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IGF 2019 – Day 1 – Convention Hall I-D - OF11 Data Governance And Competition - RAW

The following are the outputs of the real-time captioning taken during the Fourteenth Annual Meeting of the Internet Governance Forum (IGF) in Berlin, Germany, from 25 to 29 November 2019. Although it is largely accurate, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid to understanding the proceedings at the event, but should not be treated as an authoritative record. 

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>> MODERATOR: I think let's get started.  Welcome today at the Internet Governance Forum.  This is forum is about data governance and competition.  So thank you very much for attending for having gotten up so early.  I was informed normally you arrive at 12:00 in order to be fresh and ready for the night.  I hope you get started with this really interesting and debate on competition and data.

My name is Philipp Steinberg.  I'm director general for policy in economics and energy.  You might have guessed I'm responsible for competition policy in Germany and we are just about to release a recast of our competition law that will include some of the suggestions we going to hear about later on.

This topic I think is really very interesting, and really one of the topics which will gain even more importance, I think.  It is about competition.  It is about the digital economy, it is about the platform economy.  Some of the words you are all familiar with, of course, are network effects, superstar firms.  Winner takes all markets and, of course, the tendency for competition for monopolization and concentration.

Of course, the fundamental changes raise many concerns concerning the efficacy of the current competition policy and framework.  The debate here is, of course, is it necessary to update our competition law regulatory framework?

And I think it is not too daring to say that, of course, the competition law framework is vital for the functioning of our economies and that is really one of the backbones of most states' regulatory framework.

So I'm really very happy to introduce a very distinguished colleagues at a manel, not a Pam panel.  You might have realized but it is quite male the Manel here.  I have to excuse Heike Schweitzer.  She is female but more importantly a renowned expert on competition law in Germany.  She is a member of the expert panel of the European commission.  And we have invited her but unfortunately she is ill so I have to excuse her.

Still we have I think a lot to talk about.  On my right-hand side we have Martin Schallbruch.  He is the deputy director of the digital society institute at ESMT Berlin and cochair of the German federal commission competition law 4.0 which has just released its report.  And then to my right-hand side we have Phillip Marsden.  Deputy chair of the enforcement design making committee of the bank of England and professor at college of Europe and member of the UK diggal competition expert panel.  One of the main reasons he is here.  He holds many other functions but because we don't have so much time I will skip them.

And then we Ioannis Llianos.  Chair of global competition law and public policy at University College London and coauthor of the BRICS-Report Digital Era Competition.

This panel is quite a challenge for all of us because we have one hour and seven minutes have already elapsed.  One hour actually to present the main, the key points of those reports, the panel members have released.  So it is really about the key messages, if possible, really make it concise and make it clear because all of you, you have five minutes to present the main messages of our report.  And you might have realized I'm German so we like rules and we like to enforce them.  I will be very strict and I will enforce them.

So the idea is that you basically you give us an idea of the main points because I named some of the words already but, of course, it is interesting to see where do we find common ground how to regulate the digital economy, and where are differences between maybe as well.  We, of course, will have some time to get in discussion here on the panel.

Of course, I will open the panel up and then we have bring you in.  And, of course, there are online participants as well.  So I invite you all of course online as well to come in with your questions.

So I think we start with you, Ioannis if you could share the main insights of your report with us.  The panel is yours.

>> IOANNIS LIANOS: Thank you very much for the invitation.  I'm also the head of the competition commission but not presenting here, of course, the views of the commission.

I will say that there are three main points that come out of the BRICS-Report which is a work of around 35 researchers from five BRICSS countries.  We believe that the simple economics of siri are not fit for purpose in the digital economy.

We are coming from the perspective of complex economics.  And why actually the simple economics do not work because first I think that the simple economics that we apply on competition focus on market definition.  However, so many of you are familiar with the multisided markets theory and, of course, the presence of ecosystems in the context of the digital economy.  This is reductive in the way of understanding and assessing our competition.

The second issue which we have problem with is the fact that well price, focuses on price, however, many of the competitive strategies we observe in digital markets are non-price related and therefore we need other tools in order to deal with those.  Thirdly, I think that the current paradigm of competition focuses on consumer welfare and this is usually narrowly defined as consumer surplus.  We think this is definitely very important, but I think this is only one of the dimensions which competition should focus on.  We believe that issues like privacy, economic democracy, complex equality are important considerations in the context of the digital economy and obviously have motivated a lot of thinking lately with regards to populous andty trust.

