Retake on Double Take: Data privacy and regulating big tech

We investigate how big tech companies are mining personal data, and how regulators and lawmakers are responding.

Massive changes are rippling through the world of big tech. These mega companies are transforming in numerous ways, including how they mine our personal data and sell advertising, all while raising the hackles of regulators and lawmakers.

Our latest Double Take episode tackles the complex issue of big data privacy laws and antitrust implications. While tech companies are undoubtedly the focus of this regulatory scrutiny (a pointed outcome of what is commonly referred to as the ‘techlash’), this episode also covers the broad reach of antitrust law. Finally, we consider potential arguments surrounding what is truly in the consumer’s best interest.

In 2016, Europe’s General Data Protection Regulation (GDPR) was passed, requiring tech companies to comply with a rigorous set of steps to protect consumers. The law was a direct response to decade-long, radical changes to digital advertising and the digital economy. This evolution was not always favourable to consumers, according to Richy Glassberg, founder of the Internet Advertising Bureau and Safeguard Privacy:

With the rise of programmatic advertising and algorithms taking over, we really forgot the consumer. What happened was you would go somewhere [on the internet] and they would just follow you around with creepy ads… really creepy that you would go look for a pair of snow mountain pants and everywhere you went on the web, those snow mountain pants followed you.

Richy Glassberg, founder of the Internet Advertising Bureau and Safeguard Privacy

Lina Khan, President Biden’s appointed Federal Trade Commission chairwoman, is well-known for her progressive stance toward antitrust laws and is a proponent of structural separation. In the context of large tech platforms, structural separation restricts these companies’ search platforms from preferencing their own products over products from outside suppliers.

This concerns Aurelian Portuese, Director of Antitrust & Innovation Policy at the Information Technology and Innovation Foundation, which is funded by big tech and seeks to preserve innovation in the sector:

If you go down that line, which is a very radical line, preventing any companies to sell product and running a platform, just think of, for the sake of argument, think of any supermarket. Every supermarket is a platform, welcoming third-party sellers, but also most of the supermarkets compete and sell their own private-labelled product. So if you prohibit that, then you prohibit a very common business practice.

Aurelian Portuese, Director of Antitrust & Innovation Policy at the Information Technology and Innovation Foundation

There is further debate over the ways digital businesses monitor and target potential customers online. Glassberg notes that the shift from person-to-person advertising sales to algorithms that harnesses individual consumer data represents a newfound ability to discriminate against the consumer based on their tracked online activities. Additionally, companies collect and keep personal and behavioural data, which is then used to generate billions in profits. Glassberg argues that this practice ultimately led to GDPR and conceptually similar US legislation like the California Consumer Protection Act (CCPA).

I think there is a huge, Orwellian, distrust of all this, because the tech platforms have not shown themselves to be good actors. They’re doing it for the unbridled profit on every single consumer. I say it that way because I think that is what they’re showing instead of showing a modicum of restraint on what they’ve done. You could control all of this. They’ve just chosen not to.

Richy Glassberg

The pretext for such potential legislation in the US is Europe’s Digital Markets Acts (DMA), which aims to increase fairness and contestability in digital markets. These laws assign a gatekeeper designation to large-cap tech companies that are platforms for apps and commerce companies that compete with firms doing business on these platforms. Under the emerging regulatory regime, once a company is designated as a gatekeeper, it is liable for fines at best and forced to break up at worst. At present, the DMA is applicable to a handful of companies.

Portuese believes it is virtually certain that legislation similar to the DMA will be adopted in the US. However, how this is achieved, and importantly, enforced, is very uncertain. The potential passage of bills currently being drafted in Congress is similarly uncertain, which is why the US Federal Trade Commission (FTC) under Khan is working to create its own set of regulations, something Portuese notes takes an average of six years to see to fruition.

Crucially, Portuese casts doubt on the enforcement of any such regulation and its ability to hold up in court.

That’s a very high threshold for the judges to be convinced of… it’s going to be very difficult for these regulators to convince these judges to do so — you cannot only break up the company. It’s that you have to manage, you have to give the regulators the way, some power to manage on a daily basis, on a weekly basis. I’m doubtful whether or not the judge will go down that road. And for what consumer benefits? I don’t know.

Aurelian Portuese

While Glassberg takes the pro-regulation angle, arguing that most companies are not taking the notion of rethinking data privacy as seriously as they should, he shares Portuese’s view that the FTC is not likely to have much ability to enforce regulation.

I’m just concerned that the arms race is not in the favour of the regulators…it’s in the favour of the big walled gardens that throw tremendous amount of money at the best and the brightest. And that’s a hard game to win.

Richy Glassberg

Portuese believes tech players may be more skittish toward merger and acquisition activity and should be prepared to spend large sums on litigation costs. Much will depend on the make-up of Congress following the 2024 elections, how quickly the current administration’s FTC drafts regulations, the litigation that will follow any enforcement of those rules and the view that future administrations might take toward antitrust laws. Many believe that the war between big tech and those who seek to regulate it will be characterized by an initial decade of uncertainty.

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Authors

Raphael J. Lewis

Head of specialist research

Jack Encarnacao

Research analyst, investigative, Specialist Research team