Pressure on Google Is Ramping Up. Could the Antitrust Probes Help Address Privacy Harms?
Weekly Article
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June 24, 2020
The antitrust pressure on Google is ramping up. The Department of Justice (DOJ) and state attorneys general are reportedly building a case around Google’s dominance in digital advertising and online search, with potential lawsuits to be filed this year. And abroad, Australia’s competition authority became the first regulator to voice concerns about the Google/Fitbit merger in a preliminary decision issued last week; as its chairman observed, “Buying Fitbit will allow Google to build an even more comprehensive set of user data, further cementing its position and raising barriers to entry to potential rivals.”
Big Tech’s size, omnipresence, and surveillance power have long posed a growing threat to society. While many now see these companies as potential saviors in the race to track the spread of COVID-19, we must address the privacy risks they present and examine how these companies amassed such power.
Mergers, by concentrating greater amounts of data within a single company, bear a significant share of the blame.
These issues are surfacing in ongoing antitrust investigations, including the DOJ review of Google’s proposed merger with Fitbit. Reports say that the DOJ has issued a second request to review the deal more closely—giving it an opportunity to assess concerns about user privacy within an antitrust framework. Google already possesses a vast data trove through its online search, digital advertising, and browser products, to name just a few. Adding such detailed, sensitive health data to the company’s purview (especially when it already has access to a collection of patient health records) helps it build more comprehensive, intimate profiles on users, amplifying its ability to profit off and influence internet users through targeted advertising.
Now, renewed attention on the privacy implications of industry consolidation means that antitrust enforcers have a chance to weigh these concerns in evaluating the Google/Fitbit merger. This isn’t unprecedented—Google’s 2007 merger with DoubleClick raised similarly serious questions about privacy, given the extraordinary combination of user data. At that point, the Federal Trade Commission (FTC) didn’t block the merger on privacy grounds: While advocates urged the FTC to address the privacy risks under its Section 5 mandate to take action against “unfair and deceptive practices,” antitrust enforcers are limited in their ability to consider privacy issues. The Commission majority explained that, in antitrust matters, it could only consider privacy as a competition issue, and saw no privacy-based competitive harm arising from the deal. They also thought that imposing conditions on Google’s privacy practices—in effect, constraining the company while leaving competitors untouched—could actually hurt competition.
Nevertheless, antitrust enforcers should consider whether a merger snuffs out existing or potential competitors with better privacy protections. They should give more weight to potential competition theories that concern future competition: Would one of the merging parties otherwise enter the market and make it more competitive? Mergers could thwart consumers’ ability to choose between providers based on privacy protections. The present antitrust framework allows for this possibility—but because the theory involves potential developments, it’s difficult to meet current evidentiary standards.
Similarly, it’s hard to demonstrate evidence of privacy-based competition harms. For example, the Commission majority noted that Google and DoubleClick weren’t competitive restraints on each other—they didn’t significantly influence one another’s prices or product attributes, like privacy protections. However, DoubleClick had been developing an ad exchange product to compete with Google’s AdSense.
Over the past two decades, tech giants have bought many players that weren’t direct competitors—and, if Google’s endeavor to buy Fitbit is any indication, they have no intention of stopping. Antitrust enforcers should preserve competition on privacy—especially because data can entrench a company’s dominant position in the market.
Antitrust authorities should consider whether consolidating data within a single company gives it a unique competitive advantage. The Commission majority in Google/DoubleClick concluded that Google’s access to data wasn’t unique—other competitors had their own data troves to tap into—and that Google’s data collection didn’t inhibit competitors’ ability to collect data. In fact, they claimed that competitors’ data concerns “really amount[ed] to a fear that the transaction [would] lead to Google offering a superior product”; while data may not be essential, companies could use it to develop a “better” product. So, while “privacy can be an important dimension of quality,” as DOJ antitrust head Makan Delrahim said last June, it’s difficult to determine if a company’s data practices are anticompetitive, or just an effort to improve product quality.
It would be misguided, however, to ignore the key competitive advantages that data gives to companies reliant on behavioral advertising. Germany’s Federal Cartel Office has recognized data as “the essential factor … establishing [Facebook’s] dominant position”; the country’s Federal Court affirmed this thinking earlier this week. Companies want to engage individuals in order to collect more data about them. Social network users, too, aren’t inclined to switch services. It’s nearly impossible for competitors to appeal to customers and begin collecting their own data.
U.S. enforcers might be moving toward this analysis. Delrahim has acknowledged that, whereas users can theoretically give their data to multiple companies, usage data (information about how individuals use a product) is unique and cannot be easily replicated by competitors. By shedding insight into user preferences, usage data provides companies with key competitive advantages in improving their products in ways that competitors can’t. This feedback loop can make it more difficult for new entrants to compete against incumbents—Amazon, for instance, is allegedly utilizing data about independent sellers on its platform to launch competing products, giving it an unfair advantage.
Google/Fitbit might illustrate the dangers of allowing these dynamics to proliferate unchecked. Antitrust enforcers have the opportunity to apply lessons from Google/DoubleClick to this pending merger. In evaluating the Google/Fitbit deal, they should assess whether it would eliminate potential competition or consolidate data such that it would be harder for companies to compete. Ultimately, blocking the merger on competition grounds could help pave the way for a fairer tech landscape—one with more players vying to create the best possible experience for their users.