The first message is that simple economics do not work.  We have to deal with complex economics and there is a lot of work on in particular coming out of the edict of Santa Fe looking to different concepts like tipping points leverage points, increasing scale and scope and path dependence and tools like Asian-based modeling to implement competition in the digital era.

The second I think message that we are pulling forward in the report is that competition authorities have been focusing on interecosystem competition and we believe that in some context interecosystem competition might not necessarily work because of the presence of strong network effects and absence of multiabout homing.  And competitional authorities deal with intraecosystem competition.

The third main message of the report is that we are focusing on value capture as well as value generation.  I think most of the reports have been focusing on value generation.  I think this is important and valid, increasing the size of the pie is important.  It is also important to see how the pie is allocated and this is basically the value capture.

This brings forward different concepts of competition.  What we call vertical competition.  The competition between various companies present in the different segments of the value chain for the largest percentage of the value generated by the value chain.

And I think this is a dimension of competition that does not only focus on product markets but also on financial markets.  And I think this is also significant aspect of our report the focus on financialization, the idea that many of the companies get their value out of their precision in financial markets and a lot of the strategies are basically focusing on the perceptions they will provide to the financial markets.  And therefore competition law assessment if it has to be fit for the digital economy has also to take into consideration financial markets and financialization.  And I will end up here for my five minutes.

>> MODERATOR: Thank you very much.  This is impressive.  You would have had 40 seconds left.  Impressive.

Just this was I think interesting give is us an outline of how the economics are changing.  I will ask you later on what are the concrete implications for the regulatory competition and framework.  And but now I will turn to my very right-hand side to Martin Schallbruch and ask him what are the main conclusions of your work in the German commission competition law 4.0 and to share the analysis of the concrete conclusions and maybe say a word on data as well if that has played a role in your work.

>> MARTIN SCHALLBRUCH: Thank you, it is good to be here.  Competition law is one of the key priorities of the upcoming European commission.  So our idea was to give specific recommendation for German and European law makers regarding the development of competition law.

Phillip asked for key messages of the commission and one key message is that we do not see a need to change basic principles of European competition law to meet the new challenges of the digital economy.  But we see a need to add some additional instruments to address the role of data, the role of the market dominant platforms, and the effectiveness of anti-trust enforcement.

Let me give you some of our specific recommendations regarding these three key issues of our report.  In the digital economy better access to data is competitive advantage.  And this is very true especially for user data.  User data access allows for analysis of user behavior, improvement of services and creates strong lock-in effects and uses customer choices and competition.

One of our key approaches in our report is to strengthen consumer power regarding their own data.  With two ideas, more -- in more detail presented in our report published as well.

One idea is to transfer the concept of opening user accounts for third-party providers from the financial sector in Europe to other.  We have payment service to an instrument in the financial sector that Banks have to grant access to user accounts for third-party providers if and only if the customer requests to do so.  So opening up accounts, having the chance of easier homing, having effects and we think in the commission that we could transfer this concept to other long-term contractual relationships in the digital service market.

Second idea to strengthen consumer power and on the other hand granting more access to data is the establishment of so-called data trustees.  Data trustees are companies which address a need of companies who want to access data of a large number of data subjects.  Individual data is protected by the GDPR.  And to get this data, for example to innovate business models you need the consent of each individual data subject.  And data trustees would be of help because they could act as an intermediary to give companies data on behalf of the customers and in line with the data protection preferences and purposes the customer defines in advance.

For these two ideas are our major recommendations regarding data governance.  And let me add two more recommendations regarding digital platform and anti-trust enforcement.  The power of platforms from the view of our commission is not only coming from know the work effects and economies of scale but also by a very strong conglomerate effect.  This conglomerate effect leads to positions that are difficult to contest and that are having a cross-market relevance.

Therefore, our advice and our recommendation is that we should establish rules for dominant online platforms.  We recommend an EU regulation for dominant online platforms that target this specific situation of big conglomerate digital platforms.  These rules could be rules prohibiting said preferencing of on-services, strengthening data portability, strengthening intraoperablity, especially of internet services to these platforms.

