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 and development 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 made this practice more like forcing square pegs into circular holes. The network has revolutionized how humans interact and made many of the previous conceptions of individual rights outdated.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. This economic model has driven predatory business practices in the last twenty years. 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.

Antitrust and Information Sharing

Academic scholarship on antitrust often appeals to the consumer welfare theory - the idea that the purpose of antitrust law is to protect and promote consumer interests through regulating the type of competition that businesses engage in. One pertinent example of this in antitrust is the regulation of information sharing between businesses under §1 of the Sherman Act. Businesses are suspected of collusive activities where certain types of information are shared between each other. Information that is particularly suspect includes information relating to current and future business conduct, pricing and inventory. Underlying this line of legal precedent is the idea that businesses can utilize this information to abuse consumers in the marketplace, forcing consumers to pay higher prices and limiting the need for businesses to innovate during competition.

The Challenge of Modern Data-Sharing Practices

Consumer data does not necessarily fall under the umbrella of highly suspicious business information. Firms may collect information related to consumer’s demographics, their behavior on the internet (click-through speed, where they hovered on the page etc.) and their transaction history. For antitrust enforcement purposes, these types of information do not raise the same red flags as pricing or future business strategy would. Businesses thus collect this information in an attempt to build profiles for consumers, allowing them to expertly target these consumers with advertisements. As a result, comprehensive profiles that are continuously updated are significantly more desirable for a firm utilizing this strategy. While some firms are positioned to obtain these profiles in-house, most need to rely upon third-parties to obtain the relevant information. Data brokers operate as an intermediary in this space, connecting those who conduct surveillance with those who seek to profit from the information collected. The industry was reported to be worth over $300 Billion in 2021.

A Fresh Solution?

Yet, modern consumer data is arguably the exact type of information that businesses should be restricted from sharing with one another. 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 consumer addictions to certain surveillance products. Importantly, the evil of consumer exploitation still exists. Though the current economy may not directly link these practices to higher prices (to avoid antitrust scrutiny), businesses are developing methods that appear benign in order to squeeze as much value as possible out of their consumers. As technology has advanced, the level of influence that businesses have been able to exert over their consumers' behavior has risen exponentially. This trend increasingly becomes hard to square with interpretations of the consumer welfare theory.

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. Utilizing analysis similar to our class discussion on identification of complete thoughts in constitutional provisions, the Sherman Act’s first section was proposed to prevent businesses from taking actions to reduce competition and restrain the free market in order to protect consumers. Supporters of data collection may argue that these practices shift competition between businesses to how effectively they can utilize and convert upon the data they have collected. Yet, data collection has fundamentally changed the nature of how firms interact with a marketplace. While some may argue that firms are still engaged in competition with each other, the rampant sharing of consumer data appears to represent collaboration by firms to expand their ability to control their customers.

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.

Improvement will involve some closer scrutiny of the premises for the argument. Businesses may court antitrust liability for sharing information with competitors if taht information sharing enables collusive pricing, territorial allocation, or other anticompetitive practices. You do not provide any facts upon which to base the conclusion that transactions in consumer data have in general anticompetitive purposes, so speculation about "fundamentally destabilizing" current business on those grounds seems ungrounded. To the contrary, most of the existing claims are about platform monopolization, not collusion.

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