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(1) “A Technical Fix for Opt-out Cookies” (2) “Privacy and Antitrust”. Professor Peter Swire Ohio State University Center for American Progress Berkeley & Santa Clara Conference on Online Advertising April 18, 2008. A Current Issue.

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1 a technical fix for opt out cookies 2 privacy and antitrust

(1) “A Technical Fix for Opt-out Cookies”(2) “Privacy and Antitrust”

Professor Peter Swire

Ohio State University

Center for American Progress

Berkeley & Santa Clara Conference on Online Advertising

April 18, 2008

a current issue
A Current Issue
  • Swire & Anton comments to FTC last week on technical issues in behavioral advertising
  • FTC “Consumer Control Principle” – consumer choice
  • New consumer poll on how important to be able to choose to opt out:
    • 63% rate 10 out of 10
    • 84% say 8 or higher
  • Industry (NAI) says need consumer choice
  • But, the tool for choice is the opt-out cookie, and it’s broken
not a good thing for choice
Not a Good Thing for Choice
  • Monday I opt out of tracking, using an opt-out cookie
  • Tuesday anti-spyware software deletes all cookies
  • Wednesday I am being tracked again
another bad thing for choice
Another Bad Thing for Choice
  • Monday I opt out of tracking
  • Tuesday I delete “all cookies”
    • Browser software now deletes the opt-out cookies
  • Wednesday I’m being tracked again
what to do about it
What to Do About It
  • Our comments to FTC explain simple technical fixes for anti-spyware & browser software
  • We acknowledge problems with opt-out cookie approach, but that’s the technically feasible & scalable approach now
  • If don’t do the technical fix, then industry & the FTC aren’t meeting their “consumer choice” goal
antitrust privacy the basic idea
Antitrust & Privacy: The Basic Idea
  • Basic idea:
    • Price competition is part of antitrust
    • Non-price competition is part of antitrust
    • Privacy can be a form of non-price competition
  • All 5 FTC Commissioners recognized this idea in the Google/DoubleClick opinion
  • So, privacy considerations will be part of antitrust analysis going forward
intro on privacy antitrust
Intro on Privacy & Antitrust
  • My background – teach antitrust & law review draft on this for June
  • Other arguments for how privacy matters to antitrust
    • Sen. Kohl: privacy and be skeptical of bigness
    • Rotenberg: privacy as fundamental right
    • Microsoft last fall: beware of exclusionary conduct
  • My approach: privacy as form of non-price competition
history of privacy antitrust
History of Privacy & Antitrust
  • Traditionally, mergers were for products
    • Exxon/Mobil
    • Beer manufacturers
    • Etc.
  • Information about individuals was not a major factor in the mergers
  • Practices about personally identifiable information were not a major factor in the businesses
my approach privacy as non price competition
My Approach:Privacy as Non-Price Competition
  • NY Times May 2007: “Strictly speaking, privacy is not an antitrust issue”
  • Swire testimony for FTC Town Hall in October, 2007, online at americanprogress.org
  • The basic idea:
    • Privacy can be an important aspect of competition
    • Where it is, then a merger or other practice can reduce competition, triggering antitrust scrutiny
price and non price
Price and Non-Price
  • Traditional focus on price competition
    • Would G/DC merger affect prices of online advertising?
  • Longstanding antitrust attention to non-price competition
    • Imagine an agreement not to compete on warranties
    • Or, a merger where competition on warranties would be greatly reduced
    • On those facts, there would be an antitrust injury to consumers
non price and quality
Non-Price and Quality
  • DOJ 2001 speech where price is “synecdoche”
    • Price stands for the full range of issues that can affect competition in a market
    • Quality of a product one example, such as if quality of shirts would decline due to merger
  • Privacy as quality of a product or service
    • One quality of a service, such as surfing the net, is whether it is high-surveillance or low-surveillance
    • Consumers who care about privacy are harmed if there is less competition on privacy, and privacy protections decline
2 key questions
2 Key Questions
  • Is privacy a non-price factor (a quality of a product or service) that is important to consumers?
  • Will the merger or other action reduce competition in privacy, creating antitrust injury to consumers?
does privacy matter
Does Privacy Matter?
  • Quite possibly yes
  • Personal information practices – privacy & security – clearly more important in the information economy
  • Westin surveys consistently show:
    • “High privacy concern” group at 25-40 %
    • Large “medium privacy concern” group as well
  • For these diverse consumer preferences, there is competitive advantage to having a good privacy reputation
competition in privacy
Competition in Privacy?
  • Again, often yes
  • Search privacy 2007-08:
    • Google announcement on deleting logs
    • Microsoft announcement on logs & other issues
    • Ask announcement of AskEraser
  • This is evidence of competition on privacy, by major players, in a major market
what implications for antitrust
What Implications for Antitrust?
  • Have just said:
    • Privacy as potentially important non-price factor
    • Evidence of competition on privacy
  • Clayton Act § 7, for mergers: “may substantially affect competition”
  • This is the logic of how a merger could reduce competition in privacy, affecting competition in a significant non-price way
    • Could be reason to block a merger
    • Or, place “conditions” on a merger, to assure no harm to privacy
current mergers
Current Mergers
  • I have specifically not taken a position on the facts for Google/DoubleClick or Microsoft/Yahoo
  • I have done work for companies potentially affected by these theories – the views here are mine, as an academic
  • My point – is part of the job for antitrust agencies to look at privacy as a non-price aspect of competition
    • The agencies receive confidential information & presentations
    • Those on the outside thus don’t see critical information on market definition and market effects
ftc decision on google doubleclick
FTC Decision on Google/DoubleClick
  • Majority upheld Google/DoubleClick merger (4 votes)
    • It specifically referenced the approach here: “We investigated the possibility that this transaction could adversely affect non-price attributes of competition, such as consumer privacy.”
    • Accepted the analysis, but held the facts not there
  • Commissioner Harbour dissented
    • She cited my testimony, saying antitrust law should ensure competition “based on privacy protections or related non-price dimensions.”
second requests
Second Requests
  • Another important way that privacy may well become part of antitrust cases
  • Commr. Harbour: companies seeking a merger in data-rich industries may receive detailed questions about privacy in “second requests”
  • Companies can thus expect to provide detailed answers and data about their privacy practices, and how the merger will affect those practices
    • A new role for the CPO in mergers & other transactions
to recap
To Recap
  • Significant, but limited, effects of privacy issues on mergers & other antitrust analysis
  • The significant effects:
    • Unanimous FTC support for the idea that antitrust law should examine whether any loss of competition in privacy due to the merger
    • Increased questions likely as part of mergers about privacy practices, and thus a role for CPOs as part of the antitrust due diligence
limits of this antitrust approach
Limits of This Antitrust Approach
  • This approach fits within existing U.S. law, with focus on competition & antitrust injury to consumers
    • Not treating privacy as a fundamental right
    • Not a free-floating investigation into privacy practices
  • Section 7 looks to the effect of the merger
    • If privacy practices are lousy, but unchanged by the merger, then antitrust authorities don’t intervene
more to explore
More to Explore
  • Issues for possible discussion:
    • How should we assess the likelihood that a merger will reduce competition for privacy?
    • How should we weigh possible harm to privacy felt by some consumers with possible benefits to consumers from more intensive personalization?
    • How well will antitrust agencies deal with these privacy-based problems? Would the FTC do better at this than DOJ?
  • Let the debates begin