The third issue is the anti-trust enforcement.  We have seen impact based prohibitions and remedies typically take much too long.  The Google shopping case was six years and in the commission and now we are in the Court and we haven't a court decision yet.  We have to speed up the andty-trust enforcement.  And the same situation as in other regulatory subjects concerning digital platforms true as well.  Security, privacy and so on.  Our idea and our representation is to create a digital European market transformation agency as support to anti-trust and other regulators to follow market developments, dependencies, ecosystems, assess such things as data, power data transfer standards and intraoperability.  Thank you.

>> MODERATOR: Thank you very much for this concise proposal.  I'm sure we will talk about.  But let me turn to Philip and I would like to ask you to share your insight from the UK digital expert.

>> PHILIP MARSDEN: Why are we here today?  One narrative is that the sky is talling and competition have allowed too many mergers and digital markets are tipping even with consumer benefits in terms of low prices or no price.  Many harms to suppliers, indirect harm to consumers.  Reduced choice.  Lack of privacy.  The tech giants are all run by creeps.  This has fostered what I will call with my British accept a leave campaign as in leave the currently relatively permissive law approach and leave the consumer welfare standard and take back control.  Make anti-trust great again.  MAGA.  This is populist led and has a disdain for experts.  In this view, experts and economic analysis have allowed too much power in the hands of too few.

This narrative asks for more intervention, substantive changes to anti-trust and reducing the burden of proof and focusing on structural harm and economic dependency.  There is authority at the Rupa level for focusing on competitive structure not just consumer welfare.

And some authority historically in the U.S., not so much MAGA as MAFA.  Make anti-trust fair again.  Now there is another narrative unsurprise willing I which is the remain narrative and this is expert led and notes the benefits of digital developments and innovation for consumers and small business.  This has two voices with one message.  The message is stay calm, do nothing.

Right?  There is no need to change anything.  The first voice is from the large tech firms.  They say nothing to look at here, competition is a click away, move along and we grateful for the innovation you have on the glass rectangle that you are all playing with right now.  Maybe tweak a few things or look at potential harm, dynamic competition.  Maybe give the competition authorities a bit more money.

At the same time some competition shorts are saying don't do too much here, don't take back control, don't break up, give us a few more resource otherwise you might harm innovation.  So remain expert-led.  Remain evidence led.  Remain part of the consumer welfare beliefs.

We were asked by Her Majesty the Queen to try to find common ground.  Try to take the beliefs from both sides and bring them together.  What we noticed in our evidence and hearings was that the sky isn't falling.  There is huge benefits from digital and from innovation.  Equally a lot of the theories of harm are familiar to us and traditional competition law analysis of leveraging and exclusion can handle many of niece problems but not all of them.

It is not true that we should move along.  Competition is clearly not a click away.  Data is not sunshine, not in the world of world gardens and competition is usually for the market.  What we need to docent deuce in our view some changes to competition law relating to focusing on a balance of harm's approach for merger control.  Relating to speeding up interrecommend measures and looking more at competition and potential competition.  In particular, a procompetitive ex-antiregulatory structure in a room about this size with this many team with tech giants renature capital firms and complainants and consumer groups to identify a code of conduct for behavior that we don't want to see the digital players doing.

And then enforce this through is a digital markets unit.  Competition regulation that would focus on firms with strategic mark status.  This is lower than a dominance threshold.  This is a faster moving intervention than a 12-year abuse of dominance case.  But this is to get ahead of the problems.

When we talked to many of the tech giants they have said actually, many of the things you are asking for in terms of preventing self-preferencing and preventing exclusivities and making sure that firms can't prohibit you from multi-homing these are a lot of the things that the tech giants say they are already doing already.  If that is true -- and I don't believe it is -- but if that is true these firms could sign up to these kind of principles.  We are proposing to complement anti-trust and have ex-Ante regulation enforced by a unit engaging with the tech giants and learning by doing and a quick enforcement mechanism of a new weeks and not many, many year.

Thank you, Philipp.

>> MODERATOR: That is brilliant, of course, using the examples you used and, of course, it is always to pleasure to listen to the beautiful Oxford English accent.

