Privacy-As-A-Quality Parameter: Some Reflections on the Scepticism

Abstract

With the growing importance of data for commercial purposes, privacy has attracted considerable attention in competition law discussions, particularly where companies in datarich industries seek a merger or acquisition. Prime examples of such mergers include the Google/DoubleClick, Facebook/WhatsApp and the recent acquisition of LinkedIn by Microsoft. Such mergers are primarily driven by the desire to acquire and combine new data assets that are viewed as a key source of competitive advantage in developing and providing digital services. This development in turn raises novel regulatory questions in competition law including whether and how privacy considerations could be incorporated into merger assessments. One emerging approach, shared both by the European Commission (EC) and the US Federal Trade Commission (FTC), is to factor in privacy-as-a-quality (non-price) competition parameter. This approach treats privacy as a quality component of the product or service offered to consumers and privacy harms as reductions in the quality of the product or service that need to be accounted for in competition analysis. Despite some emerging consensus on how to incorporate privacy, there is much uncertainty and scepticism on what constitutes reduction in privacy, the incentive to reduce privacy and the ultimate anti-competitive effect of such a reduction. This paper identifies and reflects on some of these uncertainties and scepticisms surrounding privacy-as-a-quality parameter including the lack of a link between privacy harms and accumulation of too much information; the lack of economic incentive to reduce privacy; and the alleged trade-off between privacy harms and other quality improvements. Finally, the paper examines the role that data privacy law can play in understanding degradation of privacy in competition law.