Discussion Papers

No. 414 Big Data and OTT business models as well as emerging competition issues and challenges for data protection and consumer protection

(Full version only available in German)  

Authors: Christian Hildebrandt, René Arnold 

Summary 

Digitisation across almost all areas of our lives enables the gathering and analysis of more data than ever before. Insights gained from these data are particularly relevant for business models that use targeted advertising as a revenue stream. With these business models, such insights can generate competitive advantages. In practice, any business model can profit from the availability of structured and unstructured data (big data), their (purposeful) gathering, compilation, analysis and usage to improve its products and services. Information and insights gained from data can furthermore enable numerous innovative business models. Thus, data play an increasingly important role in the public debate. 

So-called Over-The-Top (OTT) services that use the Internet as infrastructure to distri¬bute their services and contents use data more and more as an integral building block of their business models. In doing so, they employ various tools for tracking and analysing data almost in real-time. These data originate commonly from consumers’ interactions with their websites, apps or other services as well as their devices. 

On this backdrop, the present Discussion Paper elaborates in detail the fundamental technological, competition as well as data and consumer protection issues around big data. One major insight is that data are by no means a new sort of money. The most obvious difference is that data are non-rival and cannot be consumed. Instead, the gathering, multiplication, storage and analysis of data create new added value along the telecommunications infrastructure value chain. 

Equally, this Discussion Paper finds little support for a data-induced restriction of com-petition. This would only be the case if there was incontestable exclusivity of certain data that proved critical to the success of a specific business model. Furthermore, one may doubt that data can in fact enable perfect price discrimination. As with other data usage scenarios, it is naturally possible to adjust offers to specific target groups, perfect individual pricing is however currently just as practically unfeasible as directly inducing a specific purchase. 

Finally, it appears almost impossible to realise such approaches given the Schumpe¬terian competition so typical for any service offered over the Internet. Open questions remain however as regards data protection and security as well as consumer protection (privacy and transparency). In particular, one may doubt consumers’ ability to protect their privacy and make actually informed decisions about whom they provide with access to their data. 

Discussion Paper is available for download.

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