Overview
Data is often referred to as the “new oil”.[1] However, data is unlike oil and other commodities of the past because data is intangible, infinite, not openly traded on the market, and lacks value in its unprocessed form.[2] Due to data’s unique qualities, data monopolies operate differently from the natural resource monopolies of the past.[3] As a result, Big Data monopolies of the 21st century have largely evaded enforcement of 20th century law.[4]
The Department of Justice’s (DOJ) recent antitrust lawsuit against Google could signal a departure from what some have referred to as a “laissez-faire” approach towards Big Data.[5] However, despite increasing political and public pressure to break up Big Data, there is concern as to whether competition law is the right tool for the job, and more specifically, whether competition law will adequately protect consumers from Big Data’s harmful effects.
Big Data Takedown: United States v. Google
The DOJ asserts that Google violates Section 2 of the Sherman Antitrust Act by maintaining a monopoly in general search markets through anticompetitive and exclusionary business practices.[6] Further, the DOJ argues that scale is largely determinative of a general search engine’s success.[7] In such markets, as more user data is collected, processed, and analyzed to deliver more precise query results, “positive feedback loops” result because the user experience is enhanced.[8] An enhanced user experience leads to product value.[9] In the same way that scale improves users’ search query results, scale also improves Google’s ability to match advertisers’ ads with users’ search queries.[10]
The DOJ claims that the most effective way for a search engine to obtain scale, is to secure preset default status across consumers’ various device screens.[11] Google secures a preset default status for its search engine by paying billions of dollars to device manufactures (such as Apple), major wireless providers (such as AT&T) and browser developers (such as Mozilla). Because Google’s competitors cannot afford to enter into such costly agreements, Google’s competitors are denied scale, which ultimately makes it unfeasible for them to compete with Google.[12]
The Controversial Consumer Welfare Standard
Since the 1970s, antitrust law has placed a greater emphasis on “consumer welfare” than the nature of the competition itself.[13] To succeed on a claim under Section 2 of the Sherman Antitrust Act, a plaintiff must prove that the alleged anticompetitive conduct harms consumer welfare.[14] With respect to the anticompetitive effects of Google’s conduct, the DOJ contends that consumers are deprived of the choice of using alternative search engines that may utilize innovative business models that are less violative of consumers’ data privacy.[15] Additionally, critics of the consumer welfare standard argue that the standard has been applied too narrowly in the past, resulting in enforcement that is generally limited to anticompetitive conduct affecting consumers’ pocketbooks.[16] Such critics argue that if the consumer welfare standard is not overhauled, then Big Data monopolies providing free online products to consumers will continue to evade antitrust enforcement.[17]
Although Big Data has largely been spared antitrust enforcement, there are many who reject the notion that the consumer welfare standard is to blame for such inaction.[18] Those who believe that the consumer welfare standard is effective as-is insist that antitrust laws are broad and accomplish their purpose as such.[19] To address the specific rules of competition in a given sector of the economy, there are other agencies, such as the Federal Trade Commission, with the authority to promulgate more tailored rules.[20] Furthermore, they contend that courts recognized a wide array of consumer harms under the consumer welfare standard and that the term “price” is often used by courts to denote the figurative costs consumers pay.[21] Non price-based costs or harms may include a lack of consumer choice, reduced product quality, and diminished innovation.[22]
Protecting Consumers in the Data Age
The Data Age presents unique threats to consumers.[23] Arguably, consumers are harmed as a result of a “hierarchy” of power and not as a result of one company’s control over a given market.[24] As long as companies are free to amass data for the purpose of better predicting and inducing consumer behavior to control the economic outcome, there is concern that consumers’ ability to freely contract is being corrupted by external “manipulation”.[25] Such manipulation by sellers is said to erode consumer autonomy and to subvert consumers’ bargaining power.[26]
It is unclear whether consumers will benefit as a result of greater competition in the search markets.[27] Though the DOJ references innovative competitors who do not rely on consumer data to run their search engines, consumers may still choose to use the more precise, data-driven search engines.[28] Additionally, it is conceivable that a new general search engine may arise in Google’s place that is even more harmful to consumers’ welfare.[29] Moreover, because data’s value is determined by its power to control consumers, the harm results from any such use of data.[30] It is of little concern to consumers whether one company controls such data or several companies compete for it.[31]
Over heightened concern for consumers’ data privacy rights, there is a growing demand for federal regulation that limits the type of consumer data that can be taken, and how that data can be stored and used.[32] Advocates of such consumer data privacy laws say that they could help achieve antitrust law goals by promoting competition.[33] For example, the General Data Protection Regulation’s (GDPR) “data portability right” gives the consumer the right to transport their data to another entity of their choosing.[34] By making consumers’ data portable, this law could knock down barriers that help data monopolies like Google maintain their dominance.[35]
Conclusion
In the face of mounting pressure to break up Big Data, competition law alone is insufficient to protect consumers in the Data Age.[36] The promulgation of federal regulatory laws is required to avoid any unintended consequences of antitrust law enforcement, and to protect consumers’ privacy interests in the Data Age.
