Your privacy is a product in a two-sided market


vol. 1 issue 10

Donald Baker, former US Asst. Attorney General for Antitrust. Photo: Whitney Fishburn


Today Congress began an investigation into whether Big Data firms such as Google, Facebook, and Amazon are running afoul of US antitrust law.

Before determining if the companies are monopolies, legislators will need to determine whether current antitrust law is sufficient enough to manage how Big Data has changed the marketplace. It used to be that a “relevant market” was easily defined, usually by geography. That’s out the window with the global net.

But there are more personal issues at stake. Now that we know how much of ourselves — namely our personal data — has been used for very big profit by these colassal organizations, without our explicit understanding that is what was happening, it’s also crucial that our lawmakers have a fundamental understanding of what a two-sided market is and how when we participate we are not just customers, we supply a product. Our data, our privacy, our names…these are the products that data companies sell.

That should mean we have rights as suppliers as well as citizens.

And it’s our rights as citizens that have been under attack in a pernicious way. By focusing our attention on what is called “the consumer welfare standard”, which is meant to ensure we get our goods and services for the lowest possible price, we are lured into thinking that is always the end goal.

But as we now see with Big Data firms, who supply us “goods” — essentially access to the Internet generally and to the online market place specifically, we have traded our freedoms (privacy, data) for “free”.

How will we ever return this genie to the bottle now that people we will never know have probably seen and used our personal information without our permission? Even if we stop the behavior, we can’t undo what’s already been done.

Big Data also fuels the so-called “gig economy” which includes Uber and Lyft drivers. These ride-share companies also participate in two-sided markets where we riders and the for-hire drivers are both controlled by the data company. Without the drivers, who are suppliers to these companies, not employees, the companies could not profit. Currently, there are no rights protecting the drivers as suppliers.

What, if anything, will Congress do about these questions? I just hope that Congress obtains a clear understanding of what is at stake. That would be a good place to start.

For docu-mental subscribers who listen to this podcast, the second in our Washington Remembers series, you will certainly get a good idea of how antitrust law has gone from being just about big business to instead being a very personal area of the law.

In addition to there being investigations into antitrust on Capitol Hill right now, we’ve also just passed the 50th anniversary of the first merger guidelines ever written in this country. Former US Assistant Attorney General Donald Baker was at the table as they were drafted (after now Supreme Court Justice Stephen Breyer was done composing them from scribbles taken on the golf course).

Baker and I met in his Pennsylvania Avenue office in Washington, DC to discuss why we need merger guidelines and how antitrust enforcement works in a broad sense. We also discuss how competition law can bend to politics, and what citizens should pay attention to now that the digital revolution has changed our marketplace.

We also discuss the key argument in antitrust circles today: whether the so-called consumer welfare standard is eroding our rights as citizens by making us consumers first, and persons with Constitutionally guaranteed rights second, an argument made more than 100 years ago by then Supreme Court Justice Louis Brandeis.

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Friday we’ll have more excellent food for thought, including some investigating into the correlation between the bond market, agriculture, weather, and lobbying, by request from two readers.

And next week, be on the look out for our next Washington Remembers podcast with Dr. Allen Dyer, a psychiatry and behavioral sciences professor, as well as the vice-chair of education at the George Washington University School of Medicine, and the sole surviving member of the ethics committee of the American Psychiatric Association responsible for the so-called “Goldwater Rule” that advises against diagnosing celebrities, including presidents, from afar. That one, like this one with Baker, is well worth your time.

Thank you as always for your continued readership and support.