Digitalization and technological advancements are causing profound changes in all aspects of business and commercial life. With the transition of activities carried out at the state, organizational, and individual levels to the digital environment, digital platforms are growing rapidly, and the volume and diversity of big data generated globally are increasing every day. Big data stands out as a factor representing power in economic and commercial relations. The economic effects of this digitalization process have now become a brand-new field of study on both a national and international scale.
The Rise of Big Data
In the early 2000s, this new digital age was referred to with terms such as the “information economy” or the “network economy.” Over time, as the economic effects of digitalization, along with its role in political and administrative processes, became apparent, and the relationship between digitalization and democracy became clearer, the concept of “surveillance capitalism” emerged. Surveillance capitalism refers to an economic system aimed at generating profit through the commodification of personal data and personalized advertising activities. According to Shoshana Zuboff, a theorist of surveillance capitalism, this concept encompasses the extension of some technology companies beyond their traditional structures in pursuit of profit, engaging in data collection activities without consent mechanisms, thus generating significant revenues and even influencing political campaigns.
In this new economic order, big data is now seen as a commodity, with discussions about how big data is the “oil of the 21st century.” The number and size of global companies that solely engage in data collection, processing, selling, and brokering these activities are increasing. It is predicted that data literacy will be one of the most critical qualifications for individuals performing professional occupations.
Some of this big data is produced by governments, some by organizations, and a large portion by individuals. Let’s look at the volume of data generated globally in just one day. According to data from the World Economic Forum, 500 million tweets are sent, approximately 300 million emails are sent, 4 petabytes (4 million gigabytes) of data are produced on Facebook, 65 billion messages are sent on WhatsApp, 2 billion minutes of voice and video calls are made, and 5 billion searches are conducted on online search engines in a single day. Moreover, these are the footprints that individuals consciously leave in the digital world.
There is also a large pool of big data that individuals create without being aware of it. Individuals produce data while browsing a website, spending time on a social media app, traveling from one location to another, and even while sleeping. For instance, in 2017, the American smartwatch manufacturer Fitbit had 6 billion hours of sleep data. When combined with other data such as age, gender, location, and activity level, this data provided significant insights into a person’s current and future health status and was used in various studies. In 2021, Google, with the publicly announced motivation of “making health more accessible to people,” acquired Fitbit, and the synergy from combining Google’s data with Fitbit’s sleep data was of immeasurable value. However, during this transaction, Google provided binding commitments to the European Commission to protect the privacy of Fitbit users and to keep Fitbit data separate from Google’s advertising data.
This example is valuable in demonstrating that individuals produce data even while sleeping, this data has economic value, and the synergy created by combining this data with different datasets has an even higher economic value. Considering the prevalence of smartwatch usage as of 2024 and the increase in the volume of sleep data alone, the fact that in the future, technology giants may statistically predict which of us are more likely to develop certain diseases is not a science-fictional phenomenon, but a natural outcome of the data economy.
By 2025, it is estimated that approximately 450 exabytes (450 billion gigabytes) of data will be generated globally each day. By cleaning, processing, synthesizing, and making sense of this data, we will have much stronger insights into the present and the future, and we will be living in a world increasingly based on the data economy.
Technology Companies Bigger than Countries
For companies, i) having access to the rapidly growing big data mentioned above, ii) having the ability and capacity to process big data, and iii) having commercial channels that can incorporate data into the monetization cycle as a driving factor are critical.
By monetizing big data, companies grow with a snowball effect, benefit from network effects, manage to keep users on their platform due to the high switching costs between platforms, and thus monopolized companies are born. The financial power, technical and human capacities, and merger and acquisition strategies of these companies create a significant entry barrier to digital markets, and as a result, these companies manage to maintain their strong position in the market for a long time.
As can be seen, there is a wheel in platform economies fed by big data. Although the economic value created by this wheel can be measured with many different parameters, by looking at the market values of companies that have monopolized through data monetization, we can say that they constitute the majority of the world’s most valuable companies today.
