Earlier today, the House Judiciary Committee held a hearing regarding data privacy and competition. While some panel participants argued that competition and privacy law should be conflated, it’s important to remember that practitioners and policy experts alike agree there are strong, evidence-based reasons to keep them separate:

— Data is not essential for companies to compete 

— Experts have disagreed with the notion that data has high economic value

— Consumers already use a number of products and platforms, forcing leading platforms to compete with established firms and new entrants

Data is not essential for companies to compete. 

Martin Casado and Peter Lauten of venture capital firm Andreessen Horowitz: Company ability to “stay ahead of the pack” slows down with data scale, defying the oft-used “kill zone” argument. “But regardless of exactly when this happens, the ultimate outcome is often the same: the ability to stay ahead of the pack tends to slow down, not speed up, with data scale. Instead of getting stronger, the defensible moat erodes as the data corpus grows and the competition races to catch up.”

Casado and Lauten continued: “Greater long-term defensibility is more likely to come from packaging differentiated technology; understanding the domain and reflecting that in your product as you verticalize across industries; dominating the go-to-market race; and winning the talent war to build a world-class team. These efforts will pay off in defending and winning in the markets far more than data alone.”

Economist David Evans: Spotify, with no users and no data, leapfrogged iTunes, which had data on more than 50 million users. “A similar story was true for Spotify. When it entered the U.S. 2011, Apple had more than 50 million iTunes users and was selling downloaded music at a rate of one billion songs every four months. It had data on those people and what they downloaded. Spotify had no users, and no data, when it started. Yet it has been able to grow to become the leading source of digital music in the world. In all these cases the entrants provided a compelling product, got users, obtained data on those users, and grew.”

Experts have disagreed with the notion that data has high economic value.

Alec Stapp, International Center for Law and Economics: Data has nearly zero marginal costs. “Data is merely encoded information (bits of 1s and 0s), so gathering, storing, and transferring it is nearly costless (though, to be clear, setting up systems for collecting and processing can be a large fixed cost). Under perfect competition, the market clearing price is equal to the marginal cost of production (hence why data is traded for free services and oil still requires cold, hard cash).”

A Financial Times review of industry pricing shows that a consumer’s data has very little value. “General information about a person, such as their age, gender and location is worth a mere $0.0005 per person, or $0.50 per 1,000 people. A person who is shopping for a car, a financial product or a vacation is more valuable to companies eager to pitch those goods. Auto buyers, for instance, are worth about $0.0021 a pop, or $2.11 per 1,000 people.”

Digital ad industry veteran Dave Morgan: “On an individual level, there is almost no economic value” in consumer data.

AAF’s Rinehart similarly noted that surveys of consumers often find wide variations in how users value their own data. For example, Zogby Analytics found “that only 16 percent of people are willing to pay for online platform service. Strahilevitz and Kugler found that 65 percent of email users, even though they knew their email service scans emails to serve ads, wouldn’t pay for alternative.”  Another study noted that “most subjects happily accepted to sell their personal information even for just 25 cents.”

Consumers already use a number of products and platforms, forcing leading platforms to compete with established firms and new entrants.

Economist David Evans: “The prevalence of multihoming, and switching, between platforms is inconsistent with the claim that data provides a substantial barrier to entry.”  “It is also easy for people to try a new alternative online platform and decide whether to keep using it or not. The same is true for business users on online platforms, such as advertisers and gig-economy workers. Large advertisers often use multiple online platforms, including ones in the same narrow category such as search, and switch advertising budgets between them. Drivers for ride-sharing apps can, and many do, use more than one app. Multihoming is so prevalent among online platforms that it is hard to identify exceptions. The prevalence of multihoming, and switching, between platforms is inconsistent with the claim that data provides a substantial barrier to entry. Time and again new platforms arise, with no data at inception, and acquire consumers and obtain data over time. That doesn’t mean that data isn’t valuable. It does strongly suggest that lack of data doesn’t pose significant obstacles to online platforms that develop valuable products that consumers like.”

Joel Flory, co-founder of photography app VSCO, notes that young people multihome: “Flory says VSCO’s growing popularity is partly a sign that young people are disillusioned with more mainstream apps. But he rejects the suggestion that VSCO is the ‘anti-Instagram.’ ‘It’s not an either/or. It’s not that you either like this platform or you like VSCO. Gen Z, they’re not choosing one over the other.'”