Could Antitrust Challenge Surveillance Economics?

-- By IndraDan - 01 Mar 2024

The Struggles of Internet Regulation

The early days of the internet have aptly been compared to the “Wild West”. The boundless opportunity of the internet and associated network technologies created a feeling of standing on an expansive, undeveloped frontier. Commercialization of the internet in the early 2000s transformed this experience. As corporate business presence established its footprint on the internet, law followed. Unfortunately, the relevant regulation (and the absence of regulation) has contributed to the formation of the “Parasite” - an omnipresent software system preying upon human behavior.Relying heavily upon historical precedent, much of the law relating to the internet attempts to apply concepts from other arenas. Yet, the unique nature of the internet has revolutionized how humans interact and made many of the previous conceptions of individual rights outdated. Brightline rules based upon our legal precedents fail to capture the nuance of modern day internet use.

The Parasite's demand for Consumer Data

The current iteration of the Parasite is fundamentally based upon surveillance capitalism. Specifically, the boom of “Big Data” is directly attributable to the increase in avenues for surveillance and the ability to convert human behavior into advertising dollars.Individual information has become the most valuable commodity in our modern society. Internet regulation has failed to protect consumers from exploitation by the businesses operating on the network. The need for new perspectives and approaches towards regulating consumer data collection is apparent.

Antitrust's Role to Play

Antitrust is a body of law intended to police the ways that businesses interact and compete with each other. Currently, antitrust mainly challenges technology companies data collection practices during merger reviews - preventing companies from amassing market power and monopoly status through merging consumer data. Yet, novel applications of antitrust could fundamentally alter the calculus of surveillance economics - changing how businesses on the internet operate.

Firms Engage in Competition over Consumer Data Collection

Traditional antitrust analysis fails to account for how the parasite has transformed business competition. Firms are constantly investing in new technologies to effectively collect and analyze consumer data. CEO’s of major corporations across industries (such as banking) have boasted that their firms are now “technology companies”. This trend highlights that firms have entered into technological competition with each other to facilitate their traditional business.

Consumer data collection was reported to be an industry worth more than $300 Billion in 2021. The new realm of competition for many businesses focuses on operationalizing consumer data for “data-enabled learning” to develop competitive advantages. To achieve competitive advantage, firms need to develop comprehensive (and robust) consumer profiles that can be leveraged for more valuable insights in the market. Businesses utilize big-data specifically to manipulate their consumer’s behavior. This manifests itself in a number of ways - from timing advertisements based upon consumers' needs to cultivating addictions to certain surveillance products.

New Competitors

Since data collection has become an integral part of business strategy, firms have begun to compete with a significantly larger scope of competitors. In the market for eyeballs and human behavior consumption,even sleep is a daunting competitor. The crux of this new competitive arena is that all firms are trying to maximize the time their consumers utilize their technology, in turn decreasing the time spent on another platform.

This shift in business models has made it difficult to identify who a firm competes with. While customary competitors still exist in the consumer marketplace, the competition that these “technology companies” engage in involves a wider sphere of firms. The FTC’s practice of merger review illustrates that it is aware that data monopolization can have anti-competitive effects. Yet, the current scope of this review identifies the firm's competitors as only firms that compete with them in their traditional business and fails to police this data collection battle.

§1 Information Sharing claims to Police Collusion

Information sharing claims under §1 of the Sherman act may have an application in the consumer-data context. This line of legal precedent focuses on the idea that firms can utilize certain types of information to exploit customers in the marketplace, forcing consumers to pay higher prices and limiting the need for firms to innovate. While consumer data does not fall under the umbrella of historically suspect information (i.e. pricing, inventory, business strategy), modern consumer-data is arguably the exact type of information that businesses should be restricted from sharing.

The Argument for Data-Sharing's Anti-competitive Purpose

Pricing dynamics have changed in the internet age. Specifically, dynamic pricing determined through real-time data on market conditions, consumer profiles and consumer behavior has left the traditional formula of Price = Cost + Markup in the dust. Furthermore, data collection and consumer influence represents a significant barrier to entry for new firms. These consequences of data collection represent real avenues for firms to exploit consumers and stifle innovation. Though it was dismissed, the Uber Surge-Pricing lawsuit exemplifies this danger.

Some may argue data sharing shifts competition between businesses to effective utilization and conversion of data. While this practice may increase market efficiency in some circumstances, one of the purposes of Antitrust is to ensure consumer welfare. In an age where firms have greater influence over their consumers, heightened scrutiny and protection against consumer exploitation is necessary. As information has become increasingly valuable in its own right, Antitrust enforcement authorities should apply fresh perspectives to what information can be shared by businesses. The rampant sharing of consumer data and utilization of third-party data brokers appears to represent collaboration by firms to expand their ability to control their customers.

A Fresh Solution?

Antitrust could fundamentally destabilize the data collection business. By preventing firms from sharing the consumer data they collect, firms would be forced to rely upon their own in-house capabilities to build their profiles. While some of the biggest businesses can create robust enough profiles to influence their consumers, most could not. It may be the case that smaller firms would no longer have such a strong incentive to surveil their consumers (where they wouldn’t be able to capitalize on selling the data, and would not have the resources to properly utilize that information). The hypothetical impacts of antitrust forcing businesses to stop sharing consumer information could be vast - and may represent an avenue of destabilizing the surveillance capitalist economic model.

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