Skip to site navigation Skip to main content Skip to footer content Skip to Site Search page Skip to People Search page

Bylined Articles

Preparing for a New Era of Consumer Privacy in Antitrust Enforcement

By Sarah O’Laughlin Kulik, Gregory S. Bombard, and Jennifer McDonald
December 17, 2021
ABA Section of Litigation

Preparing for a New Era of Consumer Privacy in Antitrust Enforcement

By Sarah O’Laughlin Kulik, Gregory S. Bombard, and Jennifer McDonald
December 17, 2021
ABA Section of Litigation

Read below

Historically, antitrust enforcement focused on protecting consumers from the quantifiable price effects of abusive market power. However, the recent focus of the Biden administration, the Federal Trade Commission (FTC), the Department of Justice (DOJ), and state attorneys general shows a shift toward enforcement actions premised on the erosion of data privacy and security protections for consumers. President Biden nominated Jonathan Kanter to lead the DOJ’s Antitrust Division and Lina Khan, recently confirmed, to lead the FTC. These leadership nominations, along with the recent nomination of Alvaro Bedoya to fill the final FTC commissioner position, bring the potential for a new focus on data privacy and protection in antitrust enforcement.

Already, the FTC, DOJ, and attorneys general of several states have taken antitrust enforcement action against technology companies premised on arguments about data privacy and protection for consumers. In future actions, antitrust enforcers may consider non-price effects—such as harm to consumer privacy—as stand-alone bases for antitrust enforcement. In this article, we explore arguments thatcommentators have advanced for incorporating consumer privacy into antitrust reviews and how such theories have appeared in recent cases.

Antitrust Enforcers Historically Have Been Reluctant to Consider Non-Price Effects

Quantifying non-price effects can be complex, as they are often non-quantitative in nature and can interrelate with price effects. United States, Non-Price Effects of Mergers—Note by the United States 4 (Organisation for Economic Co-operation and Development 2018); Greg Gundlach, Non-Price Effects of Mergers: A Primer, Invitational Symposium on the Non-Price Effects of Mergers 4 (Am. Antitrust Inst. June 15, 2016). As a result, antitrust enforcers have been reluctant to rely on such considerations, as such analyses “rely less on formal empirical models and more on qualitative evidence to assess the non-price effects of a merger.” U.S., Non-Price Effects of Mergers, supra, at 4. Despite these complexities, U.S. antitrust enforcement agencies in recent years have acknowledged the possibility of considering non-price effects in merger analysis. Gundlach, supra, at 6. Non-price effects first emerged within the 1992 merger guidelines in footnotes, and they were further expanded on in the 1997 revisions and the 2006 Merger Guidelines Commentary. Gundlach, supra, at 6–7; Dep’t of Justice & Fed. Trade Comm’n, Horizontal Merger Guidelines (1992); Dep’t of Justice & Fed. Trade Comm’n, Merger Guidelines § 4 (1997); Dep’t of Justice & Fed. Trade Comm’n, Commentary on the Horizontal Merger Guidelines (2006). The 2006 Merger Guidelines Commentary in particular “acknowledged that non-price based efficiencies, such as improved quality and services and investments in innovation were potentially cognizable when assessing a merger; but also acknowledged that market power may be exercised by reducing quality, or slowing innovation.” Gundlach, supra, at 7. The revised 2010 Horizontal Merger Guidelines expanded on this, stating that “[e]nhanced market power can also be manifested in non-price terms and conditions that adversely affect customers, including reduced product quality, reduced product variety, reduced service, or diminished innovation. Such non-price effects may coexist with price effects, or can arise in their absence.” Gundlach, supra, at 7.

In recent years, privacy advocates have pointed to the incorporation of non-price effects considerations in the enforcement guidelines to argue for the consideration of consumer privacy in merger reviews and other antitrust enforcements. The typical argument for dataprivacy as a non-price effect is that consumers attribute value to the data privacy measures offered or not offered by a given service. The intersection of antitrust enforcement and data privacy has already become an important consideration of the United Kingdom’s Competition and Markets Authority (CMA). In May 2021, the CMA and the United Kingdom’s Information Commissioner’s Office (ICO) published a joint statement highlighting the importance of data privacy within the digital economy, announcing the commencement of a collaborative approach to regulating digital market competition. CMA & ICO, Competition and Data Protection in Digital Markets: A Joint Statement Between the CMA and the ICO (May 19, 2021). In their joint statement, the CMA and ICO point to the increasing value of enhanced privacy and greater control over personal data by consumers and note that these issues are of “global relevance.” With the new leadership at the FTC and potential new leadership at the DOJ, those federal agencies could adopt approaches similar to those of the CMA and ICO.

