Data Protection Can’t Be Solved With Antitrust
Data protection is a popular topic of discussion these days, but it is too often and too easily lumped into antitrust conversations. Antitrust enforcement has a specific role that is clearly defined in terms of competition and cannot be used to resolve concerns around data protection. Some of the key reasons data protection is separate from antitrust:
— Antitrust exists to resolve competition issues, not data protection.
— Consumers value their data differently, making enforcement too subjective.
— Political and policy goals should not factor into the antitrust regimes.
Antitrust exists to resolve competition issues, not data protection.
Antitrust enforcers would be overstepping their jurisdictions if they regulated beyond competition issues, according to Joshua D. Wright, former FTC Commissioner. “There’s really a fundamental core choice about whether we want to see our antitrust institutions as law enforcement agencies or as super-regulators that are going to micro-manage not just markets, but the internal working of firms—privacy decisions, environmental decisions, how they structure their pay, how their board is structured.”
Drawing on her days at the FTC as Director of the Bureau of Competition, Debbie Feinstein points out that protection is simply not a competition issue. “I’m not sure why privacy is a competition issue. HIPAA isn’t a competition statute. We know how to deal with privacy issues quite well. We can do it through it through consumer protection, we can do it through statutes. I’m still puzzled.”
Maureen K. Ohlhausen, former FTC Commissioner, explains that pursuing tangential goals, such as protection or environmentalism, through antitrust would actually be detrimental to those goals. “You end up creating incentives to avoid that process, and I’m not sure that serves the privacy goal or the environmental goal if it’s going to be forced through that channel of merger review. We have other regulatory structures, we have other channels that are more consistent, more transparent, maybe bring a little more expertise to the table than an antitrust enforcer can bring. So I understand the appeal because of the leverage point, but I don’t think it would even serve those values particularly well.”
Consumers value their data differently, making enforcement too subjective.
“[N]ot every customer values their data, or their privacy, the same way,” explains Makan Delrahim, the top antitrust enforcer at the Department of Justice. “For example, some argue that U.S. or international agencies should simply declare that data is the new digital currency, that online platforms have been exploiting data without consent, that loss of informational control is anti-competitive, and then impose eye-popping penalties by multiplying some measure of data value by the size of the customer base. I wouldn’t call that an antitrust remedy stemming from an evidence-based analysis. Such an approach ignores the economic nuance of revealed preference—that is, not every customer values their data, or their privacy, the same way.”
James Cooper, Joshua Write, and John Yun of the Antonin Scalia Law School note: With varying consumer preferences around protection, and acknowledging the consumer welfare standard as the guiding principle for antitrust, enforcing data protection rules would introduce too much subjectivity. “Because demand for both the underlying product provided by the platform and privacy will vary across the population, the ultimate impact of these forces on consumer welfare is uncertain—some will find the disutility from increased data collection swamps any benefits from better content and more relevant ads, and others will find the opposite. That is, the benefits and costs from personal data collection are inexorably intertwined, and consumer tastes for both attributes are heterogenous and potentially correlated in unknown ways.”
— “What is more, it would inject an untenable amount of subjectivity into enforcement decisions; given heterogeneous preferences for privacy, what may be serious reduction in privacy to one regulator or judge may represent a consumer benefit to another. The regulatory uncertainty that accompanies subjectivity can lead firms to pull their competitive punches for fear of antitrust liability and accompanying treble damages.”
Political and policy goals should not factor into the antitrust regimes.
Former FTC Commissioner Terrell McSweeny makes the important distinction between the FTC’s protection and competition enforcement mandates, saying antitrust analysis should not be leveraged to advance issues unrelated to competition. “Even if data privacy does play a meaningful role in our antitrust analysis, the focus of a merger investigation is always on the effect of the transaction on competition–and thus privacy protection as a quality dimension of non-price competition. I believe it will continue to be important that competition enforcers not use their power over a transaction to exact privacy or data protection concessions unrelated to the underlying competition analysis.”
ICLE’s Geoffrey Manne, Julian Morris, Gus Hurwitz, and Kristian Stout note that antitrust enforcement should not be leveraged “to tackle hot-button issues.” “Arguments abound that we should ratchet up antitrust and consumer protection enforcement in various ways in order to tackle hot-button issues like excessive concentration, insufficient privacy protection, fake-news, wealth inequality, and the like. But few of them rest on solid empirical evidence, and fewer still (if any) seriously address whether or how defects in policy and enforcement decisionmaking processes may have led to the claimed problems and whether or how altering those processes would correct them. Such arguments should not simply be ignored, but nor should they be taken seriously unless and until they are rigorously supported by economic, empirical, and institutional analysis.”