While in the 1980s, companies like IBM had a limited presence among the most valuable companies, with companies like Exxon Oil, Standard Oil, Shell, Texaco, DuPont, and Mobil from the telecommunications, oil and gas, chemicals, and automotive industries dominating this list, by the 2000s, we see that companies like Microsoft, Cisco, and Nokia started to weigh more heavily on the list, and by the 2020s, companies like Apple, Microsoft, Alphabet, Meta, Amazon, and Nvidia emerged as the world’s most valuable companies.
If we deepen this qualitative review by adding a quantitative perspective, we can say that the total market value of the aforementioned technology companies was around 13 trillion dollars in 2023. While comparing i) the gross domestic product (GDP) of a country, which reflects the total output value produced in a year, and ii) the market value of a company is not a technically preferred method, these comparisons are important to get an idea of the size of these companies: the United States’ GDP in 2022 was approximately 27.3 trillion dollars, and China’s GDP in 2023 was approximately 17.8 trillion dollars.
According to 2021 data, the market value of Apple alone exceeded the GDP of 96% of the countries in the world. Among the countries Apple surpassed in terms of market value are Italy, Brazil, Canada, and Russia. From another perspective, if Microsoft were a country, it would have been listed as the tenth richest country in the world.
Regulation of Digital Markets
While these giant technology companies provide users with innovative and often free (without monetary payment) services, on the other hand, they also engage in behaviors that could restrict competition. Additionally, the large amount of data they collect through data-based business models gives platforms a much superior position over their competitors, creating a non-transparent ecosystem. Data ownership can serve as a market entry barrier for rival companies, leading consumers to face a “love it or leave it” marketing policy.
These dynamics not only strengthen the dominance of these platforms in their own markets but also allow them to expand into adjacent markets. Furthermore, discussions arise over how platforms may abuse their dominant market position to prevent rivals from entering or operating in the market, limit competitors’ access to data, and lock users into their ecosystems. These structural problems can lead to an increase in the market power of digital platforms and cause market imbalances.
Thus, in this scenario, where technology companies account for 24.3% of the world’s GDP, many states have been intensively regulating these digital ecosystems, which are larger than themselves, in the last decade by imposing certain rules and sanctions to ensure a healthy competitive environment, build a transparent market structure, prevent small and medium-sized companies from being excluded from the market, protect ecosystem players and consumers from being exploited, protect personal data, and prevent disinformation.
These regulations are reflected in many different areas of law. Data protection, consumer protection, intellectual property rights, competition law, and sectoral legislation on information and communication technologies are the primary areas. However, the most fundamental problem when talking about digital markets is the behaviors of monopolized companies that disrupt the competitive environment and harm consumers, and at this point, competition law primarily comes into play. Such behaviors in competition law are considered “abuse of dominance.” Article 6 of Law No. 4054 on the Protection of Competition prohibits the abuse of dominance by providing examples of such behavior, but these examples are not limited to those listed in the law. Both competition authorities and large technology companies are quite creative in expanding the scope of abuse of dominance cases. “Self-preferencing” as a way of abusing dominance is just one of these new harm theories.
The Situation in Türkiye
The Turkish Competition Authority, with its existing intervention tools, has taken a number of large technology companies under investigation to prevent competition violations in digital markets.
In particular, digital platforms such as Google, Facebook (Meta), Yemek Sepeti, Booking.com, Sahibinden, Trendyol, Çiçeksepeti, and Twitter (after Elon Musk’s acquisition) have undergone extensive investigations. In the investigations opened against Google, it was found that the company engaged in exclusionary practices in both its Android operating system and services like Google Shopping. In the Facebook-WhatsApp decision, a series of sanctions were imposed on Facebook due to practices that required WhatsApp users to share data. Additionally, Yemek Sepeti’s “most favored customer” practices and Booking.com’s best price guarantee practices were found to be anti-competitive, and administrative fines were imposed on these companies. Trendyol was also investigated for using its data and financial power in its marketplace to apply exclusionary strategies against competitors. In this context, it is clear that the Turkish Competition Authority, with its existing competition law tools, is closely scrutinizing digital markets.
