Infracompetitive Privacy

By Day, Gregory; Stemler, Abbey | Iowa Law Review, November 2019 | Go to article overview

Infracompetitive Privacy


Day, Gregory, Stemler, Abbey, Iowa Law Review


I. Introduction

At first blush, Google's1 acquisition of the "smart" thermostat manufacturer, Nest Labs, was as astonishing as it was perplexing.2 observers were initially puzzled by Google's motivation. For a company synonymous with its search engine, email platform, and technology services, why had Google sought to enter the thermostat market?3 Perhaps even more interesting, why did Google spend $3.2 billion to do so?4 The answer to both questions relates to data and its collection.5

It is hard to overstate the modern value of data. Platform-based technology firms ("platforms") thrive by attracting users with "free"6 and lowpriced services, enabling these companies to mine, exploit, and market their users' data to third parties.7 Google, for example, is able to capture personal information from Gmail accounts8 while Uber can, as reports indicate, track certain user activities even after one has deleted the company's application ("app").9

The deal offered by platforms is this: Individuals may enjoy "free" or cheap services in exchange for their personal information, which is turned into revenue. Google's acquisition of Nest thus makes sense considering the volumes of user data collected by Nest and purchased by Google.10

Platforms can, however, inflict a greater cost on users in the form of lost privacy, outweighing the efficiencies generated by low prices. The issue is that platforms enjoy data's economic potential without bearing the full costs of protecting privacy. Society instead suffers deadweight loss, as consumers, companies, and governments spend billions of dollars annually to redress identity theft11 and data breaches.12 Enabled by inadequate security, hackers alone impose between $375 and $500 billion in damages per year.13 More subtly yet perhaps more importantly, platforms can manipulate their users' behaviors, prompting observers to remark that technology firms are compromising human agency.14 In fact, this landscape may qualify as a market failure-a condition whereby the market systemically encourages actors to engage in inefficient behaviors15-as platforms have little incentive to bolster data security as long as they can avoid scrutiny.

We demonstrate that "infracompetitive privacy" is the root of the problem. The term "supracompetitive" almost always refers to supracompetitive pricing-defined as the high prices a monopolist charges in the absence of competition16-which is the primary injury that antitrust law condemns.17 We assert that, like prices, privacy relies on competition. Because an array of platforms compete in markets devoid of meaningful competition,18 they enjoy insulation from market forces which incentivizes them to pass the burdens of protecting privacy onto users. Disguising this market failure is the cheap or "free" price of platform services-i.e., low prices create the illusion of vigorous competition.19 If technology markets were sufficiently competitive, as we explain, firms would enhance their privacy safeguards to vie for users.

Given that insufficient competition may enable privacy breaches, it is problematic that the laws meant to protect consumers from the ill effects of uncompetitive markets-i.e., the antitrust laws-are so far unable to remedy privacy injuries. To explain this blind spot, platform and tech firms have abandoned retail prices as their chief means of competition, creating fundamental problems for antitrust enforcers.20 Because antitrust law is solely meant to promote the economic interests of consumers,21 antitrust courts have typically conditioned liability on evidence that the defendant raised prices (i.e., supracompetitive prices) or restricted output (which produces supracompetitive prices).22 The issue is that, since the courts have yet to recognize privacy as a quality that antitrust may protect, the cheap prices offered by platforms have insulated them from antitrust scrutiny.23 Perhaps antitrust's architects never foresaw an era when firms could render anticompetitive effects without charging prices. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Infracompetitive Privacy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.