When the Viennese cartoonist Joseph Keppler arrived in Missouri in 1868, it would be three decades before his work captured the zeitgeist of America’s Gilded Age.
Towards the latter half of the 19th century, the United States was a land where the barons of new industry reigned supreme, where a corporate elite emerged with unprecedented power over systems of governance. It was fertile ground for an iconic Keppler spread.
In between the pages of a January 1889 edition of Puck – known as the first successful humor magazine in the U.S. – the Austrian’s response to this period in American economic history was unequivocal. "The Bosses of the Senate" depicted a contingent of corpulent monopoly barons, looming with derision over senators in the chamber, a corruption of Lincoln’s Gettysburg address plastered across the wall: "This is the Senate of the Monopolists by the Monopolists and for the Monopolists!"
Keppler’s cartoon not only encapsulated the widespread American scorn towards worsening inequalities exacerbated by monopolies, but the illustration was also regarded as influential in directing the passage of public policy. Sen. John Sherman’s Antitrust Act was adopted a year after the provocative drawing, and, despite being duly criticized for a vagueness of language, it marked the U.S. government’s very first efforts to prohibit monopolistic conduct. Supplemented by the more specific Clayton Antitrust Act of 1914, the U.S. was seemingly pursuing the construction of an economy committed to contestability and fairness.
Fast forward to the summer of 2021 where both acts return to the minds of contemporary observers, with U.S. President Joe Biden making several references to the importance of abiding to the original principles of their design, as part of a contemporary digital economy.
"It is the policy of my administration to enforce the antitrust laws to meet the challenges posed by new industries and technologies, including the rise of the dominant Internet platforms, especially as they stem from serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects," Biden’s Executive Order on Promoting Competition in the American Economy stated.
Biden further implored government agencies to pay closer attention to "unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy."
Alongside these commitments, the administration has furnished itself with several antitrust progressives who are well attuned to the inequalities of the platform economy. This includes the installment of Jonathan Kanter at the Justice Department, Tim Wu at the National Economic Council and Lina Khan as Commissioner at the Federal Trade Commission.
If antitrust policy in the U.S. appears to be turning on its heels to take a greater heed of Big Tech's data practices, in Europe a vigorous momentum has been pursued.
EU antitrust enforcers focus on data
In June, the European Commission launched two antitrust investigations in the digital economy. The first seeks to probe how Google may be distorting competition in restricting access by third parties to user data across its display advertising business. Should a breach of competition rules under Articles 101 or 102 of the EU treaty be identified, the company may be issued with a fine of up to 10% of its global annual turnover.
While the Commission’s examination will hone in on Google’s advertising tools, including Google Ads and Adx, it was a reference to the company’s "Privacy Sandbox" initiative — which vies to put an an end to third-party cookies on Chrome — that provoked the most interest in the investigation.
For competition regulators, the March news of Google’s plans to launch a Privacy Sandbox had struck a nerve, with some fearing that the company would entrench its position in the market by limiting the capacity of rival firms and third-parties to obtain data generated by Chrome. Just two days after the commission’s investigation was announced, Google said that it would postpone the initiative.
However, some stakeholders claim that privacy issues should not necessarily be dealt with by antitrust enforcement, but rather a robust observance of data protection law. A recent paper from Cristina Caffarra, Gregory Crawford and Johnny Ryan notes that more regard should be issued to the EU General Data Protection Regulation’s purpose limitation provisions, in order to stifle surreptitious web tracking protocols from the outset, rather than necessarily embarking on lengthy and complex antitrust investigations.
Indeed, there is a legitimate case for stating that there would be no antitrust charge to be leveled against Google’s Privacy Sandbox initiative should the regime of surveillance never have been a feature of Chrome’s use. That is to say, a hypothetical web architecture that does not give agency to surveillance by default, would invariably contribute to a more competition-friendly online ecosystem.
The EU Commission’s other antitrust probe announced in June focusses on how Facebook’s Marketplace service distorts competition for rival online classified ads platforms.
The concern is that the platform may be using advertising data retrieved from classified ad services, such as eBay, to the advantage of Facebook-run facilities, such as Marketplace. The U.K. Competition and Markets Authority have launched a similar investigation and will work in tandem with the commission.
