Antitrust and privacy collide

Here is something to puzzle completed. In December, the Federal Trade Commission and a coalition of states filed antitrust lawsuits against Facebook, alleging that as the company became more dominant and faced less competition, it reneged on promises to protect user privacy. In March, another coalition of states, led by Texas, accused Google’s driving exclusion related to its plan to get rid of third-party cookies in Chrome. In other words, one tech giant is being sued for weakening privacy protections while another is being sued for strengthening them. How can this be?

This issue, and others like it, will become increasingly urgent in the coming years. Antitrust authorities prosecute the biggest tech companies as states pass new privacy laws and Congress gears up (maybe, maybe, hopefully) to pass the one of his own. Meanwhile, these same companies are making all kinds of glaring changes to their privacy policies even as government lawyers move closer. If policymakers and authorities can’t figure out the right way to think about how to reconcile privacy law with competition law, they might screw up both.

To win a monopolization lawsuit under Section 2 of the Sherman Act, the government must prove not only that a company is a monopoly, but that it has used its power to harm consumers – to do things with it. which he can only get away with because there is nowhere. else to go. (This rule, which is controversial, is called the “consumer welfare standard.”) The typical example is when a dominant firm raises prices after cornering the market. Since Facebook’s main products are free, this argument won’t work against it. But there is another way to show an impact on the well-being of consumers: the decline in product quality. It is the role of privacy in the Facebook case. The erosion of user privacy over time, the lawsuits say, is a form of consumer harm – a social network that protects user data less is a substandard product – that makes Facebook look like a simple one. monopoly to another illegal. (This allegation, which the company denies, is just one of many antitrust allegations raised against Facebook.)

This argument against Facebook illustrates the main theory of how antitrust and data privacy intersect: As you increase competition, you get more privacy, as companies will try to win over customers by offering better protections. . If a market is monopolized, this incentive to compete disappears.

Sometimes, however, the relationship of privacy and competition is reversed: the more you activate the privacy dial, you get less variety in the market. It is increasingly the case now that the most monopolistic companies are often the ones that make the most extensive and lucrative use of personal data. In March, Google ad that it was moving forward with a plan to block third-party trackers from Chrome, which has a global market share of around 60%. As part of its Privacy Sandbox framework, instead of cookie-based ad targeting, Google says it will implement a new system in which the browser tracks and serves ads to users based on the cohorts in which they register rather than targeting them individually.

At first glance, this is a step forward for privacy. Deleting cookies will make it more difficult for strangers to access your personal data. According to Texas, however – and the dozen experts I have discussed the matter with – the Privacy Sandbox will further strengthen Google’s astounding position in the advertising market. By preventing other companies from tracking users in Chrome, while keeping that power to itself, the company will add to its already formidable user data advantage and make it even more difficult for rival companies and publishers to compete for. advertising dollars.

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