FTC rulings on data collection are inconsequential

The intellectual divide in antitrust policy breaks at the fine line that defines the difference between procompetitive and anticompetitive conduct. The Sherman Act itself causes this issue in part because it does not define what it means "to monopolize" or "attempt to monopolize." Legislative historyand the courts affirm that monopolies are not illegal per se.Likewise, courts acknowledge that "monopoly may be obtained by superior skill and unmatched effort." Herbert Hovenkamp, a notable antitrust scholar, helped elucidate the distinction between illegal and legal monopolization. He points out that "in most circumstances involving monopoly, the "intent' to create a monopoly anticompetitively cannot be distinguished from the intent to do so competitively." Here, he simply refers to how normal business conduct works in competitive markets; a firm "intends" to increase its profits which, if successful, invariably leads to excluding profits from other firms.If the market is competitive, and many firms are vying for market share, it is harder to conclude that competitive conduct is intended to harm any particular rival.In a concentrated market, this scenario looks different. When a dominant firm has few competitors and it "intends" to increase its profits, it likely does so with the awareness that its actions will harm rivals. However, this scenario does not necessarily lead to the conclusion of intentional harm either. The goal of business is well [*308] understood. Companies big and small are formed to make money. Therefore, in monopolization cases adjudicators are pressed to determine when a dominant firm's profit-seeking conduct and market share exceed the benefits associated with it.

New Brandeisians claim that the competitive process is best protected by "structural conditions (competition) as a way of promoting a set of outcomes and principles" such as "preventing unfair wealth transfers from consumers, producers and workers to monopolistic firms; preserving open markets in order to ensure opportunity for entrepreneurs; and halting excessive concentrations of private power." However, this structural framework ignores the fine line between procompetitive and anticompetitive acts and, under certain circumstances, could be employed to prevent behavior that enhances competition.

New Brandeisians not only overemphasize the role of structure in maintaining healthy and competitive markets, they also mistakenly entangle the goal of protecting the competitive process with remedying consumer exploitation, manipulation, and privacy violations associated with the concentration of Big Tech.

Digital platforms have deep insight into their respective markets because they are uniquely positioned to gather data on both sides of the transactions they administer. More often than not, consumers are unaware how much of their online activity is being tracked and used to sell them products and services. However, data is essential for operating in the Internet ecosystem today and it allows companies to offer a variety of high-quality services.

Despite the importance of data to online business operations, some allege that Big Tech may use data to exploit consumers. Data mining, machine learning, and algorithmic pricing practices are claimed to disrupt the natural functioning of the market by inhibiting consumers from making informed purchasing decisions and allowing firms to unfairly maximize profit from each transaction. The presumption is that the amount of data Big Tech controls, combined with its "ability to control the environment and the timing [*309] of choices and offers," creates a system in which consumers are essentially powerless.

In Amazon's Antitrust Paradox, Khan notes that Amazon's control over vast amounts of data "enables it both to extend its tug over customers through highly tailored personal shopping experiences, and, potentially, to institute forms of price discrimination," in which customers will see different prices for the same products based on information gathered about them. Journalists note the confusion that arises when Amazon and other online services constantly shift prices day-to-day and sometimes even hour-to-hour. Behavioral economists also raise issue with Big Tech's ability to exploit and manipulate inherent consumer biases. Commentators note that the value Google delivers to users in the form of information is "delivered by [its] access to other people's labor and knowledge, most of which Google accesses for free itself." When Google turns the information into behavioral profiles for advertisers, it has the potential to cause "the kind of predatory marketing we saw in the subprime housing bubble globally and in a range of other sectors" where "seedier companies ... target the most naive and vulnerable potential consumers and facilitate new forms of price discrimination." Even with the potential for abuse, research shows that price discrimination is common in many markets and is actually an efficient practice that, in many instances, enhances market competition.

[*310] The dangers associated with these data collection practices are well documented. However, much of the analysis fails to make the case that consumer manipulation and exploitation are problems related to the bigness of Big Tech. As stated in Section II.D, the allegedly exploitative practices actually pervade the entire online ecosystem with companies of all sizes.

Those who view alleged exploitation as a distinctly Big Tech issue attempt to show that large-scale collection of data entrenches the strength of Big Tech, thereby effectuating harm. For example, Google products like Gmail, Google Search, YouTube, and even Google Chrome effectively gather data about individuals "across almost every imaginable space where users operate online" and "given how valuable such profiling is to advertisers, Google's entrenched knowledge of consumers' personal information makes it nearly impossible for any rival or potential rival to woo online advertisers away and creates an anticompetitive barrier to entry." In this case, Google's dominance is elemental to the harm. However, the amount of data the company possesses is not the impetus of the abuse. It may be true that Google has an extensive control over consumer data that disrupts competition in the advertising market, but dismantling Google's conglomerate will not change the potential for consumer manipulation and exploitation online because the components of a hypothetically broken-up Google would still collect the same data on their own. The same is true for Amazon's business; whenever there exists a buyer-seller relationship online, asymmetries of information will exist, and depending on how often a consumer uses a particular online service, that company may have more or less potential to use the information it gathers to advantage itself in a transaction.

Privacy is another category of harm associated with Big Tech's dominance. Privacy, like quality, is recognized as a non-price dimension of competition, but measuring how prominently privacy factors into consumer decision-making is hard to calculate. Privacy could be a factor to consider in a merger review or a monopolization case where a transaction or conduct "generates market power [that] ... may harm consumers when it results in diminished quality, selection, or service." Privacy concerns were a focus in the FTC's review of Google's 2007 acquisition of the advertising technology firm DoubleClick. Critics of the transaction raised questions about the boundaries of privacy and consumer expectations because the combination of [*311] "deep" and "broad" tracking that would result from the merger would likely reduce the quality of the search engine product for consumers with "high privacy preferences." The FTC ultimately approved Google's merger with DoubleClick, and responding to the privacy concerns noted: "The consumer privacy issues presented ... are not unique to Google and DoubleClick. To the contrary, these issues extend to the entire online advertising marketplace." Despite the FTC's statement, some commentators such as Senator Warren, among others, argue that when fewer companies compete in the digital marketplace, companies have less incentive to compete in key areas like protecting privacy. The problem with this characterization is that it suggests concentration causes weak privacy protections. But, like the FTC pointed out back in 2007, all firms operating within the Internet ecosystem benefit from weak privacy protections.

Since then, the landscape has not changed - commercial use of consumer data remains unregulated. The FTC acknowledged this at the time saying, "we take these consumer privacy issues very seriously," and recognizing that while "such issues may present important policy questions for the Nation, the sole purpose of federal antitrust review ... is to identify and remedy ... harm to competition." Another example clarifies this point: If Facebook divested itself of prior acquisitions WhatsApp and Instagram, it would still be advantageous for Facebook to operate under the same business model that led to the Cambridge Analytica scandal of 2018.