Does Antitrust Have a Role to Play in Regulating Big Data?
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ARTICLE SUMMARY
This paper reviews studies that consider whether antitrust law should be used to regulate big data. Most conclude that such a use of antitrust law could harm innovation and consumers. Generally, the use of big data supports competition and benefits consumers.
POLICY RELEVANCE
Antitrust law addresses harm to competition, not harm to privacy. Consumer protection law is the best way to address privacy problems.
KEY TAKEAWAYS
- Several studies warn that use of antitrust to regulate big data would tempt private firms to initiate complaints to manipulate the system and harm their competitors.
- Several studies conclude that antitrust action against big data would harm consumers and innovation; big data offers benefits to consumers such as free user services, improved quality, and an increase in innovation.
- The use of data in targeted advertising benefits consumers.
- The available of free services benefits consumers and is not anticompetitive.
- Markets in which data is important have low entry barriers, and new firms can quickly emerge to challenge established rivals; examples include Snapchat, Slack, and Tinder.
- New entrants can acquire new data from third parties.
- Data can be easily and quickly collected, and the tools to analyze it are widely available.
- Data is “nonrivalrous,” that is, one firm’s knowledge of a consumer’s preferences does not stop another from acquiring the same knowledge; one firm could hold all the world’s oil resources, but no single firm can hold all the world’s data.
- The value of data is short-lived; any advantage a firm gains by holding data will be fleeting.
- One study argues that large search engines with more data gain an advantage over small search engines, and even if the small search engine gives better quality results, it cannot compete.
- Search quality is subjective.
- Antitrust policy does not stop firms from sacrificing quality to make more profits.
- Interference with search ads might harm advertisers more than it benefits consumers.
- When Google acquired the advertiser DoubleClick, some observers suggested that mergers driven by firms’ interest in data might erode incentives to protect privacy, but there is no real-world evidence that this has happened.
- Some fear that a big firms could use big data to entrench its position, a “feedback loop” leading to a “winner-takes-all” market; a survey of investigations by competition authorities show that this problem has been greatly exaggerated.
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About Daniel Sokol
D. Daniel Sokol is the Carolyn Craig Franklin Chair in Law and Business at the USC Gould School of Law and an Affiliate Professor of Business at the Marshall School of Business, where he teaches in the marketing department. He serves as faculty director of the Center for Transnational Law and Business and the co-director of the USC Marshall Initiative on Digital Competition.
