Online Privacy

SUMMARY:

U.S. antitrust enforcement is evidently undergoing a sea change in how it treats consumer privacy in its antitrust investigations. 

Since the early 2000s through apparently late 2017, DOJ and FTC antitrust enforcers did not consider privacy to be a “non-price factor” in antitrust enforcement.

However, since 2018 the evidence catalogued below indicates that privacy now can, and will increasingly be, a factor in antitrust enforcement involving Internet multi-sided business models going forward, in determining whether a commercial practice anticompetitively harms innovation, choice, or quality.

That’s because of increasingly evident consumer “revealed preferences” for privacy; personal data’s effects on competition for markets; and the inherent “flexibility” of the antitrust consumer welfare standard to adapt to new technological, market, economic, and consumer developments. 

A big reason many investors and the marketplace have concluded that Google and Facebook face no serious antitrust risk going forward was the backward-looking, core conventional-wisdom presumption that harms to consumers’ privacy and data security were largely irrelevant because of the consumer welfare standard focus on price reduction in Internet markets where the “price” is already zero, i.e. free.  

Just like there is a strong inevitability case that it is a matter of when and not if U.S. online privacy/data protection legislation will pass, there is also a compelling common-sense case why U.S. Federal privacy and data protection legislation should and will effectively preempt or supersede state Internet-related privacy laws.   

California’s June passage of an EU “GDPR-light” privacy bill, has teed up the reality that states can and will fill the vacuum left by Congress’ long inaction in addressing consumer privacy protection in the 21^st century – until Congress legislates.  

The fact that California is taking the lead in filling a Federal vacuum, does not mean that pending state Internet-related privacy laws will survive or be determinative long term when Congress ultimately fills the gaping vacuum.

As the FTC prepares for their public hearings on “competition and consumer protection in the 21^st century” this fall, it would be reasonable and instructive for the FTC to seek to better understand the root cause of the need for these once-in-a-generation FTC hearings and to confront some of the most evident serious effects of this root cause problem.

First this analysis asks and answers “what most stunts the FTC’s antitrust and consumer protection law enforcement mission?

Second it asks a dozen of the most important questions the FTC should be asking to zero in on what problems are evidently happening with competition and consumer protection in the marketplace that the FTC’s mission and efforts evidently have been unable to deter, address or resolve since the Pitofsky hearings in 1995.

A Case Study of Alphabet-Google’s 2004-2018 Privacy Track Record of Evident Unfair and Deceptive Over-collection of Consumers’ Personal Data Exposes an Evident Gap in the FTC’s Remedial Authority to Protect Consumers

Submitted as a public comment for the FTC’s fall 2018 “Competition and Consumer Protection in the 21^st Century Hearings.” Topic #5: “The Commission’s remedial authority to deter unfair and deceptive conduct in privacy and data security matters” FTC Project Number: P181201; (PDF FTC submission here)

July 30, 2018; By Scott Cleland; President, Precursor® LLC  info@precursor.com & Chairman, NetCompetition®

Conclusion

This case study of Alphabet-Google’s track record of unfair and deceptive privacy and data security practices provides a compelling body of evidence of 17 major business practice examples over a fifteen-year period that indicate the FTC evidently does not have enough remedial enforcement authority to deter Google, or other Internet platforms, from engaging in unfair and deceptive conduct in privacy and data security matters.

It is also evident from Google’s words and actions chronicled below that it legally does not believe its users have a “legitimate expectation of privacy” concerning the information they provide to Google.

It is a matter of when, not if, Congress will pass national privacy and data protection law for the 21^st century.

It’s inevitable, because the U.S. privacy policy to date is operating as predictably as a pendulum swinging. Consider the evident big picture, pendulum dynamic at work here.

Why is the FCC protecting and facilitating online advertising monopolies?

How can the FCC square its “competition, competition, competition” PR mantra with its regulatory plans for applying new anticompetitive privacy rules only on ISPs and not the “edge” online advertising monopolies -- Google and Facebook?

Simply as it relates to online advertising, the FCC’s new proposed Title II privacy rules would require ISPs with existing advertising businesses, or those planning to enter, compete, and grow in the online advertising market, to be subject to a new and special, privacy opt-in, consumer-consent framework where they alone in the marketplace would have to secure users’ advanced permission to use a majority of their data for advertising purposes.  

With due credit to "Ripley's Believe it or Not!^®,"so much odd and bizarre is happening at the FCC in the "name" of “privacy” that the topic calls for its own collection of: "Believe it or Not!^®" oddities.

Title II Privacy Proposed Rules

The FCC claims consumer privacy is important, but preempted existing FTC privacy regulation of broadband providers before they had any replacement privacy protections in place, so U.S. broadband consumers have been left without any federal privacy protection for over a year! 

The FCC’s just-passed, 3-2 unequal ISP privacy policy spotlights how badly the FCC has lost its way.

In prioritizing the equality rights of inanimate digital bits above the equal protection and equal opportunity rights the American people enjoy under our constitutional republic, the FCC is discriminating in favor of open cronyism over equal consumer protection and equal competitive opportunity.

Moody’s Investors Service has done everyone a service in exposing the FCC’s Title II reclassification and privacy policy for what it really is – arbitrary unequal treatment under the law.

When the FCC proposed these ISP privacy rules three weeks ago, Moody’s called the FCC’s proposal as it saw it in a Sector Comment March 14 entitled: “FCC’s broadband privacy proposal credit negative for linear TV and wireless providers – Over half a trillion in rated debt affected.” 

While the PR cover story of the FCC’s AllVid proposal may be about more consumer choice and competition to reduce the cost of cable set-top boxes, don’t be fooled.

In announcing it, the FCC Chairman admits there’s already consumer choice aplenty: “American consumers enjoy unprecedented choice in how they view entertainment, news and sports programming. You can pretty much watch what you want, where you want, when you want.”

And the AllVid proposal is not about saving consumers money.

If it were, the FCC would not be shunning the obvious, best and cheapest solution of replacing the need for a set-top box entirely, by modernly and naturally transitioning them to the sector norm of easily-downloadable, cheap/free apps.

Google’s ongoing mass indiscriminate surveillance of Europeans’ private activities could threaten quick resolution of the European Court of Justice’s ruling that the US-EU Data Safe Harbor was invalid given the NSA’s “mass indiscriminate surveillance” exposed by Edward Snowden.

Google’s unique, systematic defiance of European sovereignty on these matters could warrant specifically excluding Google from what could be a timely reconstitution of the US-EU Data Safe Harbor, so that one bad actor does not spoil the whole process for the thousands of companies that have respected their Data Safe Harbor responsibilities.