Exploring opportunities and impact of mandatory data sharing in the tech sector

The collection and analysis of large amounts of data (data) plays an increasingly important role in business competition, especially for providers of digital services. A handful of well-known companies, such as Facebook, Google and Apple, have access to a significantly larger pool of data than other providers due to the popularity of their digital services. This includes data on consumers and other businesses that use their services. The data generated by these market leaders is not automatically accessible to their competitors, which has given the market leaders an increasingly dominant role in markets for digital services in recent years. In this context, to promote fair competition, the possibility of requiring digital service providers to share their data with their competitors and with third parties is increasingly being discussed nationally and internationally.

Commissioned by the Dutch Ministry of Economic Affairs and Climate, Ecorys, in collaboration with e-Conomics and Radicand Economics, has explored the role of data in data-driven markets and opportunities for such mandatory data sharing. The exploration focuses on identifying opportunities and risks of mandatory data sharing in various markets for digital services, such as for search engines, social networks, payment services and administrative business software.

Findings
Data sharing can be both horizontal and vertical. Horizontal refers to sharing data with competitors in the same market. In this case, the researchers recommend that the data be shared reciprocally: company A shares its data with company B, and vice versa. This can stimulate innovation and competition in markets where one party has a powerful position over its competitors.

In a vertical relationship (between companies with a hierarchical relationship, for example, between Google and application providers in Google’s Play Store), there are fewer obstacles to data sharing. In fact, data sharing here can increase the value of both services: applications can use Google’s user data to better tailor their applications to users’ needs, allowing not only the individual application to provide a better service to consumers, but also the Play Store to provide a more complete offering. Therefore, vertical data sharing should almost always be encouraged. Finally, large-scale data sharing requires appropriate privacy and security measures to protect consumers and businesses.

The Ministry is applying the findings of our exploration to further develop the data-sharing policy outlined in the 2019 “Vision of Data Sharing Between Businesses. In addition, the Ministry uses the insights among other things in ongoing and upcoming European policy discussions on data sharing, such as the Data Governance Act published in late 2020, Digital Markets Act and the Data Act announced for later this year.

Read the full report on the central government website.
For more information about the study report, please contact Walter Hulsker.