Countries around the world are experiencing a competition moment. After decades of policy supporting consolidation and a lax approach to concentrated corporate power, the assumptions underlying this approach are being revisited (Bester 2022). In the United States, competition law authorities have stepped up enforcement of the country’s anti-monopoly laws. In the European Union, the Digital Markets Act seeks to rein in the power of the giants of digital markets. In Canada, a series of reforms in 2023 and 2024 have dramatically strengthened the Competition Act, the country’s competition policy law (Department of Finance Canada 2023, 2024).
But largely absent from the policy discussion preceding these responses has been the intersecting roles of competition and data governance and, in particular, the role that competition can and should play in the valuation of data (Iacobucci 2021). Already critical amid the rise of digital markets, the growing use of large language models and their voracious appetite for data makes the task of understanding the true value of data even more urgent.
Competition as a Diviner of Value
As a public policy goal, competition is understood as a means rather than an end. Sidestepping an important debate about the kinds of competition that are beneficial and detrimental to the economy, the results of competition are well understood: lower prices, higher quality (Bester 2023). In addition, the fuel for the innovative process that delivers new goods and services bears the fruits of an economic system that rewards challenges to the status quo in markets across the economy.
Less advertised and more relevant to the ongoing work to better understand the value of data is the role of competition in constructing the value of the interlocking components of the economy.
The concept of value is a core component of competition. The value of a good or service, its many dimensions, the interpretation of those dimensions by individual users and societies, and the variety of those interpretations make up the heart of the competitive process. Often framed in terms of price discovery, competitive markets are the primary route for the messy process of determining what something is worth. Constraints on competition, therefore, can undermine this process and thus obscure the value of data.
Once considered outside the scope of traditional competition law analysis, privacy is increasingly valued by market participants as a dimension on which commercial decisions could be based.
This can be understood narrowly in the metaphor of the market exchange, with many buyers and sellers coming together and comparing bids and asks, but the reality of value discovery through competition is a much richer process. One example is the evolving debate over the role of privacy in competition and accordingly the enforcement of competition laws. Once considered outside the scope of traditional competition law analysis, privacy is increasingly valued by market participants as a dimension on which commercial decisions could be based. As a result, competition law is forced to reckon with privacy as a dimension of competition and understand its relevance in the competitive process. The contrary position argues that privacy is a goal best handled by discrete policies, and that competition law should maintain its focus on just that, competition. But this position attempts to skirt competition’s role as a method for divining the value of the attributes of products or services, and a law protecting competition must be flexible enough to incorporate these disparate dimensions of value.
Going a level deeper, a core motivation for competitive access to the inputs that drive the economy is the belief that a diversity of participants is the surest way to unlock not only the most efficient use of a given input, but also the full range of its possible uses. The idea that the competitive process will uncover answers in the aggregate that would have never been considered by even the commanding heights of the economy is a driver of the skepticism of monopoly power. Allowing monopolies to form bottlenecks at key points in the economic system has the potential not only to increase a wide definition of costs but also to blunt competition’s power of discovery.
Together, the unimpeded process of refining and diversifying uses of the building blocks of the economy driven by competition arrives at the most accurate approximation of its true value. The use of the word “true” does not necessarily connote a single value, given the multiple dimensions of value possible when viewed through the prism of economic actors and their forever fluid nature. For example, the value of the underlying components of mobile phones, and of mobile phones themselves, has undergone multiple transformations. Their value was seemingly well understood until it was uprooted with the introduction of the path-breaking BlackBerry, only to be transformed again with the introduction and evolution of the iPhone. For each iteration, had that combination been frustrated, markets would have continued to labour under a current but incomplete view of the potential value of the product and its constituent parts.
This is the case for data, as it is for physical goods in a more traditional view of the economy. Looking at the companies that have come to dominate digital markets over the past 20 years, there is no question that data has tremendous value. At the time of writing, nearly all of the public companies valued at more than a trillion dollars have data central to their business models or provide the inputs for others to make use of data. But an input to economic activity can be extremely valuable while at the same time having the full extent of its value misunderstood. There exists a real risk that the monopolies that have grown amid the explosion in the use of data are frustrating that competitive process and are overdue for exposure to the enlightening power of competition.
