Targeting data seen as key for regulators on Big Tech
LONDON — Germany’s top antitrust enforcer recently asked a room full of lawyers, academics and regulators to imagine a wall filled with their personal information collected by Facebook and Google. He told them to picture it stocked with their data broken up into categories such as finances, location, relationships and hobbies.
“That is you,” Andres Mundt said. “And I promise you this wall knows you better than your wife.”
Few listened to Mundt when, a few years ago, he began raising alarms about the data collected by the tech giants.
But in February, his agency ruled that Facebook had broken the country’s law and demanded that the company stop automatically sharing data among the services it owns, such as Instagram and WhatsApp, or websites that use its “like” and “share” buttons. It was the first such ruling in Europe, putting in practice ideas that had never fully escaped academic and think tank debates.
As U.S. regulators and lawmakers intensify their scrutiny of Big Tech, there is a lot of discussion about whether or how they could accuse the companies of violating antitrust law. Often, regulators look to whether a company is causing consumer harm — a standard that can be hard to prove when a service is free.
The response from Mundt is simple. The only way to take on Facebook and some of its peers is to attack what they value most: data.
He argues that the companies are so dominant in their core businesses that consumers, if they want to search the internet or be on social media, have no choice but to share their personal data. The data then strengthens the tech companies’ position over rivals even more — and therefore is anticompetitive, Mundt said.
After the Facebook ruling, Mundt received calls from regulators and lawyers around the world to discuss the idea. He helped organize a meeting of fellow antitrust officials in Colombia, where they spent four days discussing tech regulation. Joseph Simons, chairman of the Federal Trade Commission, and Makan Delrahim, head of the Justice Department antitrust division, were among those attending.
“The German authority is way out in front here and in a real sense the leading antitrust authority in the world with respect to these technology issues,” said Thomas Vinje, partner at the Clifford Chance law firm in Brussels and a veteran of tech industry antitrust battles involving Microsoft and Google.
Online platforms constantly collect data on users: what is clicked on, how fast a person scrolls past a post, what video a person stops to watch. The information helps a company such as Facebook infer characteristics about interests, personal connections and financial demographics to better target advertising, or train machine-learning algorithms that can be used for future products.
It is an extraordinarily lucrative business model. Facebook made $55 billion from advertising last year, while Google’s ad sales totaled $116 billion.
What’s distressing to regulators is the lack of new competitors, a trend Mundt attributes to a company’s access to data and plentiful financial resources. He said Facebook controls more than 95 percent of the social networking market in Germany. Without competition, the network unfairly forces people to make an allor-nothing choice between agreeing to unlimited data collection or not using Facebook at all.
Mundt contends that Facebook and other tech giants don’t need to be broken up, as Sen. Elizabeth Warren and others have suggested. Instead, he thinks governments should limit their ability to collect data. The approach can have an effect similar to a breakup by isolating a company’s different services.
“The business model is to gather and process data, full stop. There is nothing else,” Mundt said. “If they don’t have data, they can have 10,000 very intelligent engineers who tell you what you can make out of data, but without the data you don’t make anything.”
Facebook is appealing the German decision, arguing that it was transparent with users about how data is collected. The social network argues that its use of data helps improve the service and that German regulators singled it out for practices common across the internet.