Here are some Puzzle Last December, the Federal Trade Commission and a coalition of states filed a no-confidence lawsuit against Facebook, alleging that the company had become more influential and faced less competition, so it reconsidered its commitment to protect users’ privacy. In March, a separate coalition of states led by Texas, Accused Google’s external behavior related to its plan to get rid of third-party cookies in Chrome. In other words, one technology giant is being sued for undermining privacy protections and the other is being sued for strengthening them. How can that be?
This question, and others like it, will become increasingly urgent over the next few years. Incredible enforcers are suing the biggest tech companies as states enact new privacy laws and Congress prepares (perhaps, perhaps, optimistically) for a pass of its own. Meanwhile, those companies are making all sorts of splash changes to their privacy policies despite being close to public prosecutors. Policy makers and enforcers screw up both at risk if they can’t figure out the right way to think about how to reconcile privacy laws with competition laws.
To win a monopoly lawsuit under Section 2 of the Sherman Act, the government must prove that no organization is monopolistic, but rather that it has used its power to harm customers in order to do things that simply cannot be avoided. (This controversial rule is called “consumer welfare standards”) A common example is when an influential firm raises prices after being cornered by the market. Since Facebook’s main products are free, that argument won’t work against it. But there is another way to influence consumer welfare: to reduce product quality. It plays the role of privacy Facebook case. According to the lawsuit, the erosion of user privacy over time is a form of consumer-erosion, a social network that is an inferior product that protects less user data – advising to remove Facebook illegally from a mere monopoly. (This allegation, which the company has denied, is just one of many unreliable claims raised against Facebook.)
That argument against Facebook illustrates the top theory of how distrust and data privacy intersect: the more you turn on the competition dial, the more privacy you get because companies will try to overwhelm customers by providing better protection. If a market becomes monopolistic, that persuasion of competition disappears.
Sometimes, however, the relationship between privacy and competition is reversed: the more you dial up privacy, the less diversity you get in the market. It is now increasingly the case that most exclusive organizations often make the most extensive and profitable use of personal information. In March, Google Announcement That it is moving ahead with a plan to block third-party trackers from Chrome, which has a global share of 100 percent. Under its Privacy Sandbox Framework, instead of a cookie-based advertising target, Google says it will implement a new system where the browser tracks and instead of targeting individually, they advertise to users based on appropriate fit.
In its face it is one step ahead for privacy. Getting rid of cookies will make it harder for strangers to retain your personal data. According to Texas, however, I’ve discussed the issue with the and dozens of other experts – the privacy sandbox will further link Google’s stunned position in the advertising market. By cutting off the ability of other companies to track users in Chrome, while keeping that power to itself, the company will already add a deadly user-data advantage and make it harder for competing companies and publishers to compete for advertising dollars.