New Appointments May Preview a More Expansive View of Antitrust Enforcement

Jonathan Kanter, nominated to lead the DOJ’s Antitrust Division, has long advocated for more aggressive antitrust enforcement against large technology companies. Brian Pandya et al., “Nomination of DOJ Antitrust Head Signals New Era in Antitrust Enforcement,” Westlaw Today, Aug. 17, 2021. A founding partner of antitrust advocacy boutique Kanter Law Group, Kanter has advocated in favor of government enforcement action against Google and has represented technology companies such as Microsoft and Yelp in pushing antitrust officials to take action against Google. Id. Kanter has also been a vocal critic of the consumer welfare standard, decrying it as “limited” and “narrow.” He has argued that “if the free-market sector of the economy is allowed to develop under antitrust rules that are blind to all but economic concerns, the likely result will be an economy so dominated by a few corporate giants that it will be impossible for the state not to play a more intrusive role in economic affairs.” Fed. Trade Comm’n, Hearing, Competition and consumer Protection in the 21st Century, Oct. 17, 2018.

Lina Khan, recently appointed as FTC chair, has made similar criticisms of large technology companies, beginning with her note published as a law student at Yale in 2017 in which she articulated an expansive view of antitrust enforcement. Lina M. Khan, “Amazon's Antitrust Paradox,” 126 Yale L.J. 710 (2017). Khan has since held positions “as legal director of the Open Markets Institute, as a staffer at the House Judiciary Committee’s antitrust subcommittee, and as a Legal Fellow at the FTC under Commissioner Rohit Chopra.” Pandya, supra.

In addition, with the recent nomination of Alvaro Bedoya to the final commissioner slot at the FTC, the agency stands to gain significant expertise in the area of privacy. Bedoya was the founding director of the Center on Privacy & Technology at Georgetown Law School, as well as former chief counsel of the Senate Judiciary privacy subcommittee. David McCabe, “Biden will name a privacy expert to Federal Trade Commission,” N.Y. Times, Sept. 13, 2021. Bedoya’s experience as a consumer privacy advocate could play into his views on antitrust enforcement policy.

Executive Order on Competition Makes Clear the Administration’s Antitrust Priorities

On July 9, 2021, President Biden issued the Executive Order on Promoting Competition in the American Economy. In the order, President Biden encouraged the FTC and DOJ to “enforce the antitrust laws fairly and vigorously.” The order further calls on the FTC and DOJ to “review the horizontal and vertical merger guidelines and consider whether to revise those guidelines.” Specifically with respect to data privacy and security, the order encourages the FTC chair to exercise the FTC’s statutory rulemaking authority in the area of “unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy.” Exec. Order No. 14,036, 86 Fed. Reg. 36,987 (July 9, 2021). President Biden also established a White House Competition Council to “coordinate the federal government’s response to the rising power of large corporations in the economy.” White House, Fact Sheet: Executive Order on Promoting Competition in the American Economy (July 9, 2021).

Existing Cases Offer Clues to How Privacy Enforcement Could Intersect with Antitrust

Recent domestic cases, such as DOJ v. Google and FTC v. Facebook, show how data privacy may intersect with antitrust enforcement.

Last October, the DOJ filed suit against Google. Complaint, Dept. of Justice v. Google, No. 1:20-cv-03010 (D.D.C. Oct. 20, 2020). The complaint alleges that Google maintains monopolies of general search services, search advertising, and general search text advertising in violation of section 2 of the Sherman Act. The DOJ alleges that Google maintains these monopolies through its use of anticompetitive and exclusionary distribution agreements that “lock up” search access points to “drive queries to Google at the expense of search rivals.” The complaint focuses not only on the economic harm done to competitors and innovation but also on the cumulative effects that these agreements have on consumer privacy and data protection.

