Is Data Privacy an Antitrust Issue?

The treatment of customer data does not itself present a restraint  on competition.  More likely, data issues sound in privacy law, scope of consents, and contract. But if uses of data were disclosed to customers, the treatment of customer data could become a parameter of competition -- a factor customers could consider in deciding which services to use.

 Operation of a market economy presupposes that (i) customers/consumers know what they are paying, (ii) sellers know what and to whom they are selling, and (iii) customers and sellers have a choice among people with whom they may wish to do business.  In transactions where services are "free" this basic market function cannot work. Customers need to know what they are paying. When consumers use the services of a tech platform, the consumers do not pay any money.  Their payment is the providing of personal data and permissions to use it, which, when aggregated with the data of millions of other consumers, becomes a valuable asset.  The asset can then be used by the service provider, or sold or rented to others whom the consumers do not know, for purposes and uses which the consumers do not know and for which they gave no informed consent.  These uses can include targeted marketing, political advertising, contact and location tracing, and other uses to which consumers might or might not consent if they knew.

The remedy here is transparency, disclosure, and bringing into the consumers' consciousness the awareness of what they are "paying" for the "free" service.  A number of governmental antitrust authorities are working on this.  The Japan Fair Trade Commission announced guidelines in December 2019 that require certain digital platforms to (a) inform consumers of the use and purposes that will be made of the consumers' data, (b) limit the use of the data according to the use disclosed, (c) take precautions necessary and proper to safely manage the consumers' data.  An official from the Australian Competition and Consumer Commission remarked in December that "consumers really are completely oblivious about what's being done with their data -- to what's been collected, to where it's being sent, to where it's being monetized, to which third parties are accessing it. … [T]here's a role for agencies just to shine some sunlight for consumers, just to get them thinking about these issues, get them thinking about privacy, maybe think about using other platforms and options to generate competition on privacy settings." (MLex report dated December 11, 2019).  And the UK Competition and Markets Authority issued an interim report stating that it is considering rules to give consumers greater control over their data and to improve transparency: (a) a rule to require platforms to give consumers an option to use their services without providing the consumer's data for use in personalized advertising and (b) a default opt-in that would facilitate informed consumers' choice about how their data will be used.  In a speech in January, 2020, a Commissioner of the U.S. FTC stated that the Commission may do a broad study of how online platforms collect and monetize personal information, and how that data drives algorithms -- in effect, a study of what consumers and businesses "pay" when they use the "free" platforms.

Fundamentally, these initiatives would help to inform consumer choice:  consumers would obtain some knowledge of what they are paying for the services. Realistically, it is an open question whether this would change consumer behavior.  Consumers may be happy with the quality of the service and willing to permit use of their data in exchange.  There will also be inertia; patterns of usage are established and may not easily change.

Data usage presents issues of consumer choice, privacy, and transparency.  It does not by itself present an antitrust violation.  It is not the role of antitrust authorities to tell consumers what choices they should make.  Fully informed choice, then the dynamic of competition should make these decisions.