Antitrust Chronicle^® – Privacy & Competition

Dear Readers,

As consumers worldwide increasingly entrust online platforms with their sensitive user data, regulation (both in terms of specific privacy or data protection rules, and antitrust rules) have scrambled to keep pace. Data has famously been called the “oil” of the new economy. Just like oil, raw data is not valuable in and of itself. Rather, its value is created when it is collated quickly, completely, and accurately, and connected to other, similarly relevant data. How such data is used and shared between companies is therefore key to its value, and this raises obvious privacy (and competition) problems.

As a result, the so-called “data economy,” which is the basis for many digital products and services, has been recently facing pressure from a number of regulations worldwide that aim to protect user privacy.

Individual companies, too, have adopted policies that claim to protect user privacy on their platforms. Reinhold Kesler opens with a discussion of Apple’s App Tracking Transparency (“ATT”) rules as a representative example of such a policy. Following a brief description of ATT, the author reviews the current state of research and investigations by competition authorities to provide insights on the possible effects of the privacy change.

Building on this, D. Daniel Sokol & Feng Zhu further expound on Apple’s ATT policy. In a prior piece, the same authors claimed that this policy in fact masked anti-competitive conduct that would have been identified under traditional antitrust theories. Further, they suggested that the policy could potentially have the effects of enhancing the dominance of iOS among mobile operating systems, and the dominance of Apple’s own apps and services within the iOS ecosystem. This, they claimed, would have the effect of reducing consumer choice and undermining the “free” app ecosystem enabled by personalized advertising. In this updated piece, they reexamine the issue in light of a year’s worth of data since the introduction of the policy. Their contention in this new piece is that the overall empirical record supports the conclusions that: (1) competition and privacy can be at odds; and (2) that Apple’s ATT policy has made app developers, particularly small and new firms, worse off.

In a novel article, Alex Marthews & Catherine Tucker discuss how, following on from the Snowden revelations regarding mass surveillance by the U.S. government, it is now known that chilling effects from government surveillance and other privacy violations exist. Further, these effects can at least sometimes be quantified, and significant proportions of citizens in many countries describe themselves as being harmed by them, and alter their behavior in response. What is less well established is how a government’s interest in maintaining mass surveillance programs could affect competition. This article studies this question.

Ginger Zhe Jin, Ziqiao Liu & Liad Wagman discuss how COVID-19 changed work and leisure, including leading people to spend more time using mobile apps. The authors present findings from a large database of mobile apps, and discuss how pandemic-amplified demand reshaped app entry and market competition among popular apps. Interestingly, the authors note that relative to five of the largest EU economies, the U.S. has seen more breakthrough new apps after the onset of the pandemic.

Taking a U.S. perspective, Daniel A. Hanley & Karina Montoya comment on how antitrust enforcement can operate as a supplement to privacy protections, by providing consumers with robust privacy protections, despite the lack of a comprehensive U.S. federal privacy law. The authors argue that antitrust enforcement can be used to provide consumers baseline privacy protections by creating a market for privacy protections, targeting specific conduct such as mergers, monopolization, and deception, and imposing broad structural remedies inhibiting and deterring certain conduct.

Giuliana Galbiati & Henri Piffaut further discuss the evolving interactions between privacy and competition rules. While some initially argued that privacy was a distinct and complex issue and that competition enforcement should stay in its own lane, market realities and digitization have since then forced regulators to reflect upon how the two policies are interrelated and increase their coordination efforts. Regulations like the EU GDPR attempt to give substance to privacy rights through defining mandated levels of protection and consent. With the ensuing decrease in the asymmetry between platforms and users, privacy protection can become a relevant competition parameter. The question is then how to best inform competition policy of privacy issues. 

Finally, Victor Oliveira Fernandes notes a crucial area of complementarity between competition and data protection law regimes. This is by ensuring greater data mobility through data portability, interoperability, and open data standards in digital markets. The paper discusses how antitrust agencies would evaluate dominant platforms’ strategies to prevent data interoperability as an abuse of dominance violation against the backdrop of Brazilian experiences. 

No matter what the jurisdiction, however, the critical choices to be made by antitrust and privacy authorities involve defining the limits of intervention regarding the design of digital products. The articles in this volume address the relevant questions from a number of perspectives. Each brings valuable insight to this evolving and increasingly topical area of debate.

As always, many thanks to our great panel of authors.

Sincerely,

CPI Team^[1]

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[1] CPI thanks Meta for their sponsorship of this issue of the Antitrust Chronicle. Sponsoring an issue of the Chronicle entails the suggestion of a specific topic or theme for discussion in a given publication. CPI determines whether the suggestion merits a dedicated conversation, as is the case with the current issue of the Chronicle. As always, CPI takes steps to ensure that the viewpoints relevant to a balanced debate are invited to participate and that the quality of our content maintains our high standards.