How data is shared by users with platforms and in turn used by Big Tech has come under close scrutiny by authorities from both a privacy and competition perspective in recent years. There is an increasingly common view among some competition enforcers that failure to properly quantify both the value of data users share with platforms, and the value users get from free-to-use services, has led to an incomplete analysis of tech markets in past cases. A case before the UK's Competition Appeal Tribunal (CAT) could consider this important question, with potentially broad implications for companies that monetise the data users share with their platforms.

The opt-out competition class action launched in the CAT last year alleges multiple abuses of dominance by Meta, which “cash out” in an alleged failure by Meta to compensate its users for their data. The claim faced a major setback last month when the CAT refused to certify it to proceed. But the CAT has given the class representative six months to come back with a methodology that would allow the value of user data, and the value of Facebook's free-to-use service, to be quantified, making the case an important case to watch for the evolution of the law in this area. 

Data’s competitive value

The claim is shaping up as a potential key battleground in a growing debate about how competition authorities should treat the value of user data. Historically antitrust analysis has not ascribed an equivalent monetary value to user data and free-to-use services. Depending on how each is valued, attributing an equivalent monetary value could lead to the conclusion that dominant platforms should be paying users for data they share, as the class representative is alleging in Gormsen v Meta (i.e. that "free" was in fact an "excessive and unfair price"). 

The case is among the most novel and ambitious of the collective actions before the CAT and unlike many of the other cases in the CAT, has no parallel authority investigation underpinning it. While there is a German competition authority case pending before the ECJ relating to Meta’s data practices, the facts of that case are very different (and relate to sharing of data between Meta’s various businesses and GDPR restrictions). Novel as it is however, it has added fuel to the debate about the value of user data. 

A setback that sets up the big question

In February, the claim against Meta faced a major setback when the CAT declined to certify the class action. However, the CAT gave the class representative six months to come back with a “root and branch” re-evaluation of the methodology underpinning the claim. The CAT judgment has important implications for the UK’s evolving collective action regime as we’ve written about in more detail on our Collective Redress blog, but it also includes some interesting observations on the value of data.

Notably, in its judgment the CAT described the Facebook service as “one of barter” that gives rise to three possibilities (i) that the price is fair; (ii) that Meta should be paying users; or (iii) that users are “free riding” and should be paying Meta. Noting that they could not “possibly determine which of these outcomes is the case, and it is not our function to do so”, one of the key reasons for not certifying the claim was that the methodology put forward did not provide an adequate basis for resolving this “difficult question”. 

If the claim does return and is ultimately certified and moves forward, the resolution of this question could have potentially significant consequences for all tech companies monetising user data.

Seeds of EU/UK divergence in what competition law can consider?

Finally but importantly, the CAT’s judgment indicates a level of scepticism about the scope for competition law to consider breaches of other laws when considering abuse of dominance. The CAT said that some of the allegations advanced in the case “seem to us not to be competition law infringements at all, but rather some other – possibly consumer protection based – claim… if this is not an infringement of the Chapter II prohibition, then there is no jurisdiction to try this claim before the Tribunal”.

This is in stark contrast to the opinion of the EU’s Advocate General in the German Meta case mentioned above, in which she opined that the fact a company is not complying with its GDPR obligations could be a relevant factor in demonstrating it had abused its dominant position. This will be another interesting area to watch for potential divergence between the EU and UK.