Privacy is important – but not an antitrust issue

Orson Swindle Contributor
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If you’re a vegetarian, you don’t want to see an online ad for a hamburger joint – and the hamburger joint doesn’t want to waste its ad dollars on you.  Seems only reasonable – yet some in Washington see a problem with this.

Many online companies currently collect consumer data and use it to drive innovation and make web applications function efficiently. The data make advertisements more relevant, search engines more intuitive and social networking platforms more valuable to the user. Even more importantly, data collection helps companies make the services we’ve all come to love and use on a daily basis – Google, Twitter, Facebook and others – available to consumers for free.

At the same time, the demand from consumers for strong privacy protections, greater transparency and more control has significantly increased. And just as companies are racing to release the next big product or platform, they are also competing over who can build the most effective privacy controls.

Look at search and online advertising companies. In 2007, following Google’s announcement that it would anonymize its user search “logs” after 18 months, Microsoft and Yahoo! both committed to similar practices. This trend continued in 2008 when Google took the further step of anonymizing search logs after nine months and Yahoo later agreed to anonymize after only 90 days. When Google introduced interest-based advertising in 2009, it also introduced the industry-leading “Ads Preferences Manager,” which showed users which interests had been associated with their web browser. Later, as the online advertising industry faced calls for greater consumer protection, Yahoo! and the Network Advertising Initiative, a coalition of more than 80 online marketing companies, embraced similar notices and controls for users. And most recently, following the release Google+ and Circles, which gave users greater control over what data is shared amongst their social connections, Facebook integrated similar user controls on its platform.

Still, some in Washington have been critical of Google’s attempts at improving privacy for its users. Rep. Marsha Blackburn (R-TN) questioned whether Google’s recent decision to enhance and consolidate its privacy policies “raises additional questions about how the company’s monopoly power might hurt competition and how their action might unilaterally and unnecessarily invite even broader government regulations on everyone else.”

In addition, in a speech last week at an American Bar Association event, Senator Al Franken (D-MN) stated that users’ “right to privacy can be a casualty of anticompetitive practices.”

Both Rep. Blackburn and Sen. Franken are erroneously suggesting that there is an antitrust aspect to privacy and innovation. The law is clear in this area: privacy is not an antitrust issue.

In its 2007 review of Google’s acquisition of DoubleClick, the Federal Trade Commission noted that many companies have access to a wealth of consumer data, including Google’s main competitors such as Microsoft and Yahoo!. Data brokers like Acxiom and Experian meld offline data with online data to help deliver targeted ads, catalogs and direct mail.  And today, companies like Facebook and Twitter, which also collect vast amounts of consumer data, are also competing heavily with Google for users’ time online.

The FTC explicitly rejected the argument that privacy is an antitrust issue, saying that “not only does the Commission lack legal authority to require conditions to this merger that do not relate to antitrust, regulating the privacy requirements of just one company could itself pose a serious detriment to competition in this vast and rapidly evolving industry.”

Antitrust law is about preserving competition in markets for the benefit of users and consumers. The FTC and Department of Justice, among other tasks, are charged with ensuring that one company doesn’t compete unfairly, potentially creating a monopoly that raises prices for consumers. This certainly won’t be a problem for many online companies, since Google, Bing, Facebook, Twitter and other social web platforms all provide their services for free. And since consumers have the choice of whether or not to use these websites, the companies can hardly be legitimately subjected to allegations of unfair business practices or monopolistic pricing schemes when everything is available for free.

Whatever tomorrow may hold for company privacy policies, it’s clear that antitrust law doesn’t apply.

Despite that, some advocates assert that consumers do “pay a price” for using Facebook or Google – but that price is somehow measured in privacy, not dollars. They contend that social web companies should be able to give us the level of services we enjoy without knowing anything about us at all. This is, of course, impossible. Customization and personalization are what we love about the social web — and consumers choose to use these services.

As a former FTC commissioner, I have always believed in allowing the free market to solve marketplace issues. I applaud the strength officials at the Federal Trade Commission continue to show in the face of political pressure to conflate privacy debates with the strict doctrines of antitrust law. For certain, companies are competing with the ever-improving privacy attributes of their products and services, and consumers are benefiting.

The current FTC and Obama Administration Department of Justice have been aggressive when it comes to tough antitrust enforcement. They came blaring into office publicly declaring an end to what they called the “lax enforcement” of the Bush era. And yet even those pro-enforcement antitrust regulators have made clear that privacy is not a factor to be considered in antitrust reviews. That alone speaks volumes.

Orson Swindle is a former Commissioner at the Federal Trade Commission, Assistant Secretary of Commerce for President Reagan and a retired Lt. Colonel USMC. He is an advisor to Google.