Mergers, Acquisitions and Combining Data

An article in PC World tells us of renewed interest in privacy issues that sometimes arise in mergers and acquisitions. The particular subject of that interest is pooling personal information after the merger or acquisition – combining the personal information that was in the possession of the parties before the merger or acquisition.

The issue was raised in a February 6 letter to Commissioner Edith Ramirez, the Chairwoman of the Federal Trade Commission (the “Letter”).  The Letter was sent by Center for Digital Democracy, Public Citizen, United States Public Interest Research Group and Consumer Watchdog. (PC World calls them privacy groups, but it’s likely those groups don’t see their work as limited to privacy issues.)

Given that these groups are well-known and influential, we should probably pay some attention to what they’ve said in the Letter.  The Letter is a little rambling, but the essential point seems to be:

Big Data is Scary – Bigger Data is Scarier

The Letter says that “privacy and consumer protection online” will be adversely affected by: 

  • increasing consolidation in the data-driven consumer-marketing sector, with companies amassing vast holdings of the key element that drives much of online commerce – information on or about individual
  • merging of far-reaching and powerful datasets
  • merging of even more powerful datasets on U.S. consumers
  • numerous new alliances and special relationships among companies that enable the “pooling” of data

Big Data can be used to compromise privacy and harm consumers.  Bigger Data can compromise privacy and harm consumers even more.

Fair enough.  But:

What Do They Want?

The groups’ list of demands includes:

  • the commission should be more proactively involved with consumer-information oriented mergers and acquisitions
  • an investigation into the impact on the American public of the growth in data-oriented mergers and acquisitions and the consolidation of datasets and targeted marketing applications
  • a more effective approach to identifying new problems and threats to competition and consumer protection in the Big Data era

The FTC doesn’t seem to need much prodding to start investigations though.  Also, as we’ve previously discussed here at Big Data and the Law, the FTC has already shown particular interest in Big Data.  And last year the FTC has looked into privacy issues in the context of mergers and acquisitions, when the FTC got involved in the Facebook – Whatsapp acquisition.   In fact,

In spite of this:

There’s Something New Here

To begin with, the data combining issue was not a concern in the FTC’s review of the Facebook – Whatsapp acquisition.  That’s important.  In mergers and acquisitions, privacy is not the only legal question arising from combining data after the transaction merger or acquisition is complete. The Letter raises another one – whether the aggregation of consumer data may have an anti-competitive effect. 

The Letter specifically references “effective competition in the digital marketplace.”   In addition, the Letter calls for the involvement of the Department of Justice in the review of “data-oriented mergers and acquisitions.”  In fact, the Letter states that “the FTC should have urged the Department of Justice to engage in extra scrutiny” of the Oracle – Datalogix transaction, the event that triggered the Letter.  What’s new then is the possibility of competition law becoming a tool in the regulation of Big Data. 




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