It’s the data, stupid. On antitrust issues, EU regulators have traditionally focused their scrutiny on large industrial deals — from the failed attempt by Siemens to buy Alstom to the frustrated purchase of Honeywell by General Electric.
But these days, officials in Brussels have taken a keen interest in arguably more niche transactions involving data. Most recently, Amazon’s proposed $1.7bn purchase of Roomba maker iRobot has caught their eye. Their main concern? Whether the deal will give the ecommerce giant an unfair competitive advantage over rivals.
Antitrust investigators are asking the usual questions about market dominance, but they are also zooming in on a relatively new area of interest: is the data that the robotic vacuum cleaner gathers as it moves through your home of such significance that it will skew competition?
As part of their questioning, they have even expressed privacy concerns — usually a remit left outside the investigations of mergers — as they seek to understand if the acquisition will undermine consumers by invading their personal lives. This is something that privacy campaigners have long pushed for.
The iRobot deal got consumer groups worried, too. An anti-monopoly coalition, which includes the Open Markets Institute, has called for the transaction to be blocked.
“Amazon already monitors our doorsteps and listens in on our dinner conversations, and the proposed merger will put Amazon inside our living rooms,” the coalition said last month. “It will deepen Amazon’s retail and consumer data moats, bolster its vast ecosystem and market dominance, and cause harm to consumers and competition in ways that cannot necessarily be fully conceived of today.”
Similar deals involving data have drawn scrutiny in recent years. Brussels launched an in-depth review of Google’s purchase of wearables maker Fitbit in 2020 over concerns that the search giant may use the health data generated by Fitbit’s tens of millions of users to target consumers with ads and undermine rivals.
The EU eventually extracted concessions from Google, including a promise not to use Fitbit’s data to target adverts for a decade. Regulators cleared Google’s acquisition of Fitbit despite concerns that such deals would enable tech giants to buy up potential contenders and entrench their dominance. Other tech giants have won approval for deals over the years as well. But there is a feeling among regulators in both Europe and the US that more action is needed on data concerns. “We were asleep at the wheel,” says a regulator, who laments years of underenforcement.
Alec Burnside, a Brussels-based partner at law firm Dechert, says a significant part of large tech giants’ power comes from the depth and breadth of the information they hold. “The significance of holding large data sets has become established in antitrust thinking in the past few years, in a way which was never thought previously,” he says.
Burnside says the world of antitrust has been “swept by the realisation of the importance of data”. Cases involving large troves of data become even more interesting to regulators when a big tech company such as Amazon is involved.
“The commission has failed to properly catch Amazon,” says a Brussels veteran, pointing at either wins or partial wins by Amazon on tax and antitrust investigations in recent months. “Brussels is keen to get their hands on a consumer case.”
Critics of an aggressive approach from regulators, which unsurprisingly includes big tech titans themselves, fear that a clampdown on digital mergers will damage innovation and job creation.
Others think investors and companies should not dramatise the risks poised by this novel scrutiny. Nicholas Petit, a professor at the European University Institute in Florence, points to data-rich mergers being cleared as evidence that regulators are yet to be “convinced that data can be a source of enormous competitive advantage to the benefit of big tech”.
However, Petit says while the nuclear option of terminating a deal out of privacy concerns has not materialised, regulators are looking at these issues because there is a lot of pressure on them to do so.
And as the “internet of things” develops and we see more objects collecting data — from wearables to vacuum cleaners — the potential for anti-competitive mergers rises. So tech companies should be prepared: antitrust investigators will continue to look under the hood at data.