A while back we started our #CompetitionTalks interview series giving a place for competition policy experts to express their views on today’s hotly debated topics. In the second part of our series, we are proud to present to you Prof. Justus Haucap who heads the Düsseldorf Institute for Competition Economics (DICE) and who is the former Chairman of the German Monopolies Commission. We had the pleasure of interviewing Justus at the fringes of CCIA’s competition conference organized together the Lexxion and the Vrije Universiteit in Brussels. An economist by training, Justus gives his opinion on how well the current competition law framework works in digital markets and explains why the analogy of consumers ‘paying’ with their data is a bad one. Last but certainly not least, he clarifies why data protection and competition law enforcement don’t mix well.
Earlier this month the U.S. Court of Appeals for the Ninth Circuit issued an important decision in Oracle v. Rimini that decreases data aggregators’ potential legal exposure for using software tools such as robots and spiders to scrape information from websites.
Rimini is an independent provider of maintenance services to customers of Oracle software. To provide these maintenance services, Rimini needed to download software updates from Oracle’s website. Oracle sued Rimini for infringing its copyrights as well as violating California and Nevada’s computer abuse statutes. The district court ruled in favor of Oracle on all counts. Rimini appealed, and the Ninth Circuit affirmed the copyright infringement claims but reversed the state computer abuse claims.
The copyright claims turned largely on interpretation of Oracle’s license agreements with its customers and thus do not warrant extended discussion. Oracle’s licenses allowed an independent service organization to download and use an update to provide services to a particular Oracle customer (“direct use”), but not to other current or future customers (“cross use”). Rimini, however, used the same downloaded update for multiple customers. Thus, the Ninth Circuit found that Rimini made reproductions beyond the scope of the license.
The Ninth Circuit’s analysis of the state computer abuse claims has more far-reaching implications. California’s Comprehensive Data Access and Fraud Act (“CDAFA”) imposes liability on a person who “knowingly accesses and without permission takes, copies, or makes use of any data from a computer….” Similarly, the Nevada Computer Crime Law (“NCCL”) imposes liability on a person who “knowingly, willfully, and without authorization…uses…or obtains or attempts to obtain access to…a computer….”
The latest intentions of the European Commission, expressed in its proposal for a Directive on certain aspects concerning contracts for the supply of digital content, to establish data (personal or not) as an alternative way of payment could create major challenges in the Digital Single Market.
Maybe it is tempting to treat data as a currency, but in reality one needs to be careful, not least because the protection of personal data is a fundamental right in the EU. That is not however the only reason why personal data should not be treated like a currency; here are a few other reasons.
Inability to evaluate and monetize data
Unlike money, data is not easily defined in terms of quantity or price. Even if we are all aware of the data we own, nobody knows exactly what it is worth.
The difficulty in pricing data in monetary terms derives partly from the fact that its value originates from data’s various applications and not the data itself. The insights that can be derived from data are much more valuable than the data itself.
Therefore, in a case where data will alternatively be used as a payment method, the inability to precisely value it could set a huge question mark on the value of transactions, which is not good for any of the involved parties.
This post is part of a series dedicated to highlighting small and medium-sized enterprises across the country employing technology in new and innovative ways.
Denver-based Land Title Guarantee Company celebrates its 50th birthday this year, a milestone reached by offering widespread capabilities with a personal touch. Land Title Guarantee Company services residential, commercial, homebuilder, and lending real estate transactions throughout Colorado, and recently turned to data analytics to glean business insights that have taken the business to the next level. I sat down with Craig Rants, Land Title’s Vice President of Title Operations, to learn about the impact this technology has had on the company’s bottom line.
Courtney Duffy (DisCo): What was life like before you prioritized data analytics at an organizational level?
Craig Rants (Land Title): We have 50 offices throughout the state of Colorado, and 10 years ago all of our offices had green screens with about 20 different reports that had to be run. Data reports would print out, or show up on a screen, and you’d have to run all of the reports to get your lay of the land. We ran a report, and if we had any questions about it, we had to run two more reports. It took hours, and that’s time we could be using in other ways. The process was a burden, and it limited our ability to deliver for clients. By incorporating robust data analytics system, we’ve saved ourselves time and money.