The largest companies on the planet take up the lion’s share of headlines related to competition and data, but this phenomenon extends to some of the most traditional markets of the economy. Consider the case of farmers, whose commercial activity generates not only food that keeps society fed but also constant streams of data about weather, soil quality, crop yield and the effectiveness of agricultural inputs. Today that data is often captured by major equipment manufacturers such as John Deere rather than the farmers themselves (if it is captured at all). This has implications for the more familiar boundaries of competition law, with access to data conditioned on locking farmers into a given equipment manufacturer’s platform, possibly choking off competition in the market for farming implements. But the issue extends beyond this scope to the goal of understanding the value of data in a market core to human flourishing. While a company such as John Deere has turned those data flows into a valuable revenue stream for itself, the true value of this data is obscured and likely discounted by pulling control away from individual farmers and locking it within a walled garden. While maintaining scarcity over this data may improve its financial value for a single actor, its true potential value and contribution to the economy and society is obscured.
Competition Law’s Oblique Contributions to Data Valuation
The monopolization of the flows of data is not a new issue. In 2011, the Canadian Competition Bureau challenged the Toronto Real Estate Board’s (TREB’s) monopoly over real estate data in the city of Toronto. This was one of the most consequential cases of abuse of dominance under the provisions of the Competition Act focused on anti-competitive activity by dominant firms. Hinging their case on an innovation-based theory of harm, the bureau successfully argued that TREB was foreclosing access to valuable real estate data, thereby suppressing the ability of other companies to enter the market.
TREB is an example of both the intersection and the gap between more traditional competition policy and the valuation of data. Though not an explicit component of the bureau’s case, TREB is a prime example of the suppression of the true value of data in the hands of a monopolist. Even if TREB were, in theory, the optimal user of the data in question, the range of that data’s uses would be necessarily bounded by the realities of the organization, the path dependency of its capacity and its limited and potentially conflicting business incentives. From a competition law perspective, the goals of the organization were misaligned with the more optimal outcome of the use of its underlying resources in a more open and competitive market. From a data valuation perspective, narrow control of the data was blunting the ability to understand the true potential value of the data to the economy and to society.
Demand and supply are worked out in an infinitely recurring series of automated auctions matching advertisers and publishers.
The US Department of Justice’s (DOJ’s) 2023 complaint against Google’s dominance in the advertising technology (ad tech) market is another illustration of the importance of competition, not just as a distributor of value generated, but also as a tool for understanding the true value of data (US DOJ 2023). Much of the modern digital advertising infrastructure functions similar to a stock exchange. Demand and supply are worked out in an infinitely recurring series of automated auctions matching advertisers and publishers. Google is accused of establishing positions across both sides of the exchange market, as well as the exchange itself, and using those positions to tilt the outcomes to its own benefit. This conduct, which the DOJ suggests leads Google to claim 30 percent of every ad dollar spent through its platforms, comes at the cost of advertisers and publishers who are harmed by the monopolization of the advertising market. Following the lead of the DOJ, Canada’s Competition Bureau has expanded its own investigation into Google’s ad tech practices, including a predatory pricing theory of harm unavailable under American antitrust law (Competition Bureau Canada 2024).
Without focusing explicitly on the value of data, both of these cases speak to the power of competition to unearth a truer picture of value, as well as the power of monopoly to distort that picture. A company such as Google brings in myriad data flows through its services and funnels them toward a variety of purposes, many of which have provided value to a global base of users (Birch 2023). But the centralization of these flows within a single corporate entity represents a barrier to unlocking not only the potential of that data in a more open market, but also an understanding of the value of the data beyond the noisy headline figure of the corporation’s market capitalization. The use of these financial metrics to understand the value of data is frustrated, both because market capitalization is too crude a figure to extract any meaningful view and because the value itself is distorted when the control of data is monopolized. With the competitive process frustrated, the result is a crude, inflated and incomplete picture.