Let's start with I think there was one interesting element of the intervention of all of you but especially of Philip and Martin.  You said we need to make anti-trust law big again and enforce it correctly.  Of course, there was some agreement on making -- on speeding it up and on interim measures.  Both of you said we need this pro competitive ex-antiregulation mechanism.  Martin if I understand correctly argued for we need regulatory law as well.  Regulating big platforms certaining self-preferencing and intraoperability and so on.  Maybe elaborate a little bit.  Isn't that contradictery.  You said we need to make competition more effective but that is not enough and we need to go beyond competition law.  Phillip, want to start again?

>> PHILIP MARSDEN: First hashtag.  Hashtag intraoperability stimulates competition.  Intraoperability stimulates competition.  Is isn't really about intraoperability.  It is about expost analysis and takes many years and many experts trying to work out if harm as happened.  What we need to do, I feel, is to get ahead of some problems.  Pa so many of the recommendations were to help us catch up with the digital giants but the procompetitive regulatory suggestions are not just a catchup.  They are to get ahead of problems.  One of the things is to build into the systems entransaction log operability and data portability so the technical structure of open markets and the original plans for the internet we have closed systems on top of open systems is more disintermediatiated if you will and many of the technical experts no more than I do.  Introduce a layer in which competition can happen and new products can develop.  And we did this in our UK retail banking study where we looked at an Oligopoly of large Banks and tried to not break them up, though there was a strong political recommendation that we break them up but instead open up through open data and open APIsand open operability and data that portability.

That fostered new rules and made the in cull bent Banks feel the heat of competition.

>> Thank you very much, mar.

>> MARTIN SCHALLBRUCH: We agree with the idea of a procompetitive ex-antiregulatory environment.I fully agree with that.  And but this environment has not necessarily been introduced -- implemented in the competition law at all.  The competition -- the question of competition on platforms and competition off platforms is that with a different regulations.  Privacy and the right of data portable and reliability of platforms.  Regulation around liability is affecting competition.  Security regulation.  Media regulation and so on.  We have a lot of competitive effect or competition effects in different kinds of regulation.  And we look at our idea of having a better regulatory environment with ex-antirules.  We have to have a more holistic view.  And I found this in the BRICS-Report also.  A more holistic view on the role of platforms and the different regulatory environments in competition law.

And one idea of the ex-antisystem for dominant digital platforms is to have some of them major means for more competitions within the competition law.  And from my perspective and I'm a computer scientist, intraoperability and data portability are very core ideas of fostering competition and that should be not only be root out by sector regulation but also be a part of general competition relationship.

>> MODERATOR: Okay.  Thank you very much, indeed.  Martin.  I think a lot of agreement on the right-hand side.  To Ioannis you have the big picture of how the economics change.  You said simple economics don't work.  What do you make out of the concrete positions are what are your concrete competitions to deal with the developments?

>> IOANNIS LIANOS: In our report we take the approach suggested before in terms of the based approach to promote intraoperability and adopt interim measures, to a lower probably the extent of the judicial review in this very rapidly developing markets.

But I would like just to basically make three points.  The first one is that the main problem we have is that there has been a period of value extraction without proper rules, without proper institution sys, this is what led to the situation we have now.

And I do agree that competition law on its own cannot provide an answer to the problem.  So what we have been pulling forward in our report is what I call a tool kit approach.  And obviously the tool kit approach will depend from jurisdiction to jurisdiction.  It will depend on the development of the digital economy, but also on the institutional capabilities that each jurisdiction has.

More generally speaking, I think that the first question one should ask is do we have in the specific market or specific context do we have a winner takes most or a winner takes all game?

Now if it is a winner takes most game, that means that competition might still work in this particular context.  But if it is a winner takes all game, then we need probably to think about the presence of a natural monopoly and possibly more utility style regulation.

And we make some suggestions about that.  We, for instance indicate that could probably take the form of limiting the amount of advertising on platforms or it could be on somehow imposing payments to be made to users for the use of their data.  The second I think important issue, and which actually comes up to the issue of data is that one of the main problems we have I think in the current context is that we have a missing market.  We have a data missing market.

What does it mean?  It means that when basically Google is selling and take this example selling predictions to advertisers and obviously there is a market there.  On the other side there is a an exchange between the users and Google.  But there actually we don't really have a market because users do not have property rights.  So there of we don't really have an understanding about the valuation of the users of how much this data is valued.