This is the first post in a series dedicated to highlighting small and medium-sized enterprises across the country employing technology in new and innovative ways.
“Innovation” may not be the first word you associate with the construction industry, but three-year-old EquipmentShare makes a strong case for a reframing of that narrative. The company, which is headquartered in Columbia, Missouri, and has a presence across the urban centers of Texas as well as Jacksonville, Florida, connects contractors with a platform to rent and lend equipment on a peer-to-peer basis, empowering them to earn income off of equipment that would otherwise go unused. More recently, EquipmentShare added telematics and equipment utilization services to the mix. We interviewed Willy Schlacks, EquipmentShare’s co-founder and president, to learn more about technology disruption both within the company, and in the industry at large.
Courtney Duffy (DisCo): How has the construction industry, as well as the needs of its participants, changed as we’ve entered the digital age?
Willy Schlacks (EquipmentShare): Construction has traditionally been a tech-averse industry, slow to adopt new technologies and reliant on pen-and-paper or otherwise manual processes. But just like many other industries, construction companies have been forced to do more with less. Contractors and other players in the space have been looking for ways to find efficiencies, cut costs or otherwise boost their bottom line and are turning to technology to do just that.
The biggest benefit that technology brings to the construction industry is the ability to capture and use data. Technologies like telematics are enabling contractors and OEMs (original equipment manufacturers) to capture data from their equipment–something that wasn’t possible before–and use that data to more intelligently manage their maintenance schedules, hours of service and more. There are so many applications in the construction industry for data that can all be used to drive efficiencies, productivity and greater safety.
Every summer has its craze, and this year it was all about Pokémon Go. I’m still playing, even after the initial hype has died down, so it’s an interesting time to think about the impact of Pikachu and friends. Pokémon Go has been a revolution in mobile gaming, leading to several interesting disruptions — in terms of how location-based games work, who plays them, and expectations about data sharing.
Before we start, this’ll be an easier read if you play yourself (it’s free — why not try?) but in essence, your phone becomes a screen through which to view the world of Pokémon. When they pop up, you can catch them, using Pokéballs, which you get by visiting Pokéstops, landmarks varying from cathedrals to hipster street art. One aim is to try and catch all 250 Pokémon, like a butterfly collector. The other is that, as you advance, you can put the Pokémon in the gym to fight on behalf of one of three teams.
First disruption: the game took an extremely nerdy framework and made it mainstream. The joy of seeing Pokémon pop up at the bus stop is certainly a great novelty. But much of the system, like the location of the Pokéstops, has been imported from earlier games, like Geocaching and Ingress.
Geocaching — or as I like to call it, sci-fi orienteering — consists of using coordinates, and usually GPS, to find hidden boxes in the real world containing a log book and some trinkets, as this charmingly hyper woman explains. Ingress, an earlier game developed by Pokémon Go creators Niantic, pits two teams in an eternal battle that relies on players “capturing” “portals” in an augmented reality and, occasionally, wearing matching T-Shirts!
Geocaching and Ingress both sit comfortably in the Venn diagram of Settlers of Catan, Vibram shoes and his’n’hers fleeces. That’s an awesome space, but not a guarantor of mainstream cool success. Pokémon Go somehow subverted that and became a worldwide hit — and even, thanks to the Pokéstop information pulled in from Ingress, a great way for people to find out about quirky architectural features in their area.
The Internet is all about sharing. We share memes with our friends on Facebook, messages with our coworkers on Slack, and 140 characters of witty repartee with the public on Twitter. These platforms are fueled by data, which allows providers to better tailor their services to our desires and develop new, innovative ways for us to create, interact, and transact both online and in the physical world.
