A COUPLE WEEKS ago, during an unassuming antitrust conference at Oxford University, a German bureaucrat uttered a few words that should send a chill through Silicon Valley. In front of a crowd of nearly 200 competition law experts—including enforcement agents, scholars, and economic policy-makers from the United States and Europe—Andreas Mundt, president of Germany’s antitrust agency, Bundeskartellamt, said he was “deeply convinced privacy is a competition issue.”
It’s a conviction major tech platforms are listening to closely, especially since Mundt’s agency is in the midst of a high-profile investigation into whether Facebook abused its dominance as a social network by forcing customers to agree to unfair terms about the way the company uses their data. Mundt’s words may have sounded mundane, but his implication was anything but: the world’s foremost antitrust regulators were publicly discussing whether they should intervene if a transaction weakens consumer privacy protections, a pervasive concern in the era of big data.
A few years ago, to suggest that enforcement agents should act based on privacy would have be heretical to accepted antitrust dogma, particularly as it’s been practiced in the US. The underlying aim of antitrust regulation is to keep the market humming by promoting competition and limiting barriers to entry (this is why the field is known as competition law outside of the US).
For decades, antitrust philosophy in America, and to some extent in Europe, has been shaped by the Chicago School, a highly influential conservative framework that favored big business. Its proponents argued that intervention was only necessary if a business deal hurt consumer welfare, not, for example, smaller competitors. The scope was narrowed further by measuring consumer welfare primarily by whether people had to pay higher prices.
This anti-interventionist approach has led to consolidation across the board, from healthcare to pharmaceuticals to telecom. But the fixation on price has been a boon for tech platforms, which have mastered the art of making money off of free products. An intellectual shift among antitrust experts could ultimately pose an existential threat to Silicon Valley—especially to the idea that its companies are simply scrappy, innovative upstarts that won out rather than heavyweight incumbents using valuable data troves and network effects to dominate one niche after the other.
My emphasis. A very interesting new angle of attack.