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Tilburg Law and Economics Center

TILEC supports and stimulates academic research on the governance of economic activity. It fosters academically path breaking and practically relevant research and aims to be a leading center worldwide.

TILEC Seminar: Bertin Martens (Joint Research Centre of the European Commission)

Data market design between technological and regulatory constraints
A case study of car data markets
10:45-11:45, T 50A


Bertin Martens is a senior economist at the Joint Research Centre (Seville) of the European Commission, working on digital economy issues.  His current research interests focus on the economic implications of artificial intelligence, access to data and online platforms, including online services and media platforms.  Prior to that, he was deputy Chief Economist for Trade in the European Commission in Brussels and carried out various other assignments in the European Commission, working extensively on international and institutional economics issues. He holds a PhD in economics from the Free University of Brussels.

Abstract

We can define the Internet-of-Things as a market for physical products equipped with digital sensors that collect user data after the sale of the product. Firms can design the data architecture to ensure their exclusive control over access to the data.  Consequently, IoT firms sell three complementary outputs: a product, data and data-based aftersales services. I examine the trade-offs between these three outputs using a case study of car data markets.  I start from a technical description of current car data architectures that gives manufacturers exclusive control over data collection, storage, transmission and distribution.  Manufacturers face competition in car sales and in some aftersales services (maintenance) markets. They can leverage their data monopoly to improve their position in these competitive markets. They have a choice between selling indirect data-based services to drivers and maintenance service providers and/or sell data directly to service providers and intermediary data brokers. Traditional micro-economics examines direct and indirect data sales from the perspective of product differentiation and price discrimination strategies. This becomes more complex when data sales interfere with the manufacturer's own services markets and aftersales revenue. Information economics shows how they can design direct data and indirect data services sales to reduce competition in aftersales markets and boost their revenue in these markets. I also look at the role of intermediary multi-sided data and services platforms that are dependent on but also compete with manufacturers because they benefit from economies of scope in data aggregation across car brands.  Finally, I examine the role of two existing EU regulatory instruments – the OBD data plug and data portability under the GDPR – that may open alternative data access points for drivers and weaken the monopolistic position of manufacturers.  Driver welfare gains from open data access and competition in data markets depend on the impact of data on data-based services markets and the market structure for data intermediaries.  Moreover, manufacturers' exclusive control over the in-car human interface hampers services delivery to the driver via alternative data gateways.  Proposed voluntary data governance rules for the car sector fall short of addressing these concerns


When: 21 November 2018 10:45

End date: 21 November 2018 11:45