And Brussels is very much treading ground previously ploughed by European national competition authorities, harking back to the German Bundeskartellamt’s 2019 order to prohibit Facebook’s collection of data from WhatsApp and Instagram, as well as third-party platforms, for the purpose of assigning it to a user.
In levelling the charge against Facebook’s conduct, the Bundeskartellamt relied on consent provisions outlined in Article 6 of the GDPR. The authority found that the processing and combination of user data between different sources without soliciting voluntary user consent, constitutes an infringement of the GDPR, which in turns leads to a violation of Section 19 of the German Competition Act, and ultimately an abuse of a dominant position.
The case came to inform revisions to Germany’s competition law, which came into effect in January this year, and now includes prohibitions on designated platforms from raising barriers to market entry against competitors by using certain data processing strategies, as well as stating that a refusal to admit access to commercial data for competitors could constitute a competition violation.
Digital Markets Act
At the supranational level, the European Commission’s Digital Markets Act, currently being debated over in Brussels, does place data use restrictions on platforms designed as gatekeepers. For example, Article 5(1) prohibits gatekeepers from combining personal data from several sources without seeking the user’s consent, and Article 6(1) bans commercial data ring-fencing, obliging gatekeepers to “refrain from using, in competition with business users, any data not publicly available, which is generated through activities by those business users.”
In respect to the articles above, the designation of gatekeepers is a vital ingredient to the efficacy of the future Digital Markets Act.
The commission has proposed that to fall under the gatekeeper designation criteria, a firm will have to have at least 45 million monthly EU users and more than 10,000 annual business users. The platform will also have generated at least 6.5 billion euros across the European Economic Area over the last three years or have a market value of at least 65 billion euros in the last financial year — with services available in at least three member states.
Surprisingly, there is no specifically defined data-related criteria present in the designation of a gatekeeper platform as part of the DMA. However, in cases where a platform does meet the above thresholds but is still regarded as a risk to the contestability of digital markets while occupying an entrenched position, Article 3(6c) notes that the commission will analyze whether a platform has constructed entry barriers derived from data driven advantages, in relation to a provider’s “access to and collection of personal and non-personal data.”
The commission’s parallel platform regulation, with its Digital Services Act, directs attention to ensuring the emergence of safer and more reliable online content. In terms of data, it pitches transparency obligations for platforms in the arena of targeted advertising, obliging firms under the scope to provide users with granular information on why they have been targeted.
However, for lawmakers in Brussels, this may not go far enough. A steadfast group of those on the left of the political spectrum in the European Parliament are calling for an outright ban on targeted advertising online — something that would undoubtedly engender a competition dimension, the business models of such platforms being heavily reliant on the enterprise of targeted advertising.
Despite the recent developments however, it was back in 2014 when the European Data Protection Supervisor first implored privacy and competition regulators to pay closer attention of one another’s’ fields, noting that the acquisition of personal data on a mass scale amounts to an apparatus of market power.
The terminology at the time used by Peter Hustinx, the then EDPS chief, was to describe data as a "valuable intangible asset." This description not only correctly helps to break the distorted metaphor of data as the new "oil" (a tangible asset), but also encapsulates the difficulty of global antitrust enforcers in regulating an asset that is both quantifiable and qualitative, yet has no physical form nor a default function.
Emblazoned across the barreled chests of the moguls in Joseph Keppler’s 1889 cartoon are references to the titanic industries represented by "The Bosses" — steel, oil, copper, coal. These assets were the materials vital to a burgeoning industrialist economy and allowed the barons to leverage overwhelming power over U.S. lawmakers.
The Information Age’s most in-demand asset, however, finds no historical equivalent, and the intents of regulators across the digital economy should at first be geared towards ensuring compliance with existing data protection legislation in order to preserve platform competitiveness. It should be borne in mind that today, the biggest baron in the chamber is the one who has amassed the most data and is willing to use it to the detriment of fair, free and contestable markets.
Of this, efforts both in Europe and the U.S. appear to be on the precipice of a truly transformative moment.
Photo by Aedrian on Unsplash
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