Face­book and Google now in crosshairs of Europe’s an­titrust chief

The Washington Post Sunday - - THE WORLD - BY MICHAEL BIRNBAUM michael.birnbaum@wash­post.com Quentin Ariès con­trib­uted to this re­port.

brus­sels — Mar­grethe Vestager is an avid Twit­ter user who likes to post pho­tos of flow­ers and cityscapes from her na­tive Den­mark.

Her ac­count is also a means of track­ing her trav­els as Europe’s chief an­titrust cop and a scourge of big tech­nol­ogy com­pa­nies. Here she is at the Euro­pean Par­lia­ment. Here she is speak­ing in Wash­ing­ton and at Har­vard and de­liv­er­ing a Ted talk in New York. Here she is im­pos­ing a $2.9 bil­lion fine on Google for “abus­ing its search dom­i­nance.” And slap­ping Face­book with a fine for “wrong/mis­lead­ing in­for­ma­tion when it took over What­sApp.” And threat­en­ing higher taxes for Ap­ple and other dig­i­tal com­pa­nies that do busi­ness in Europe.

Vestager was scru­ti­niz­ing tech com­pa­nies long be­fore the lat­est scan­dals about Rus­sian elec­tion in­ter­fer­ence through so­cial me­dia and mis­use of data by Cam­bridge An­a­lyt­ica. But she said those episodes “changed the con­text very much.”

“Just as there is a won­der­ful side to big data in a va­ri­ety of dif­fer­ent kinds and ways, there is a dark side to it as well,” she said in an in­ter­view. “And I think that has been much more ob­vi­ous.”

The dis­clo­sure that Cam­bridge An­a­lyt­ica de­ployed per­sonal data from mil­lions of Face­book users, with­out their per­mis­sion, in the ser­vice of Don­ald Trump’s pres­i­den­tial cam­paign has fu­eled pri­vacy con­cerns most promi­nently. Vestager said that, as a con­sumer, she wor­ries about data pri­vacy, too.

But she and other reg­u­la­tors are also look­ing closely at how tech­nol­ogy com­pa­nies har­ness vast troves of data to en­rich them­selves, quash com­pe­ti­tion and ex­ert con­trol over their users.

The value of data is sky­rock­et­ing: For ex­am­ple, Face­book made $11.8 bil­lion on ad­ver­tis­ing in the first three months of 2018, up 50 per­cent from the same pe­riod a year ear­lier.

Com­pe­ti­tion watch­dogs have of­ten viewed the pri­vacy con­cerns sur­round­ing data and tech­nol­ogy as un­wor­thy of their full reg­u­la­tory fire­power. Yet as more value is as­cribed to peo­ples’ in­for­ma­tion, that is start­ing to change.

Ger­many’s Fed­eral Cartel Of­fice is in­ves­ti­gat­ing whether Face­book abused its dom­i­nant po­si­tion to force users to ac­cept its terms and con­di­tions and hand over in­for­ma­tion that the com­pany then sold to ad­ver­tis­ers. The case is lim­ited to a sin­gle coun­try. But the out­come could set a model for oth­ers to fol­low.

“The is­sues are not clear, at least not yet,” Vestager said. “We fol­low with in­ter­est what the Ger­mans are do­ing in the space be­tween com­pe­ti­tion law en­force­ment and pri­vacy.”

Grow­ing Euro­pean frus­tra­tions with tech­nol­ogy com­pa­nies, many of which are Amer­i­can, were ev­i­denced by the Euro­pean Par­lia­ment’s en­dorse­ment last month of a non­bind­ing re­port that ad­vo­cated break­ing up Google. Vestager said a breakup is “not very much my pre­oc­cu­pa­tion.”

But many Euro­pean an­a­lysts agree that data con­cerns could evolve into other com­pe­ti­tion con­cerns.