I think this is really an important element in the missing element in the picture that we have.  Probably we need to think about Mays to increase data or of retention in that context.

And obviously provide users possibility to transfer data or transfer more generally their attention.

The other element is to understand in the current form we have digital platforms in labor markets.

Number of freelancers, artists, journalists are that are basically working for the platforms and apparently do not necessarily get a fair share of the value.  And obviously that is because of the monopsoic power.  We need to think about cultivating powers through collective bargaining of the freelancers or sole users.  And we need to develop competition law that takes into account not just price but other dimensions of well be.  And in particular, privacy or a complex quality.

This can be done by adding certain concepts to the existing tool kit.  For instance, when we think about the exploitation abuses, wellers I mean we can probably add different forms of exploitation.  Manipulation, it could be attention theft, some have put it forward as an idea.  That could be different forms of exploitation we can enforce through competition law.

And secondly and final element is that we probably need to think differently about power.  We have been focusing too much probably on market power which is very much based on the idea that we need to have, you know, competition between substitutes.  But as I mentioned before, an important dimension of competition in the digital value chains is vertical competition.  We need a theory of vertical power.  I think the various reports have been putting forward some possible dimensions of these vertical power theory.  For instance, in the furman report that put forth the study of strategic market position.  The German reports that Heike Schweitzer and her colleagues completed has actually put forward this idea of intermediation power.  All that shows that power is more related to the position of a specific platform in a network, so its positional pourer is based on status and this is something that the current metric of market power does not take into account.

>> MODERATOR: Thank you very much.  Indeed, I would like to stick a little bit with the last question here for the panel and then I will open it up so think of your questions please online and offline.  Data is one of the most debated and when I witnessed some of the discussions I think sometimes without no offense to anybody but still there is a lot of uncertainty and unsecurity and there is a lot of we have to to and we should do.  Of course, there are many different approaches.  The GDPR with the regulations and competition law and the calls for regulation forum, what Martin Schallbruch called data trustees.  Everybody agrees that data is important.  The new resource for the digital age.

So what if you could try to be brief, what is the role of competition policy competition law and what is the role or what other regulatory instruments or other instruments in general do we need?  Maybe Martin you will start off, Mees.

>> MARTIN SCHALLBRUCH: Well you probably know that in Germany we have a strong political discussion about opening data of big companies for other companies for competitors.  One of the ruling parties the SPD made the recommendation of having the data for all laws.  So giving companies access to data of their competitors.  And we have had a strong debate about that on our commission and we found that opening the data of companies is always a problem of reducing innovation of this company.  Data is somehow the source for innovation and if you too early open data access you have the block for innovation within the company.

So we did not come to a solution that this one size fits all approach may work.  Our idea is to have some kind of I like the word tool kit approach to define more specific instruments for data access.  Of course, we have the instrument under the existing competition law that data access denies can be treated as an abuse of dominance.  This could be made a little bit more effective and I think Germany is doing well with that with the draft of the new competition act.  And there are more tools.

I mentioned tools touch as data trustees or opening a user accounts, obligations for platforms as market dominant platforms could have an enhanced role in data sharing.

We have some experiences with sector regulation and opening data such as the energy sector where data is open about energy production and energy transport and across the new business models.  And one important aspect we identified in our commission is the role the -- the raising role of public data, open data of public authorities of government, of public rule sectors such as healthcare or energy or mobility can help to foster competition.  We made some hearings with small and medium enterprises who said we would like to have an easier access to open data from governments and more standardized platforms, broader open portal or something else to access public data because public data such as mobility data is always a help for developing business models.

>> MODERATOR: Thanks you very much for the explanation.  The obligation to share data and what data, would that be comprised by the procompetitive ex-antiregulation mechanism or do we need a specific regulation or specific instruments to impose this obligation to share data?

>> PHILIP MARSDEN: What I perceive is a digital markets unit engaging with the tech giants and key complainants and consumer groups to identify what data is the most important data to share.  A lot of the tech firms will be a bit inconsistent with the arguments in resisting this.

Some will say it is not about the data.  Data is everywhere, it is about the engineers.  So, you know, then I always ask them so what is the problem with releasing some of the data if it is not about the data?  And they say oh, you will change your fundamental business model and killing innovation incentives and blah, blah, blah.  Other times they say the data is crucial to us and this is where we make our money from it.

