people from harm.
We strongly believe that by working together we can learn those lessons and use data to make people's lives better, and help our nations and world adapt to the 21st century's challenges.