Europe's antitrust watchdogs and the world's tech giants are about to join battle once more — this time, over how the likes of Google, Facebook and Amazon harvest and sell European consumers' data when they search, shop and socialize online.

Tech companies earn billions of euros each year from the data they gather from people's increasingly digital lives.

But to prove these companies have fallen afoul of Europe's tough competition laws, regulators like Margrethe Vestager, Europe's top antitrust enforcer, must show that their dominance over vast amounts of people's data has hampered consumer choice by relegating potential rivals to the sidelines, according to competition lawyers and policymakers.

That determination may prove difficult, if not impossible, as consumers routinely share their online information with lots of tech companies — from established players like Uber and Apple to tiny startups from across Europe and beyond.

"Just because a company is sitting on a lot of data doesn’t mean it’s anti-competitive,” said Sibel Yilmaz, a lawyer at Linklaters in Brussels. “People signing up to Facebook and giving them data isn’t enough. You need to show harm.”

This data showdown between tech companies and the European Commission — as well as national regulators, with whom some skirmishes are already taking place — targets the lifeblood of the digital economy, threatening the business models that have made the likes of Google and Facebook some of the most valuable companies in the world.

The pending battle also throws into question how people's data will be used to create the next generation of online services at a time when Europe already finds itself out of step with the United States, where such concerns over how online information is used have barely raised regulators' eyebrows.

“Big data are the resources of our economy,” said Giovanni Pitruzzella, president of the Italian competition authority, which started an investigation in June into how companies collect and use online information. “But it could be a problem, especially when big data creates a big market power that can be used to foreclose competition.”

Data-driven deals

Alongside Italy’s recently opened investigation into companies’ use of data, French antitrust enforcers are also asking questions about the online advertising sector and, in particular, the role of Facebook. Results of that inquiry are due in the fall.

Across the Rhine in Bonn, German competition regulators started their own antitrust investigation last year into how the social networking giant collects and uses people’s data. The initial conclusions in that case — the first of its kind — are expected by the end of the year. Facebook denies any wrongdoing.

European policymakers are also tightening takeover rules to give antitrust agencies more power to block deals that involve large data sets changing hands — increasingly for billions of euros.

Rightly or wrongly, Facebook’s $19 billion acquisition of WhatsApp, the internet messenger, in 2014 has fueled these changes.

“The Facebook-WhatsApp deal was the concrete trigger for Germany’s new law” — Antitrust lawyer Justus Herrlinger

While the deal was worth billions of euros because of WhatsApp’s treasure trove of data on its 1 billion global users, the internet messenger — under existing merger rules — did not generate enough revenue itself for the takeover to warrant closer scrutiny in Brussels and in some European capitals. To avoid regulatory difficulties, Facebook notified the merger to the Commission, which approved it without conditions.



“The Facebook-WhatsApp deal was the concrete trigger for Germany’s new law,” said Justus Herrlinger, an antitrust lawyer for the firm White & Case in Hamburg, in reference to the country’s new merger rules that allow regulators to closely scrutinize data-driven deals.

'No free lunch'

Vestager, Europe’s competition chief, is considering similar reforms as part of her efforts to cement her legacy, and she has openly questioned companies’ perceived dominance of people’s online information.

“We need to understand what happens when data is the prime currency of a company,” she said in an interview last year. “There’s no such thing as a free lunch. Eventually, consumers will have to pay.”

This focus comes after a series of high-profile cases by the Commission against tech companies, including a €2.4 billion record fine against Google for anticompetitive practices and an order that Apple reimburse Ireland's government €13 billion in tax breaks that the Commission found broke EU law. Both companies deny wrongdoing.

Yet over the past 18 months, Vestager and her allies in national capitals have spent an increasing amount of time analyzing how a small stable of companies have come to own so much of people’s online data.

That includes an investigation into Bayer’s $66 billion acquisition of Monsanto. Vestager said on August 22 she was looking into, among other issues, the combined companies' potential control of reams of farming and genetic information.

European antitrust officials also have filed charges against Google’s Android operating system, in which investigators claim the company’s ever-present mobile software ensures traffic — and the associated user data — is funneled toward Google’s search engine. The company denies any wrongdoing.

A recent Commission investigation into Europe’s e-commerce market also made a veiled allusion to Amazon, the industry’s dominant online player. Officials warned of situations when online marketplaces collect sensitive data on merchants’ activities, only to then start selling rival products themselves. Amazon declined to comment, but has said previously it competes with a broad range of companies in the online and offline worlds.

Concerns over the companies' collection of personal data are not new. European privacy watchdogs already have brought data-related cases against Google and Facebook, questioning if these companies have played fast and loose with the region’s tough data-protection laws since at least 2010, if not earlier. The companies reject such accusations.

But the attention by European competition authorities on big data and the way it could reinforce monopolies online, legal experts say, is a new phenomenon, and highlights how quickly some of Silicon Valley’s largest companies have vacuumed up people’s online information.

Google and Facebook, for example, together pocketed roughly half of the money spent on digital advertising last year in several European countries, according to eMarketer, the data analytics company. That was primarily driven by the companies’ collection of information about people’s online habits and activities, which allowed brands to target consumers online more accurately than through rival services.

"These are all fundamental questions," Andreas Mundt, president of the German cartel office that is investigating Facebook's use of data, said in an interview last year. "If this case is done, we will know a lot more about the use of big data in the online world, what kind of role it plays and what the limits are — if there are any limits."

Digital utilities

Google and Facebook — with billions of users worldwide — deny they have an unfair advantage, saying people have control over what information is shared with advertisers. Users, they add, can delete and sometimes move their digital information whenever they choose.

Both companies declined to comment for this article.

Despite regulators' best efforts, proving that companies’ dominance of data is anti-competitive may still prove an uphill battle.



For one, European regulators must show the companies are trying to prevent potential rivals from collecting the same or similar data, shutting them out of online markets.

“It would be the first time that competition law has waded into these waters" — Michael Carrier, co-director of the Rutgers Institute for Information Policy and Law

Officials also may try to label Google, Facebook or Amazon as the equivalent to digital utilities — key components of the online world that would require them to open up their data archives to others to promote competition.

In France, for instance, investigators ordered energy giant GDF SUEZ, now known as ENGIE, to share customer data with rivals after companies complained they could not keep pace because GDF Suez had gathered the proprietary data as a state monopoly.

Tech companies are likely to fight such moves by claiming that online competition is merely a click away. And legal experts warn that applying decades-old monopoly rules to the digital world could be unwieldy, as it would require competition enforcers to prove tech giants are the equivalent to state-owned water or energy companies.

“It would be the first time that competition law has waded into these waters,” said Michael Carrier, co-director of the Rutgers Institute for Information Policy and Law in New Jersey. “You would need to make totally new legal arguments.”