Other entities use data in different ways. Spokeo, a data broker, is one such entity. Spokeo collects, collates, and cross-references publicly available data from a variety of databases, and presents that information in profiles about individuals, basic details of which it then makes freely available, with greater detail available to interested parties for a fee. Spokeo’s services, though very different from the consumer-facing platforms we enjoy every day, can help illustrate a key distinction in the ever-shifting balance between consumer privacy and innovation online.
Last month, the Supreme Court ruled in Spokeo, Inc. v. Robins that Robins, whose Spokeo-generated online profile contained inaccurate information, failed to meet minimum constitutional requirements to show harm in order to have standing to bring a case when alleging that Spokeo willfully failed to comply with the compliance requirements of the Fair Credit Reporting Act (FCRA) in making an inaccurate profile available to its users.
Last Wednesday, Federal Trade Commission (FTC) Chairwoman Edith Ramirez announced that on September 9 the FTC will hold the first seminar of its “Start with Security” campaign (which we previewed in March). The campaign is aimed at helping small and medium sized companies improve their data security practices based on the knowledge the FTC has accumulated over a decade of enforcement action. Also last week, the FTC launched IdentityTheft.gov, a website that offers victims of identity theft tools to report and recover from identity theft and data breaches.
The FTC’s recent focus on privacy issues, particularly identity theft and data security, is a recognition of the priority consumers place on trust in the Internet. Trust in the integrity and security of the Internet and associated products and services is essential to its success as a platform for digital communication and commerce. One of the earliest government reports on the viability of the Internet for commerce said, in 1997, “[i]f Internet users do not have confidence that their communications and data are safe from unauthorized access or modification, they will be unlikely to use the Internet on a routine basis for commerce.”
Internet users continue to prioritize confidence in the security of digital services above all other privacy concerns online. In late 2013, CCIA commissioned a survey of Internet users that aimed to better identify the priorities and concerns of Internet users with respect to the handling of the information they share online. As far as privacy risks go, the study found that nothing is more important to Internet users than the security of their information online, in particular ensuring that their personal data is out of the hands of those who would do them harm.
Big data, and its effects on online markets, has been thrust into the center of the tech policy chattering class debate. In the last few weeks, events have been held on both sides of the Atlantic focusing on the concept of big data as an entry barrier. (The topic has also come up in speeches by FTC Commissioners [and a paper], in discussions surrounding the EU’s forthcoming Digital Single Market strategy, and is the frequent topic of recent academic writing.) Specifically, the concept being debated is whether the accumulation of data by Internet companies hinders competition because the new entrants will not be able to compete effectively with the first mover in the marketplace. In this post, I will address why startups and entrepreneurs should not be overly concerned.
In a stylized view of the Internet economy, as a platform (such as Google, Facebook, Amazon, Pinterest or Twitter) achieves scale and gains users, it acquires more data. This data leads to product improvement, which leads to more users and, subsequently, more data. The process repeats. According to proponents of the data as a barrier to entry theory, this leads to an unbreakable positive feedback loop that makes effective competition impossible.
However plausible this argument sounds, a review of the short history of the Internet economy, which has been characterized by intense competition and frequent disruption, seems to cast doubt on the soundness of the theory. (See Andres Lerner’s discussion of the User Scale – Service Quality feedback loop.) Besides the common examples of Facebook overtaking Myspace and Google overtaking prior search competitors (who, at the time, were predicted to be unassailable largely on account of the User Scale – Service Quality feedback loop discussed above), a casual look at online markets illustrates how competitive the market is. Why are online markets so competitive even though some firms are believed to have an unassailable advantage in big data?
First, this view of Internet markets is extremely simplistic. Data is just one input of many in the process of innovation and market success. Second, unique economic characteristics of data — such as it being non-rivalrous and the diminishing marginal returns of data — mean that the accumulation of data, as opposed to other barriers to entry like intellectual property portfolios or high-fixed capital costs, in and of itself does not function as much of a barrier at all. When you couple these characteristics with the fact that data, and the tools to use and analyze data, are readily available from numerous third party sources, the notion of an iron-clad data feedback loop falls apart.
I’ll break this down piece by piece.