On the side of ex-ante regulations, after long discussions and legislative efforts in the European Union, with the Digital Markets Act becoming enforceable as of May 2023, a legislative effort inspired by European Union regulations was carried out in Türkiye. This legislative effort, designed to amend the current competition law, was opened for consultation by relevant institutions and organizations in mid-2023. Whether this draft will be enacted in our country remains to be seen. During this process, it is worth following the regulations, processes, secondary legislation, and post-regulation market behaviors of gatekeeper technology companies in the European Union regarding the regulation of digital markets.
References
[1] Gamze Aşçıoğlu Öz, Current Developments and Reflections on the Regulation of Digital Markets and Services in the European Union, Ankara Journal of European Studies, Vol. 22, No: 2 (Year: 2023), pp. 427-475.
[2] Ibid., p. 428.
[3] Shoshana Zuboff, Surveillance Capitalism and the Challenge of Collective Action, International Journal of Communication, Vol. 14, 2020; Andrew Selbst, Surveillance Capitalism and the Law: The Implications of Shoshana Zuboff’s The Age of Surveillance Capitalism, Harvard Law Review, Vol. 133, 2020.
[4] https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data, Access Date: 25.09.2024.
[5] For an example list of data brokers, please see https://privacyrights.org/data-brokers, Access Date: 25.09.2024.
[6] https://www.forbes.com/sites/bernardmarr/2022/09/28/the-importance-of-data-literacy-and-data-storytelling/, Access Date: 25.09.2024.
[7] https://www.weforum.org/agenda/2019/04/how-much-data-is-generated-each-day-cf4bddf29f/, Access Date: 25.09.2024.
[8] https://www.weforum.org/agenda/2018/02/fitbit-analyzed-data-on-6-billion-nights-of-sleep-with-fascinating-results/, Access Date: 25.09.2024.
[9] https://aasm.org/fitbit-scientists-reveal-results-analysis-6-billion-nights-sleep-data/, Access Date: 25.09.2024.
[10] https://blog.google/products/platforms-devices/fitbit-acquisition/, Access Date: 25.09.2024.
[11] https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2484, Access Date: 25.09.2024.
[12] https://www.weforum.org/agenda/2019/04/how-much-data-is-generated-each-day-cf4bddf29f/, Access Date: 25.09.2024.
[13] Çiğdem Gizem Okkaoğlu, Big Data in Merger Control, Turkish Competition Authority Expertise Thesis, 2020, https://www.rekabet.gov.tr/Dosya/uzmanlik-tezleri/05-cigdem-gizem-okka-tez-20200923173802835-pdf.
[14] https://www.investmentnews.com/equities/news/only-one-of-the-worlds-biggest-firms-of-2000-is-still-in-the-top-10-today-243474, Access Date: 25.09.2024.
[15] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US, Access Date: 25.09.2024.
[16] https://tradingeconomics.com/china/gdp, Access Date: 25.09.2024.
[17] Oxford Economics with Huawei: Digital Spillover. Measuring the true impact of the digital economy (2024), https://www.huawei.com/minisite/gci/en/digital-spillover/files/gci_digital_spillover.pdf, Access Date: 25.09.2024.
[18] https://competitionpolicy.ac.uk/blog/the-legal-definition-of-self-preferencing-too-narrow-too-broad-or-both/, Access Date: 25.09.2024.
[19] https://www.rekabet.gov.tr/Dosya/dijital-piyasalar-calisma-metni.pdf, pp. 7-16, Access Date: 25.09.2024.
[20] https://www.visualcapitalist.com/the-tech-giants-worth-compared-economies-countries/#google_vignette, Access Date: 25.09.2024.
[21] https://digital-markets-act.ec.europa.eu/about-dma_en, Access Date: 25.09.2024.
