On the hypocrisy of using privacy to justify unfair competition

In the US, the Federal Trade Commission and various states attorneys general have opened investigations against alleged anti-competitive practices of Facebook and Google, while demands for stronger regulation both in anti-trust and privacy laws are growing. The EU has unveiled its twin proposed legislation, the Digital Services Act and the Digital Markets Act, aimed at increasing the responsibilities of big platforms and seeking to address the power imbalance they have over other businesses and users. In UK, similar reforms have been pursued.

At the centre of these developments is market dominance (call it monopoly, duopoly, oligopoly) of a handful of big platform companies, dominance that result in choking off other businesses and in encroaching on new markets.

Such dominance and expansion are fuelled by the exploitation of information about us: increasingly less on information we knowingly provide, increasingly more on information observed or inferred from our behaviour online and offline. Users are used, consumers are consumed, individuals are… well, profiled.

Exploiting these data, these companies profit directly from the users, and they profit from acting as gatekeepers, imposing unfair conditions on businesses that wish to use the data to reach consumers via their platforms. Often, it is alleged in some of the ongoing litigation, big platforms unfairly use the information they glean on their competitors to push them out of business.

Expansion to other (more or less adjacent) markets inevitably seem to follow from such dominance. Alphabet is not just Google search engine, Amazon is not just selling books online. The Google-Fitbit merger is only the latest example of a big tech buying up an emerging company to gain control of a new market, whose most valuable revenue is data about us (in this case as intimate as our health.). While this is not a new strategy in itself (Facebook acquisition of Instagram was as much guided by market expansion than by data greed), the absolute dominance of these companies on certain market gives them an undeniable edge in developing future products that thrives on people’s data.

Within a week in December, two leading anti-trust regulators, the European Commission and the Australian Competition and Consumer Commissioner, came out with opposite views on the Google-Fitbit merger and its implication for consumer’s protection. This is a strong of an indication that privacy is a key battleground no longer only relevant to mostly under-resources data protection regulators. The role of personal data in digital and non-digital markets is increasingly within the analysis of anti-trust/competition authorities as well as the object of attempts to regulate big tech companies.

And so no surprise that the same big tech companies are now using privacy to seek to justify their business practices. Privacy is no longer dead, it seems.

Some initiatives are good, like rolling out end-to-end encryption of communications and, at least in public, fighting governments’ attempts to undermine encryption with ‘back doors’ and ‘ghost’ protocols. Although the cynical may say that big tech no longer need to read the content of our e-mails or messages: they get enough information from the metadata and from tracking our behaviour online and offline.

More worrying are attempts to use privacy as a cloak to disguise unfair, data exploitative practices. It is getting increasingly hard to glimpse what is behind the game of smoke and mirrors played by companies, claiming that privacy is hurting competition while posing as champions of privacy.

Facebook, for example, has not taken well Apple’s forthcoming requirement on developers to ask for permission before they can track what users do across apps.

Others are challenging Google’s privacy tools on the ground that it is anti-competitive. This last feat has not escaped the UK’s Competition and Market Authority (CMA) which has opened an investigation into Google’s proposals to remove third party cookies and other functionalities from its Chrome browser. Meanwhile, here is how US attorneys see the reasons behind the move in the Google online ads case:

“Google’s entire business model is to collect comprehensive data about every user in the service of brokering targeted ad sales. It then uses privacy concerns as an excuse to advantage itself over its competitors. For example, Google’s stated reason for cutting off publishers’ user IDs is protecting users’ privacy, but Google does not protect users’ privacy when doing so harms Google. Google encrypts publisher ad server user IDs but uses the same user ID information for encrypted from Google itself. The planned elimination of third-party cookies from Google’s dominant browser, Chrome, is also justified on privacy grounds, but the effect is to increase information asymmetries between Google and its competitors.”

Ultimately, a level playing field will not be achieved by a race to the bottom of privacy protection. Nor by using privacy as a cloak to continue with current or novel practices of tracking and profiling on and off line. This will only entrench the market dominance of big tech.