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  • Devarshi M Trivedi

Organic Dominance vis-à-vis Essential Facility: Analyzing Exclusionary Effects by Big Data Firms

[Devarshi is a student at Institute of Law, Nirma University.]

With the advent of the rejuvenated digital-market-centered Competition (Amendment) Bill 2023 passed in Lok Sabha on 29 March 2023, the ambiguity surrounding jurisdictional competency vis-à-vis digital market regulation now stands explicit. The renewed stance is evident from the judgement in Google LLC v. Competition Commission of India by the National Company Law Appellate Tribunal (NCLAT) upholding the penalty of INR 1,388 crores in the case of Umar Javeed and Others v. Google LLC and Another imposed by the Competition Commission of India (CCI). The NCLAT’s approach crystallises the stance of the adjudicatory bodies to treat big data firms abusing their dominant position by restricting competition through data-oriented entry barriers.

The initial perusal commenced when the crackdown on WhatsApp’s renewed privacy policy by the CCI and the subsequent ratification by the Supreme Court of India highlighted a significant transition in the era of big data firms acquiring voluminous data at the behest of privacy. However, apart from the privacy domain being the moot point in the controversy, the market tactic of WhatsApp accumulating humongous data and circulating to its parent company Meta Platforms and sister concern Instagram, in a way that centralized data sharing patterns and subsequently created entry barriers for potential new competitors. These firms have acquired organic dominance by “essentializing” their cardinal facility that assumes a pervasive market significance. In light of the same, let us broadly about the concept of “essential facility” and its implications.

What is the Doctrine of Essential Facility?

The phenomenon of 'essential facility' can be termed as a situation of ingredient-oriented economic advantage. The firms occupying the essential facilities have either naturally acquired monopoly or man-made innovation has catered to their stronghold in the upstream market. In one of the first European Commission (EC) decisions on 21 December 1993 in the case of Sea Containers v. Stena Sealink, the term 'essential facilities' was deliberated as instances wherein the firms refrain/restrict the circulation of the facility beyond their market presence thereby dwindling the supply chain.

Big Data vis-à-vis Essentiality

The dominance of the existing data-driven firms should be accredited to the user base that subscribes to the platform. Since antitrust authorities have absolved themselves from the unregulated market, the big data firms have nurtured strategies to keep the competition restricted and limit data interoperability. This results in smaller or uprising competitors devoid of access to the quality of the data available as against the market position of Google Amazon Facebook Apple.

Data replicability

Data is a non-rival component without a price dimension. As a result, it is easy for different data controllers to attain requisite access and perform subsequent processing. Since the web giants have polished their user base from inception, the daily traffic has allowed them to accumulate and reproduce data at a zero-marginal cost. It allows them to consolidate and personalize consumer preferences without extra additional expenses. This creates a hurdle for potential newcomers to replicate the data possessed by the web giants at a nascent stage. The new firms cannot have direct market access to the data as it is directly dependent on consumer engagement on the aforementioned web giants. Therefore, data replication indirectly subsumes the essentiality of consumer data as a factor to bolster digital market presence.

Data substitutability

A resource’s essentiality is determined by its close substitute and its viability. It is significant to note that data substitutability should be analyzed relatively as against the absolute terms i.e. determining the intended use of the data. Therefore, it becomes essential to obtain data at a nascent stage from established close substitutes capable of circulating the requisite data. For example, a man has created an AI software capable of generating automated job availability in requisite locations. To bolster his data replication, he approaches the locational data platform Google Maps and LinkedIn for data access. Now, since these entities possess voluminous data, they may “essentialize” the records and prevent them from being ubiquitous and relish the competitive advantage derived therefrom. The resources do have close substitutes, but the behaviour of the undertakings in terms of information stronghold makes big data essential. As long as the data possessed does not have viable alternatives to bring the competitor to an equal footing, data shall remain an “essential” component.

Big Data vis-à-vis Exclusionary Effects

If yes, how?

The web giants have time and again claimed the first-mover advantage when it comes to innovation or entering alien businesses. The cardinal reason behind this leveraging of market power is the self-preferencing of the firm’s own products and services. As a result, it sends policy shocks in the downstream markets and increases the demand for data access from close competitors/new entrants due to the substitutable/replicable nature of the data. On 17 September 2007, in the case of Microsoft Corporation v. Commission of the European Communities, the EC elicited the competitive advantage possessed by Microsoft by refusing the data interoperability with non-Microsoft dealers. It was observed by the commission that dominant firms possessing essential facility should regulate self-preferencing to refrain from the practice of creating exclusionary effects.

In furtherance to the same, the European Commission, on 14 May 2008 in the case of the Tom Tom/Tele Atlas acquisition, observed that acquiring a key input increases one’s market presence. It provides the firms leverage to reproduce and process humongous data for maximum market penetration. That said, in the above case, the commission discarded the effects test as the entities lacked economic incentives. However, it is significant to note that an input attaining sole ownership in a vertical integration may create an artificial price surge in the upstream market wherein potential competitors/rivals who had data access may find it difficult to access data in a new commercial arrangement. This can result in the refusal to market access by restricting the supply when the same product has potential consumer demand and the competing firm intends to carry out innovation investment in future. Further, the exclusionary effects can also arise in cases of web data giants entering into exclusive contracts to foreclose the attempt of rival firms to access the similar data.

If no, why?

Since the big data firms have cemented their position using sustained innovation investment, their apprehension to refuse data facility cannot be termed outright implausible. Just as allowing data as an input will foster competitiveness in the market amongst rivals, refusing access will devise a path for innovation. Further, refusing data access will pave the way for rival firms to be incentivized to develop close substitutes to dominant firms and disrupt innovation. As previously discussed, the non-rivalrous nature of datasets deems it as a conducive component available in the market. It is ambiguous on the aspect of 'essential facility' only on account of the quality of the dataset. For example, when Facebook acquired Instagram and WhatsApp, it got access to the quality of data that was insurmountable. However, its alternatives such as iMessage (Apple), LinkedIn (Microsoft), and Skype (Microsoft) were able to generate substantial consumer traffic and accumulate quality datasets through constant processing.


Based on the aforementioned discussion, the idea of big data firms relishing organic dominance stems from the data manifestation derived from the digital interaction between different actors, thereby catering to the systematic interpretation of consumer preferences within the digital market. Despite no commercial impairment, the potential new competitors are unable to dissect the preferences and expend a lot of capital to study market demand, hence falling back on the aspect of creating a profound innovation-oriented layout. The CCI is yet to adjudicate more broadly on the idea of data being an 'essential facility', which may broadly explore and validate the contours of whether big data firms engage in exclusionary acts by essentializing the data.

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