[1] Katharina Pistor, Rule by Data: The End of Markets?, 83 Law & Contemp. Probs. 101, 106 (2020).
[2] See id.
[3] See Daniel McIntosh, We Need to Talk About Data: How Digital Monopolies Arise and Why They Have Power and Influence, 23 J. Tech. L. Pol’y 185, 196 (2019).
[4] See id. at 195-98.
[5] Jacob Beaupre, Big is Not Always Bad: The Misuse of Antitrust Law to Break Up Big Tech Companies, 18 DePaul Bus. & Comm. L.J. 25, 32 (2020).
[6] See Complaint at 2, United States v. Google, No. 1:20-cv-03010 (D.D.C. filed Oct. 20, 2020).
[7] See id. at 13-14; see also McIntosh, supra note 3, at 192-93 (explaining how data-driven network-effected markets determine market dominance).
[8] McIntosh, supra note 3, at 193.
[9] See id.
[10] See Complaint, supra note 6, at 13-14.
[11] See id. at 14.
[12] See id. at 5.
[13] See Beaupre, supra note 5, at 33.
[14] Ryan Young, Antitrust Basics: Rule of Reason Standard vs. Consumer Welfare Standard, Competitive Enter. Inst. (July 8, 2019), https://cei.org/blog/antitrust-basics-rule-of-reason-standard-vs-consumer-welfare-standard/.
[15] See Complaint, supra note 6, at 5 (identifying competitor search engines, like DuckDuckGo, that distinguish their business models from Google for their privacy-protective policies).
[16] Andrea O’Sullivan, Big Tech Antitrust Investigations Should Focus on Consumer Welfare, James Madison Inst. (Aug. 4, 2020), https://www.jamesmadison.org/big-tech-antitrust-investigations-should-focus-on-consumer-welfare/.
[17] Jeffrey Miron & Pedro Braga Soares, Do Antitrust Concerns Imply More or Less Privacy?, Cato Inst. (June 15, 2021, 9:49 AM), https://www.cato.org/blog/antitrust-or-against-privacy.
[18] Carl Shapiro, Opening Statement before Senate Judiciary Committee, Subcommittee on Antitrust, Consumer Protection and Consumer Rights, at 3-4 (Dec. 13, 2017) (explaining the consumer welfare standard accomplishes the goals of antitrust, and should not be expected to resolve problems that are unrelated to competition).
[19] See id. at 4.
[20] See id.
[21] Christine S. Wilson, Comm’r, U.S. Fed. Trade Comm’n, Luncheon Keynote Address at
George Mason Law Review Annual Antitrust Symposium: Antitrust at the Crossroads?, at 5 (Feb. 15, 2019).
[22] See Shapiro, supra note 18, at 3.
[23] See Pistor, supra note 1, at 111.
[24] Id. at 112.
[25] Id. at 113.
[26] See id. at 112-13.
[27] See Beaupre, supra note 5, at 43.
[28] See Pistor, supra note 1, at 117 (explaining that consumers do not feel the harmful consequences of data harvesting, and that they receive access to something they want in exchange for their data).
[29] See Beaupre, supra note 5, at 43-44 (discussing how after the government broke-up AT&T, Southwestern Bell merged with regional Bells and what was left of the post break-up AT&T to create a “new” AT&T that is perhaps even more powerful than its predecessor).
[30] See Pistor, supra note 1, at 116.
[31] See id.
[32] See McIntosh, supra note 3, at 198-200; see also Tom Wheeler, The Justice Department’s Antitrust Lawsuit Against Google Isn’t Enough to Stop the Abuses of Big Tech, Time: Ideas (Oct. 20, 2020, 11:26 AM),https://time.com/5901696/google-antitrust-case/.
[33] See McIntosh, supra note 3, at 199 (describing the potential impact that GDPR’s data portability right can have on competition).
[34] See id.
[35] See id.
