Congressional attempts to rein in large tech firms like Google and Facebook by reforming antitrust laws are not without their merits. Antitrust laws seek to encourage freedom to contract for the benefit of consumers, and courts have thus far been reluctant to penalize Big Tech under existing antitrust statutes.
However, members of Congress proffering reforms assume our current antitrust framework is unable to protect consumers against large tech companies. This assumption is mistaken—existing antitrust law already offers sufficient tools to remedy Big Tech malpractice, if courts are willing to reconsider the role of data in online transactions. Without this reconsideration, courts will continue to leave consumers in the lurch on antitrust cases involving Big Tech.
Generally, courts determine whether a firm's actions violate antitrust law by applying Judge Robert Bork's standard of "consumer welfare." This analytical framework helps judges determine any market inequities or inefficiencies that require remedy on behalf of consumers. A firm arbitrarily raising prices on its customers or mergers that could lead to a degradation of consumer services are classic examples of what Judge Bork's standard asks courts to protect against.
At the heart of the consumer welfare standard is consumer equity. Put simply, Judge Bork's standard requires courts to examine whether consumers benefit from a firm's action, even if it means consumers lose a competitor as a result. When applying the consumer welfare standard, courts have mainly focused on a transaction's effect on price. However, in the case of Big Tech, judges' reliance on price has led them to ignore the nature of transactions involving supposedly free online services, like social media.
Courts must recognize that consumers are in fact paying for these "free" services. As the late economist Milton Friedman once said, "there ain't no such thing as a free lunch." In the digital age, Friedman is as correct as ever, because companies like Facebook, Twitter or Google don't want users' money; they want data. To better analyze consumer harm, courts could treat that data as a form of currency in this context. The transaction between users and tech platforms is straightforward; users provide tech companies their personal information and, in exchange, tech companies provide those users a license to use their services.
Users' data have a measurable value tantamount to a traditional currency. Scholars have evaluated the consumer-tech relationship and found that data function as an alternative currency. Additionally, economists have developed models that can identify values on user data for a company. Tech companies already treat their users' data as currency—that is how they can monetize their ad services in the first place. Adopting the same metrics may help courts accurately assess a tech company's market share or whether a company unlawfully requires data from consumers under an antitrust theory.
A consumer-welfare analysis under this paradigm rests on a simple question: are consumers receiving more value from a tech company's services when they provide more data to that company? Suppose a tech platform started requiring more data from the user than it initially required, and did not give comparable value to that user in exchange. In that case, a court could find antitrust injury under an unlawful monopolization theory, because users had to give more data for the same product or service without justification.
For example, Google required far fewer data points from users when it made its "search" service available in 1997. However, Google's search now effectively requires its users to provide the company with near-constant access to their geolocation, their spending habits on other sites, their time spent on other sites even when not using the search function and so much more. By providing more of their information, are consumers getting more from Google's search relative to what they received initially? Probably not. A judge could find that Google is arbitrarily requiring its users to provide more data for the same service solely to avail itself of ad revenues.
In sum, many have misinterpreted Judge Bork's standard to advance a laissez-faire approach to Big Tech. That was a mistake. Judge Bork supported antitrust enforcement when firms provide the consumer with a raw deal. If courts were to begin treating a user's data as a form of currency, the bargain from the perspective of consumers would prove one-sided in favor of the tech giants. Recognizing this imbalance may lead to more equitable results without having Congress throw out the antitrust baby with the bathwater.
Joel Thayer focuses his law practice on telecommunications, regulatory and transactional matters, as well as privacy and cybersecurity issues. He has represented clients in front of myriad legal and regulatory fora, including the Federal Communications Commission, Federal Trade Commission and federal administrative agencies. Additionally, he has also represented amicus curiae before the United States Supreme Court and advised technology companies on the European Union's General Data Protection Regulation.
The views expressed in this article are the writer's own.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
