Concealed Data Practices and Competition Law: Why Privacy Matters

Abstract

This article argues that the degradation of consumer data privacy in the digital environment causes objective detriment to consumers and undermines the competitive process, and should therefore be of critical concern to competition authorities. It is notorious that consumers are frequently unaware of the extent to which their personal data is collected, the purposes for which it is used, and the extent to which it is disclosed to others, particularly in digital markets. Researchers and regulators have observed that this is not simply a matter of consumer apathy, but that firms often understate and obscure their actual data practices, preventing consumers from making informed choices. This article defines, and provides examples of, a set of “concealed data practices”. These concealed data practices are not purely a concern for those with subjective preferences for greater privacy: they create objective costs and detriments for consumers, making them more susceptible to criminal activity, discrimination, exclusion, manipulation and humiliation. This article argues that these practices and their consequences are not only problematic in terms of consumer protection and privacy regulation. Concealed data practices should also be of concern to competition policy due to their role in chilling competition on privacy; preserving substantial market power by means other than superior efficiency; and deepening information asymmetries and imbalances in bargaining power. The article concludes by outlining five ways in which these factors should be taken into account by competition authorities.