13 March 2019
On 25 February 2019, Mr S Iswaran, Singapore Minister for Communications and Information, announced that Singapore intends to introduce a data portability requirement as part of the ongoing review of the Personal Data Protection Act 2012. Data portability refers to the requirement for organisations to transmit a copy of an individual’s data held by the organisation in a commonly used machine-readable format to another organisation, upon the individual’s request.
As data portability is a recent global development, a discussion paper on data portability (“Discussion Paper”) has been published by the Personal Data Protection Commission (“PDPC”), in collaboration with the Competition and Consumer Commission of Singapore (“CCCS”), to provide a framework for stakeholders such as businesses and consumers to understand and further discuss the impact and issues in implementing a data portability requirement. A substantial part of the Discussion Paper discusses the implications of data portability for competition policy and consumer protection.
Key considerations of data portability for competition
Lower switching costs and barriers to entry or expansion
Data portability has the potential to lower the barriers to entry or expansion such that entrants without an established customer database can acquire data at a lower cost. Lower barriers to entry or expansion will be particularly important for circumstances where data is a materially significant input for organisations.
CCCS has recognised that data could form a significant barrier to entry for entrants in CCS 400/004/14, Notification for Decision of the Proposed Acquisition by SEEK Asia Investments Pte. Ltd. of the JobStreet Business in Singapore pursuant to section 57 of the Competition Act (13 November 2014) (“SEEK/JobStreet”) as well as in CCS 400/007/07, Notification for Decision: Merger between the Thomson Corporation and Reuters Group PLC (23 May 2008) (“Thomson/Reuters”). In particular, SEEK/JobStreet also highlighted the potential for network effects to be a significant barrier to entry; new entrants needed to attract a critical mass of jobseekers and recruiters to their platform to overcome the network effects enjoyed by the merging parties.
Data portability can result in potential efficiencies in the form of “economies of scope of inputs”. This refers to the efficiencies that arise specifically from a greater variety of inputs (rather than the traditional economies of scope which focuses on outputs). By having a sufficiently greater variety of data (i.e. the inputs), organisations are better able to develop and improve product offerings and potentially lower the cost of product development. The Discussion Paper notes that the economies of scope of inputs via data portability will likely only materialise when the types of data collected by different organisations are sufficiently different.
Combining data sources might exacerbate the impact of a merger on market structure and give rise to competition concerns, even if conventional market share measures do not appear to give rise to competition concerns. For example organisations with small market shares might possess valuable data that, combined with an incumbent’s data, amplifies the incumbent’s market power. The combination of datasets was an issue in the proposed acquisition in SEEK/JobStreet as well as in Thomson/Reuters. CCCS highlighted that concentrating the data sets of the merging parties could constitute a significant barrier to entry for new entrants.
Abuse of dominance
The Discussion Paper notes that data and data portability may give rise to several issues under section 47 of the Competition Act:
- Price discrimination: Possession of certain levels of data increases the ability of organisations to price discriminate which can potentially be abusive if it is used by a dominant firm to foreclose all, or a substantial part of the market.
- Discriminatory access to data: Dominant organisations may abuse their dominance if they discriminate access to critical data for competitors.
- Exclusive contracts: Organisations with market power may also abuse their dominance by entering into exclusive contracts with customers, therefore foreclosing the entry of new competitors.
In the context of data, CCCS has noted, in a previous discussion paper published in 2017 titled “Data: Engine for Growth - Implications for Competition Law, Personal Data Protection, and Intellectual Property Rights”, that this could take the form of a dominant data aggregator offering access to a large body of data entering into long term exclusive contracts with its customers such that other data aggregators would not be able to enter the market even if they are able to replicate the data.
- Refusal to supply access to data: Dominant organisations may further abuse their dominance by refusing to supply access to critical data to competitors.
The Discussion Paper notes that many types of data are readily available and/or replicable and it is in situations where the data can be characterised as an essential facility, that discriminatory access to data will be abusive. Additionally, any obligation imposed on an organisation to share its data will likely be highly specific, limited in scope, and imposed by the courts or the central competition regulator.
Key considerations of data portability for consumer protection
CCCS is presently tasked with administering both the Consumer Protection (Fair Trading) Act (“CPFTA”) and the Competition Act. Both Acts protect consumers in different ways; the Competition Act protects consumers from anti-competitive conduct while the CPFTA protects consumer by ensuring sound trading practices. The additional powers under the CPFTA allow CCCS to enhance the market studies they are currently conducting by allowing them to approach the issue from a fair trading angle as well. This approach can be seen in the context of the Discussion Paper. Aside from highlighting the competitive effects of data portability, the Discussion Paper also highlights the need for transparency regarding a consumer’s right to data portability. Specifically, the Discussion Paper highlights that imposing hidden charges or misleading consumers in relation to their rights to data portability may constitute an unfair practice under section 4 of the CPFTA.
This article discusses the implications of data portability for competition policy and consumer protection. For an article on other aspects of the Discussion Paper, please click here to read the article titled “Singapore intends to introduce data portability requirement, discussion paper published” (March 2019).