It would be nicer to have a conversation and real debate about this.  Another hashtag.  Hashtag follow the data.  Hashtag follow the money, right?  The data is related to our attention which is related to our engagement.  Those are the markets I'm interested in looking at engagement and attention markets which is where they are competing for and making the advertising Euros.  We we said open up the banking data which is some of the most commercially and financially and sensitive information that we all have, our own, you know, financial status et cetera like that, we were not saying release the data into an iPad or USB stick.  We were saying can some of the companies entering the market or seeking to enter the market access some of the data of the incumbents to train their algorithms and to be able to operate new products with consumer concept.

We were not saying release the data so that the sky will fall.  And all I'm saying is if we don't try to introduce some of these models something much worse will come down the pipe.  What we are introducing is not something that will make the sky fall in and destroy the business models.  It will just help them evolve and adjust.  If we don't find a way of addressing these kinds of imbalances in power and find new ways of introducing competition I feel a much colder regulatory winter will come through, hashtag winter is coming, right?  So we need to do something to make sure it is not a scary regulatory winter and it is something that actually engages companies to become more competitive themselves.

>> MODERATOR: Thanks you very much, beautiful pictures.

So Ioannis you talked about the lack of data and asked for communication of data.  You remain in the framework of competition law or competition policy or we need to go on as well.

>> IOANNIS LIANOS: I'm in favor of the tool kit approach.  Let me say why data is important.  Data is important because of the importance of learning effects.

I think we have focused a lot on network effects but the most important issue is the learning effects.  And why is that?  I mean learning effects states journally.  If you are in a particular industry you know better about the Indy Tris and have a competitive advantage.  It is more difficult for someone to take you out.  I think the digital economy, the learning comes out of data and the development of algorithms that actually make learning even more powerful.  Which probably leads to a difficulty for other companies to enter this market once you have developed really quite important learning.

So data is important from that perspective.  Data is everywhere.  It is an unrivaled source.  Only certain categories where we have scarcity, for instance, important information such as medical data.  Generally speaking for life tile data is available and usually people can actually have access to that through different sources.

However, as Philip mentioned, the important issue here is is the scarcity of attention.  We need to move a little bit the debate towards attention markets or personalized markets which is actually quite important in the context of a personalization we will see happening with report to the internet of things.  There is a competitional problem in the setting of this specific markets.

Let me basically give you an example.  Using a search engine let's take for example Google or social media take the example of Facebook you are using this and you have to accept that you will provide your data.

So to certain extent there is an agreement that enables you to have access to the service by providing your data.  And obviously that provides huge advantages to the users.

But one will ask, would it be possible to have such a configuration if the market of social media or the market of search engine was competitive?  Would it be possible, for instance, to think that in case we have different competitors in the markets maybe some users could have actually been paid in order to provide their data.  Maybe some users will have preferred to pay but not to provide their data or their privacy.  And finally, maybe some users will have probably, you know, use their data to actually enjoy the service.

What I'm saying is that we can't see the preferences of the users expressed in the market.  Interest having the three options and we have think of different others because of the setting of the market and the fact that we have a super dominant firm that basically imposes its choice.

What actually I think becomes a competitional problem there is to enable, you know, to the consumers to choose according to their preferences and to provide basically the various choices in the marketplace.  And that actually is definitely the task the competition rules should follow.

>> MODERATOR: Thank you very much.  That was very clear and inspiring.  I mean, of course, there are some saying, well, the users could choose today but they don't want to.  Maybe this is a topic for debate of questions from the audience online or offline.  Are there any remarks questions.  Maybe you have to come -- there is a mic coming to you.

>> AUDIENCE: Thank you for this very interesting discussion.  I want to talk about the issue ofen know expectations and people say that exclusive data power is necessary for innovation.  But what about the current factual, all of the up novation that is not taking place today because of the exclusive data power and the startups that are bought up before they can even compete by the companies.  No one is regulating that.  And secondly, I want to talk about data as a nonrival resource.  I would think that at an ecosystem level and there is some academic work on this, it is actually a rival industry source because given the platform model it would be given the fact that networks, network effetes reenfirst the data power.  Maybe it becomes a rather source at the ecosystem level.

