Excessive Data Collection and (Mis)use of Data: A Comparative Law and Economics Study on the Chinese Didi Case and the German Facebook Case

Abstract The excessive data collection and (mis)use of data can result in the coexistence of two market failures—namely, market dominance and information asymmetry—which in turn interact with each other in digital markets and trigger simultaneous concerns about competition law and data protection law. This article establishes a law and economics framework to study the divergence in response to the concerns caused by excessive data collection and (mis)use of data by dominant technology undertakings in the European Union and China. The German competition authority, the Bundeskartellamt, found that Facebook, a dominant social network platform, abused its dominant position by excessively collecting and misusing user data without consent, whereas the Cyberspace Administration of China addressed similar concerns caused by Didi, a dominant ride-hailing undertaking, via data protection law. Based on the comparative analysis of the German Facebook case and the Chinese Didi case, a competition law approach to deal with excessive data collection and the (mis)use of data by a dominant technology undertaking results in high enforcement costs due to the prerequisites of market definition and dominance determination under abuse of dominance, while contributing to minimizing error costs, especially false negatives in the absence of data protection enforcement. In contrast, a data protection approach would be a cost-effective way to intervene in the market ex-ante by decreasing the likelihood of excessive collection and misuse of data, reducing the exclusionary and/or exploitative effects of competition and lowering the market entry barrier that benefits from the collection and processing of significant amounts of data.