Context

In February, Facebook stated that its revenue in 2022 is anticipated to reduce by $10 billion due to steps undertaken by Apple to enhance user privacy on its mobile operating system.

Move towards more privacy-preserving options

• Apple introduced AppTrackingTransparency feature that requires apps to request permission from users before tracking them across other apps and websites or sharing their information with and from third parties.
• Through this change, Apple effectively shut the door on “permissionless” internet tracking and has given consumers more control over how their data is used.
• Privacy experts have welcomed this move because it is predicted to enhance awareness and nudge other actors to move towards more privacy-preserving options, leading to a market for “Privacy Enhancing Technologies”.
• Google’s Privacy Sandbox project is a case in point, though it remains to be seen whether it will be truly privacy-preserving.

Big Tech dominance and issues related to it

• Privacy and acquisitions: One standout feature of the Big Tech dominance has been the non-price factors such as quality of service (QoS) in general and privacy and acquisitions in particular.
• Acquisitions to kill competition: Acquisitions by Big Tech are regular and eat up big bucks, not always to promote efficiency but to eliminate potential competition, described evocatively as “kill zone” by specialists.
• According to a report released by the Federal Trade Commission, between 2010 and 2019, Big Tech made 616 acquisitions.
• In the absence of a modern framework, competition law continues to rely on Bork’s theory of consumer welfare which postulated that the sole normative objective of antitrust should be to maximise consumer welfare, best pursued through promoting economic efficiency.
• Market structure thus became irrelevant and conduct became the sole criterion for judgement.
• Conduct now predominantly revolves around QoS which, like much else surrounding digital platforms, is pushing competition authorities to fortify their existing regulatory toolkits.

Privacy as a metric of quality

•  Companies such as Apple and DuckDuckGo (with its slogan “the search engine that doesn’t track you”) are employing enhanced user privacy as a competitive metric.
• It has been shown that “websites which do not face strong competition are significantly more likely to ask for more personal information than other services provided for free”.
• In 2018, OECD accepted that privacy is a relevant dimension of quality despite the low quality that may be prevalent due to lack of market development.
• Regulators across the globe are recognising privacy as a serious metric of quality.
• For instance, the Competition Commission of India (CCI) in 2021 took suo moto cognisance of changes to WhatsApp’s “take-it” or “leave-it” privacy policy that made it mandatory for every user to share data with Facebook.
• In its prima facie order, the CCI inter alia observed that this amounts to degradation of privacy and therefore quality.

Way forward

• Privacy and competition have overlapping boundaries.
• If privacy becomes a competitive constraint, then companies will have the incentive to create privacy-preserving and enhancing technologies.
• Barriers for new entrants: On the other hand, care must be taken so that Big Tech, aka the gatekeepers in the EU’s Digital Markets Act, do not misuse privacy to create barriers for newer entrants.
• Restricting third-party tracking is not novel and other browsers such as Mozilla Firefox and Microsoft’s Edge have already done so.
• But Google, which owns 65 per cent of the global browser market, is different.
• By disabling third parties from tracking but continuing to use that data in its own ad tech stack, Google harms competition.
• The use of privacy as a tool for market development, therefore, has to tread this tightrope between enabling and stifling competition.

Conclusion

An approach that balances user autonomy, consumer protection, innovation, and market competition in digital markets is a real win-win and worth investing in.

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