“Data has such an eco­nomic value. It’s some­times char­ac­ter­ized as the raw ma­te­ri­als of the new econ­omy,” said Christo­pher Kuner, co-chair of the Brus­sels Pri­vacy Hub at the Free Univer­sity of Brus­sels, who said he has watched his stu­dents seek to bring to­gether pri­vacy and an­titrust is­sues in novel ways.

“It’s hard to see how this wouldn’t be­come more im­por­tant in the fu­ture. There seems to be grow­ing con­cern about the mar­ket power of dig­i­tal ser­vices,” he said.

The Euro­pean Com­mis­sion al­ready re­views whether com­pa­nies that are merg­ing could bring to­gether a vol­ume of data that would close the mar­ket to com­peti­tors. Vestager said she has also directed mem­bers of her team to ex­plore whether con­trol over data could cre­ate a vi­o­la­tion of an­titrust law more broadly.

An­titrust reg­u­la­tors face a range of chal­lenges in tak­ing on data con­cerns. It can be hard to as­sign a value to data. Some can eas­ily be shared or copied. And the eco­nomic value of some user in­for­ma­tion can be fleet­ing: News Corp. bought the so­cial net­work­ing site MyS­pace for $580 mil­lion in 2005, only to sell it for $35 mil­lion six years later.

Vestager said she some­times doubted the value of the tar­geted ad­ver­tis­ing that drives much of the com­pa­nies’ busi­ness. Her pixie-cut hair is un­apolo­get­i­cally salt and pep­per, but, she said, “I get a lot of ad­ver­tis­ing on how to cover your gray hair. So ob­vi­ously they don’t know that I wear it with pride.”

She said that her job, how­ever, is to keep watch over the in­dus­try, no mat­ter the ef­fec­tive­ness of its ad­ver­tis­ing.

This month, a broad new set of pri­vacy reg­u­la­tions will go into ef­fect in the Euro­pean Union, forc­ing com­pa­nies to hand over far more con­trol of per­sonal data to the 500 mil­lion con­sumers of the bloc. Face­book chief ex­ec­u­tive Mark Zucker­berg has said that U.S. Face­book users will also be granted some of those in­creased con­trols.

In con­gres­sional hear­ings with Zucker­berg last month, law­mak­ers ap­peared to be con­sid­er­ing im­pos­ing new reg­u­la­tions on the way Face­book and other In­ter­net giants use their users’ in­for­ma­tion.

But, so far, U.S. an­titrust reg­u­la­tors have been cau­tious about get­ting in­volved in what they say is an evolv­ing mar­ket for pri­vacy. Some have said they are wor­ried that too much reg­u­la­tion could sti­fle in­no­va­tion — and they say that as con­sumer at­ti­tudes change about how much value to place in pri­vacy, reg­u­la­tors should stand aside un­less there are clear mar­ket abuses.

“The men­tal­ity re­gard­ing free plat­forms may well be chang­ing. I know that for me, it has changed,” said Makan Del­rahim, the as­sis­tant at­tor­ney gen­eral for the Jus­tice De­part­ment’s an­titrust divi­sion, in a speech last month. “An­titrust enforcers may need to take a close look to see whether com­pe­ti­tion is suf­fer­ing and con­sumers are los­ing out on new in­no­va­tions as a re­sult of mis­deeds by a mo­nop­oly in­cum­bent.”

Many Euro­peans are skep­ti­cal of the cau­tious U.S. ap­proach.

“Data is it­self valu­able, and peo­ple give it in ex­change for ser­vices,” said Alec Burn­side, a lawyer at the Dechert law firm in Brus­sels who has taken part in an­titrust com­plaints against Google. “I think they are wrong in be­liev­ing that data must have all the char­ac­ter­is­tics of cash.”

2017 PHOTO BY PA­TRI­CIA DE MELO MOR­EIRA/AGENCE FRANCE-PRESSE/GETTY IM­AGES

Mar­grethe Vestager, Euro­pean com­mis­sioner for com­pe­ti­tion, is look­ing at how tech firms har­ness vast troves of data to en­rich them­selves, quash com­pe­ti­tion and ex­ert con­trol over their users.

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