>> MODERATOR: Thank you very much.  Indeed, Ioanni 60sneeds to leave in five minutes but you might have a chance to answer.  I would take another question or remark if there is one.  Yeah.  The gentleman over here.

>> AUDIENCE: Thank you very much for this nice --

>> MODERATOR: You might introduce yourself briefly as well.

>> AUDIENCE: Sorry?

>> MODERATOR: You might introduce yourself briefly as well if you want to.

>> AUDIENCE: I'm a member of parliament in Lebanon.  And I'm the head of the IT committee in the parliament.

I was just thinking you took into consideration the management of the data and data governance and how regulation should be managing the data.  However, I would like to go into another view and have a view on the regulation by itself.  Knowing that the regulation is part of a very big burden on companies, and this is like sometimes regulation by itself and GDPR specifically is a big burden for companies and is creating disbalancing in competition.

Like, for example, if we apply the GDPR on Facebook, Google or Amazon on the big companies, they have the possibility of paying the fines and they are like -- they are okay with the regulation.  But if we go into small and medium companies, they are much more vulnerable on fines and penalties of the GDPR.  So there is a lot of competition.

The security by design imposed by GDPR is much more heavy for these small companies than for the large one.  And at the same time, by putting such regulation, we are killing a little bit the free service of the internet.  So I just want to know what is your opinion about this, and how can regulation also help for better competition.  Thank you.

>> MODERATOR: Thank you very much.  And I would take a third and last one, intervention or question if there is one.  The gentleman over there.  Yeah.

>> AUDIENCE: Thank you, chair.  My name is Barack and I'm representing the Kenya IGF.  Interesting conversation.  Something we are also facing back at home.  Although I was looking at it from a different perspective.

For us, it is more a case of big telcos with the large pools of data that they are able to play around with from an innovative standpoint and the industry is crying foul should be they broken up because of the monopolistic tendencies because they are playing around with innovative solutions and some are coming out to be big money makers.  I don't know from a developing country per spect whether regulatory sandboxes with be something to pursue.  In the EU your market is much more developed.

I'm looking at it you have regulations in place, but what of countries that do not have regulations?  Should we go for regulatory sandboxes?

>> MODERATOR: Thank you very much.  Fascinating questions.  I would turn to Ioannis.  You pick the questions.  Innovation not taking place.

>> IOANNIS LIANOS: Unfortunately, I have a limited time.  I agree with what you mentioned before, discussing the network effects in the context of outside interecho system competition.  In the intraecosystem you might have network effects with regards to data.

The second with regards to mergers and acquisitions this is a huge debate.  There have been hundreds of mergers and account characteristics in the area.  Some relying on empirical work done in the pharma sector have put forward the idea this might be some of them at least might be killer acquisitions and some form of killer zone.  What does it mean?  This means that the digital platforms when they see some company that might be a potential competitor, they instead of basically waiting to -- for that competitor, they buy that competitor.

Possibly there have been some mergers that have been specified by the specific strategy.  But at the same time I say we have to be careful there because for many of the startups it seems that being bought by a major platform is also a way to monetize the effort and the innovation that has been put forward.

And I think there we really need to be extremely careful to understand when we have issues of potential competition and don't have issues of potential competition.  The competition laws and economics are not developed that much with regards to what we per peeve as potential competition and the metrics for that.

It is quite important to have in mind also that the funding obviously is there.  But funding is not always what is really miss.  I mean generally, companies when they are asking for funding they are also ask for quality certification.  There are some specific firms that specialize in funding digital technologies that also provide quality certification.  That is why you have the Chinese firms going to silicon valley.  There are huge capital markets in China as well.  But they prefer to go to silicon valley because of the quality certification element.  There you might have a buyer to entry that might develop and this is something we look in more detail in our report.

With regards to financialization issue.  Thank you very much for the invitation.  I'm afraid I need to go.

>> MODERATOR: Thank you, and good luck on your way to the airport.  Now it should be okay.  The question asked of innovation not taking place and then the burden of regulation to GDPR and especially the burden of small companies.  Wouldn't that be a problem and then the question from the gentleman here on big Telcos and regulatory sandboxes especially but maybe not exclusively for less developed companies.  Martin?