The sky-high valuations of these companies test the belief in the competitive process to ascertain value over centralized economic decision making. Setting aside competition law’s inherent wariness of economic dominance, it is reasonable to assume that Google is best placed to decipher and deploy a deep understanding of the value of data as one of the world’s largest companies. But, as in the case of TREB, a corporation such as Google is bound by its own capacity and incentives. For all its sprawling services and business lines, Google, as well as its parent company Alphabet, is first and foremost a digital advertising company. Accordingly, the use of data within the company ultimately serves the goal of success in that market and its value is distorted by the competitive moats encircling its business. As the company’s mythology of risky bets outside its core competency fades into memory and the quality of that core competency itselfappears to degrade, the consequences of monopoly in understanding and unlocking the true value of data become harder to ignore, making the task of opening these bottlenecks more urgent (Bevendorff et al. 2024).
Privacy and Control as the Foundation for Competition
With all the talk of openness, it is fair to worry that the use of competition as a tool to derive the true value of data implies a free-for-all with the often sensitive data that individuals and organizations generate. In the case of companies dominant in digital markets, the agreement frequently offered has been that privacy will be preserved as long as the data is the sole remit of the company in question. Scandals such as Facebook-Cambridge Analytica poked holes in this narrative, but alongside the Wild West of the data broker industry, these scandals have ultimately reinforced the idea that data should be entrusted to the chosen few. Returning to the TREB case, arguments for privacy were unsuccessfully marshalled in defence of the data monopoly, casting the organization as a responsible steward amid reckless potential competitors.
This view is incorrect. Rather than encouraging the careless use of data, the potential for competition as a method for sussing out the value of data reinforces the need for reliable privacy protection and control of the data generated by individuals and organizations. Though the nature of data and its generation, collection and use force new ways of thinking about control and ownership just as it does with the concepts of value and valuation, this does not mean the task can be forfeited. Nods to data portability and interoperability driven by the actors sitting on data chokepoints are unable to escape the incentives at the heart of their own business models. As a result, work to this end has often been little more than window dressing by monopolists trying to protect their own turf as opposed to efforts to truly spur broader access and competition. To realize the true potential of competition for the task of valuing data, policy makers and organizations seeking broader access to data have a mutual interest in creating reliable systems to support the responsible use of data.
To be successful, these approaches to privacy regulation must appreciate and reflect the value of competition. Echoing the motivation for skepticism of monopoly, a narrow reading of the potential uses of data will lead to narrow results. Compare the approaches taken by the United Kingdom and Australia in providing their citizens with systems for control of their data. The United Kingdom’s open banking regime has given the British public greater control over the use of the data that makes up their financial lives, as well as increasing transparency and competition in an important market — the provision of high-quality financial services.
But the adoption and success of that system is limited by the boundaries of its ambition to improve competition in the financial sector. In contrast, the Australian approach to enacting a consumer data right was always anchored in a broad and evolving understanding of the potential uses of data in many sectors, even if the initial scope was limited. This has allowed organizations from a wider range of sectors to create services that provide value to consumers on the basis of the data they now control. Framed in the language of privacy and consumer choice, this wider conception of the potential uses of data implicitly adopts competition as a tool for better approximating the value of the data in question.
Conclusion
After decades of dormancy, competition policy has returned to the foreground amid the rise and persistence of digital market giants that are driven by business models based on the collection and utilization of vast flows of data. As competition policy turns to the more familiar question of addressing the economic dominance of these giants, the role that competition can and should play in better understanding the value of the data that has supported their business models has lacked discussion. While these firms have recognized fantastic economic value from the data they hold, the centralization of the control of that data runs counter to the promise of competition as a true diviner of value beyond the narrow performance and financial metrics of a given firm.
A pillar of the faith in the competitive process is that working out approaches through competition and contestation, as opposed to the genius or capability of a single actor, is more likely to reveal the true and evolving value of a given commodity. Attempts to discern the value of data emerging from a diverse range of actors — located in both the private and public spheres, as well as in academic and civil society — mimic this competitive process and its potential for enlightenment. But to fully realize that potential, the walled gardens frustrating that process must be brought down and replaced with contestation, both for the sake of markets and in order to understand the true value of their underlying components.
