Privacy meets Antitrust

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Privacy, Technology and Perspective 

Privacy meets Antitrust:  This week saw privacy collide with antitrust, as Facebook’s co-founder, Chris Hughes, wrote an opinion piece in The New York Times calling for Facebook to be broken up.  You can read it here: https://www.nytimes.com/2019/05/09/opinion/sunday/chris-hughes-facebook-zuckerberg.html . 

 Hughes is not alone.  Prompted by concern over Big Tech’s seeming lack of accountability for data privacy failures, election meddling, and the spread of misinformation, a growing number of scholars, legislators and entrepreneurs have begun calling for the use of U.S. antitrust laws to break up Facebook and other Big Tech behemoths. 

The growing outcry has a name.  It’s called the “Hipster Antitrust Movement,” and its progenitor is Lina M. Kahn. 

 Kahn’s soon-to-be (if-not-already) classic article, "Amazon's Antitrust Paradox," 126 Yale Law Journal 710 (2017), available here: http://www.linamkhan.com/work, highlights the relationship between antitrust and privacy.  Kahn explains how since about the early1980’s, U.S. antitrust enforcement has evolved away from emphasizing scrutiny of structure-and practice-based competition itself (the more competition, the better, with sharp focus on certain anti-competitive practices, like price-fixing), and has moved toward focusing on lower prices for consumers (the lower the prices are for consumers, the  better, with a softer focus on anti-competitive practices).  

 With the stunning increases in computing power and storage capacity during the past two decades, incredible drops in relative computing cost, and the grim willingness of Big Tech companies like Amazon to absorb large losses over time while growing their infrastructure and consumer reach, many Big Tech companies have indeed provided lower consumer prices and greater availability, but at what cost in personal privacy, and for that matter in competition and, ultimately, opportunity itself?  For these and many other reasons, Kahn and other “Hipster Antitrust” commentators are asking, is it time to blow the dust off of Section 2 of the Sherman Act and break up Facebook and other huge data-based companies?  

 Breaking up (or at least limiting) monopolies is one proposed solution.  Another is tighter regulation, accompanied by massive fines, mandatory limits on business activities or expansion, or both.  Massive fines may be coercive enough to cause behavior to change – or not.  Big Tech is truly Big; fifty-million-dollar fines may be sofa change, and billion-dollar ones simply a cost of doing business.  After all, in a saying variously attributed to J. Paul Getty and Nelson Bunker Hunt, a billion dollars ain’t what it used to be.   

 One little-recognized fact is that over the past fifty years, anti-monopolization; tighter regulation; de-regulation; and more have been tried to a degree that has often been surprisingly independent of partisan politics, and with varying degrees of success, failure, and inevitably surprise, both short- and long-term.  

 The Department of Justice began an effort to break up IBM during the Johnson Administration – an effort that continued through the Nixon, Ford, and Carter years, and only ended thirteen years after it began when the Department gave up (several years into the Reagan Administration). Also during the Reagan Administration, however, AT&T did break up into eight different companies, a long-distance entity and seven independent regional Bell operating companies. The trucking, airlines, and natural gas industries were all deregulated during the Carter Administration.   

 We expect that many of today’s such proposed solutions (regulatory, fines, breakups, etc.) will start as they almost always do, with limited or gauzy articulation of the problems they’re trying to address.  Mind-blowingly complex issues with competing, compelling interests then result in overly complex, detailed, minutely-compromised or contradictory regulatory structures (the GDPR comes to mind), with nirvana-like “compliance” their targets’ vital goal. Then they end as they almost always do, with sporadic, often-ineffectual enforcement and backlash against complexity, overreach, and anecdotal tales of disaster.  

 What’s on our minds is how different today’s situation is from all these examples from the past. “Information” and “communication” have always been the most valuable things on earth.  Now “information” and “communication” are suddenly so cheap that they are nearly free for many purposes. This is something new to the human experience, and we wonder whether any one nation or group of nations can effectively control the internet, or the FANG Colossi that now stand astride it – by breaking them up, regulating them, using those regulations to fine them, or any other way.   

 Maybe not.  But we suggest that the starting point is to ask precisely what we want.  What do we understand “privacy” to be? How badly do we want it, and under what circumstances, and how much are we willing to pay for it – either directly, through higher prices, or otherwise? By what process do we arrive at a rough consensus or workable compromise on these issues, first in this country, and also with foreign countries?  How do we protect our consensus and preferred course on these matters when – not “if” – foreign governments like China reject it?    

Hosch & Morris, PLLC is a Dallas-based boutique law firm dedicated to data protection, privacy, the Internet and technology. Open the Future℠.