Australian Competition and Consumer Commission (ACCC) Chair Rod Sims discussed the local and global issues in regulating the data economy in a speech delivered in Sydney on Monday, October 15.
Mr Sims examined the difficulty regulators face in determining the competition impacts when dynamic data companies merge, consumer issues, and how the ACCC is well placed to take enforcement action in relation to data issues.
“One of the key challenges with merger cases in digital markets is predicting the likelihood of future competition between the target and the acquirer,” Mr Sims said. “In fast moving markets, this is clearly difficult particularly when the target is a start up or currently only active in a neighbouring market.”
“Such transactions can end up leading to a large reduction in competition but, at the time of merger review, the chance of this occurring may well be considered low or difficult to predict.”
Mr Sims pointed to Facebook’s purchase of Instagram in 2012 as one example of the difficulties competition regulators face when determining the competitive impact of acquisitions in dynamic industries like social media. Instagram had just 13 staff and no revenue when it was sold in 2012, but has since grown into the second most popular social media platform in Australia, behind Facebook.
“It would be extremely difficult to predict what was going to happen in social media in the last five years, including whether in the absence of the acquisition by Facebook, Instagram would have grown and become an independent challenger to Facebook.”
Full Content: ACCC
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