Microsoft/LinkedIn: could Big Data be a Big Problem?
On 14 October 2016, Microsoft's $26.2 billion acquisition of LinkedIn was notified to the European Commission for merger clearance. The EU regulator's initial deadline to decide whether to approve the deal or refer it for in-depth investigation is 22 November 2016.
Having already been approved by competition authorities in the US, Canada and Brazil, the deal might be expected to have an easy passage through the Commission, there being little obvious overlap between Microsoft's existing businesses and the ubiquitous professional networking platform provided by LinkedIn. Such "conglomerate" mergers rarely trouble the competition regulators.
But could there be a hitch arising from the Commission's growing interest in "Big Data" as a possible source of competition concerns?
LinkedIn holds a vast collection of data on its 450 million members worldwide. Margrethe Vestager, European Competition Commissioner, said shortly after the deal was announced in June 2016 that in any review of the merger the Commission would look at whether “the data purchased in the deal has a very long durability and might constitute a barrier for others, or if they can be replicated so that others stand a chance to enter the market”. Salesforce, which lost out to Microsoft in bidding for LinkedIn, has been warning publicly that Microsoft would “deny competitors access” to LinkedIn’s “one of a kind dataset”. Microsoft is reported to be arguing that the LinkedIn data is public today and that it wants to make that data useful in lots of new ways.
On the face of it, the size and replicability of LinkedIn's dataset should not of itself be an issue in the merger review. Merger control is concerned with whether the combination of the parties' assets and businesses would give rise to competitive harm, normally through the creation or strengthening of a dominant position. If Microsoft holds no or only limited comparable data to LinkedIn, the merger should not in principle improve or strengthen LinkedIn's market position.
Less immediately obvious effects could be felt though if the deal would alter Microsoft's ability or incentive to exclude or harm rivals in other markets in which it is active. Salesforce argues that the merger will enable Microsoft to use LinkedIn's dataset to enhance its own products, such as Microsoft Office, while preventing competitors from accessing and using the same data.
The Commission's enthusiasm for Big Data arguments in this case is a further sign of growing concern amongst competition regulators that the holding of unique datasets, often by internet and technology companies, might give rise to market power and possible threats to competition.
The issue has generated a lot of discussion and debate in the last year or so. In addition to speeches by Margrethe Vestager, for whom this appears to be a favourite topic, there have been reports and studies on Big Data and related topics published by the UK Competition & Markets Authority (June 2015), the UK’s Financial Conduct Authority (November 2015), the European Commission (“Competition in a Big Data World” – January 2016), and a joint paper by the French and German Competition Authorities (May 2016). Shortly after publication of the May 2016 joint paper, the French competition authority commenced a sector inquiry into display ads in the European online advertising market, which could lead in due course to antitrust enforcement in France. The German competition regulator is also investigating whether Facebook's privacy policy represents an abuse of market power.
All agree that the holding of a unique dataset could in theory give rise to competition issues, depending on the particular circumstances of the case.
As for infringement decisions concerning the competition impact of Big Data, the French Competition Authority intends to be the most advanced, having considered data issues in a number of competition inquiries including an Opinion issued in 2010 relating to Google and an interim measures decision against GDF-Suez in 2014.
Beyond that, concrete decisions on competition law breaches arising from Big Data remain elusive – for the time being. The Microsoft/LinkedIn inquiry may provide an opportunity for the Commission to test the water in this sensitive area.