>> MARTIN SCHALLBRUCH: I would like to pick two.  The first question was about exclusive data power.  The view of the commission is that it is too early to have a general rule for opening data access because you need a period of time where the innovator, the company, which innovates has exclusive data power.

But, of course, exclusive data power has to be limited.  And I have described some of the limitations.  One limitation is that the access to user data should be steered by the user at the first hand.  The second limitation is that dominant platforms should open more data.  And third limitation is, of course, abuse of dominance positions in other market could also be the reason for orders to grant data access.

And the last thing is that all data that was produced by public money should be opened.  But only data within the public service, but also data that was generated, let me say in the sector of healthcare or mobility where we have public licenses.

Second question I would like to pick is the question about regulatory sandboxes.  We have seen in our work that there are a lot of very similar competition problems in very different sectors of the economy.  And therefore we propose some changes in sector regulation that introduce more instruments that foster competition.

And this kind of sector regulation from my perspective could be a good place for having regulatory sandbox concepts in place.  For example, regarding the question of intraoperability or regarding the question of data access which somehow could be a test in one sector that could be if successful transfer to other sectors such as the transfer of the regulation for financial sector, PSD 2 that I would like to transfer to other sectors, too.

>> MARTIN SCHALLBRUCH: I will try to answer briefly through an example.  Relating away to the counter factual question at begin.  The retail banking study in the UK we were given a lot of political pressure to break up the main financial platforms.  We decided to epiup through open APIsand data portability and, indeed, needed a regulatory sandbox to be able to implement that.  And then we were asked by government wouldn't you have a faster result if you had broken up the Banks.  What is the test for success?  You have released data and seen some new competition in the market but we don't see consumers switching and we want to see consumers switching amongst the platforms.

We said to them our remedy and test for success is not switching because British people switch their spouses more frequently than we switch their Banks.  The remedy is not divorce.  It is engagement.  The remedy is not leave Facebook, delete Facebook, delete Instagram, delete Twitter.  There are benefits to engage better and make the platforms even more innovative.

The platforms will say frankly there is a lot of innovation, just relax.  And what you are prosing is chill innovation.  No, it won't.  What we are trying to get them to do is to be believe o or not a little less lazy.  Some will say they are not lazy, Google and Facebook and Twitter they are amazing.  Tons of studies that show when you get into monopolistic or oligopostic markets, things change.  Microsoft ignored internet explorer when it was the dominant provider.  It needed Mozilla to compete and that required regulatory intervention.  There is tons of research to show that we need to have a better and could have a better ecosystem if we allowed more intraoperability and data portability and faster competition interceptions.  The Swedish research which is famous which is the winner takes it all from Mapa.  American research from Silicon Valley you can check out any time you like but you can never leave, all right, the eagles.

And finally the Scottish train spotting choose life.  That's what we want.  More choice.  More consumer choice.  More choice amongst platforms and more choice for different merchants and so let's have a lust for life as Ziggy Popp says.

Thank you.

>> MODERATOR: Impressive not only the content but the way you present it.  I think it will remain with us even after this session.

So obviously I think we have seen that this debate has shown us once again if you hadn't known before that the debate is fascinating and that the question of data governance and competition it will remain with us.  There was agreement that we need some kind of tool box, I think that is quite clear.  There was a lot of emphasis on expanding choice and on intraoperability.  Being pro competitive.  A lot of agreement, I think, of course making competition law great again.  But not limiting ourselves to competition law.  We need to go beyond competition law if necessary.  As well, you probably need to some innovation and introduction of this -- of an ex-antimechanism or ex-andty mechanisms.  We tried to do that in Germany actually drawing on your proposition and to try to introduce something similar let's say in our competition law which is going to be difficult because actually the big tech concerns they are a little bit reluctant to like that.

So we're going to see what is going to come out of it.  Thank you very much, indeed, to the panel, to the remaining panel but, of course, even though he has left to IOannis Yankees you very much, Martin and Philip.  And thank you dear audience very much for having taken the time, for having asked questions and, of course, also the online community, I don't see you, but thank you very much for having listened.  So I wish you a good continuation of this Internet Governance Forum and I hope to see you soon again in some discussions on some panel.  And, of course, I'm very happy to exchange opinions and views with us.  So thank you very much and have a good day.  Goodbye.

 

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