While the DOJ’s complaint against Google does not explicitly identify data protection and privacy as non-price attributes, the DOJ advances an argument of consumer harm by way of a reduction in quality of general search services, including “dimensions such as privacy, data protection, and use of consumer data.” The complaint also looks ahead to the future, alleging that “Google is positioning itself to control the next generation of search distribution channels,” such as smart TVs, voice assistants, and other internet-of-things devices. Implicit in this argument is an acknowledgment of the evolving ubiquity of these devices in the lives of consumers and, with them, increasing modalities through which consumer privacy may be eroded and data amassed by Google.

In addition to the DOJ’s characterization of privacy as a quality of service, and thus a non-price attribute, the DOJ also argues that privacy and data are an inherent currency in the exchange that takes place between consumers and Google for search services: “Most general search engines do not charge a cash price to consumers. . . . That does not mean, however, that these general search engines are free.” The DOJ argues that rather than paying for Google’s search engine services with money, consumers are providing Google with “personal information and attention in exchange for search results,” which Google then monetizes by selling ads. The DOJ also makes a point to distinguish Google from DuckDuckGo, which it says “differentiates itself from Google through its privacy-protective policies,” underscoring the argument that privacy is a non-price attribute related to the quality of the product. The DOJ also argues that “American consumers are forced to accept Google’s policies, privacy practices, and use of personal data” as a result of Google’s alleged monopolization of search services, reiterating its assertion that privacy is a non-price attribute that may influence consumer choice.

Two coalitions of state attorneys general have filed two additional suits against Google, advancing similar arguments regarding data privacy as a non-price attribute of quality. The first suit, filed in December 2020, alleges violations of section 2 of the Sherman Act in markets that include general search services, general search text advertising, and general search advertising, and it outlines arguments similar to those made by the DOJ. Complaint, State of Colorado et al. v. Google, No. 1:20-cv-03715-APM (D.D.C. Dec. 17, 2020). A second suit, filed in July 2021, alleges that Google maintains “monopolies in the markets for Android software application distribution and for payment processing of digital content purchased within Android apps in the United States.” Complaint, State of Utah et al. v. Google, No. 3:21-cv-05227 (N.D. Cal. July 7, 2021). The complaint asserts that Google “faces no competitive pressure to provide consumers quality customer service or meaningful privacy protections from its own data harvesting.”

The FTC’s case against Facebook also focuses on data and privacy in the context of consumer harm, using privacy as a non-price attribute of quality and consumer satisfaction. Complaint, FTC v. Facebook, No. 1:20-cv-03590-JEB (D.D.C. Jan. 13, 2021); First Amended Complaint, FTC v. Facebook, No. 1:20-cv-03590-JEB (D.D.C. Aug. 19, 2021). The FTC alleges that Facebook has violated section 2 of the Sherman Act and section 5(a) of the FTC Act by maintaining a monopoly in the market for personal social networking (PSN) through acquisitions of WhatsApp and Instagram. The FTC filed its original complaint in December 2020, and the court granted Facebook’s subsequent motion to dismiss in June 2021. On August 19, 2021, the FTC filed an amended complaint.

The FTC argues that PSN users “have been deprived of the benefits of competition,” including consumer choice relating to the “availability, quality, and variety of data protection privacy options for users.” “Without meaningful competition, Facebook has been able to provide lower levels of service quality on privacy and data protection than it would have to provide in a competitive market.” In particular, the FTC argues that Facebook’s acquisition of Instagram deprived consumers of “a check on Facebook Blue’s treatment of and level of service offered to users, including ad load and level of privacy.” The FTC also focuses specifically on WhatsApp’s “top-grade privacy protection” and “increased encryption for privacy-conscious users.”

The recent cases coming out of the DOJ and FTC, in addition to those filed by the coalitions of state attorneys general, suggest that data privacy’s role may continue to take center stage in forthcoming antitrust enforcement. The recent nomination of Jonathan Kanter to lead the DOJ, Lina Kahn’s appointment as FTC chair, and the most recent nomination of Alvaro Bedoya signal further support from the Biden administration for advancing non-price effects such as harm to consumer privacy as stand-alone bases for antitrust enforcement.

Sarah O'Laughlin Kulik is an associate in the Philadelphia, Pennsylvania, office of Duane Morris; Gregory S. Bombardis a partner in the firm’s Boston, Massachusetts, office, and Jennifer McDonald is a paralegal with the firm.