- Vestager was scrutinising tech companies long before the latest scandals
- She said scandals “changed the context very much”
- Later this month, GDPR will go into effect
Margrethe Vestager is an avid Twitter user who likes to post photos of flowers and cityscapes from her native Denmark.
Her account is also a means of tracking her travels as Europe’s chief antitrust cop and a scourge of big technology companies. Here she is at the European Parliament. Here she is speaking in Washington and at Harvard and delivering a Ted talk in New York. Here she is imposing a $2.9 billion (roughly Rs. 19,500 crores) fine on Google for “abusing its search dominance.” And slapping Facebook with a fine for “wrong/misleading information when it took over WhatsApp.” And threatening higher taxes for Apple and other digital companies that do business in Europe.
Vestager was scrutinising tech companies long before the latest scandals about Russian election interference through social media and misuse of data by Cambridge Analytica. But she said those episodes “changed the context very much.”
“Just as there is a wonderful side to big data in a variety of different kinds and ways, there is a dark side to it as well,” she said in an interview. “And I think that has been much more obvious.”
The disclosure that Cambridge Analytica deployed personal data from millions of Facebook users, without their permission, in the service of Donald Trump’s presidential campaign has fueled privacy concerns most prominently. Vestager said that, as a consumer, she worries about data privacy, too.
But she and other regulators are also looking closely at how technology companies harness vast troves of data to enrich themselves, quash competition and exert control over their users.
The value of data is skyrocketing: For example, Facebook made $11.8 billion (roughly Rs. 79,300 crores) on advertising in the first three months of 2018, up 50 percent from the same period a year earlier.
Competition watchdogs have often viewed the privacy concerns surrounding data and technology as unworthy of their full regulatory firepower. Yet as more value is ascribed to citizens’ information, that is starting to change.
Germany’s Federal Cartel Office is investigating whether Facebook abused its dominant position to force users to accept its terms and conditions and hand over information that the company then sold to advertisers. The case is limited to a single country. But the outcome could set a model for others to follow.
“The issues are not clear, at least not yet,” Vestager said. “We follow with interest what the Germans are doing in the space between competition law enforcement and privacy.”
Growing European frustrations with technology companies, many of which are American, were evidenced by the European Parliament’s endorsement last month of a nonbinding report that advocated breaking up Google. Vestager said a breakup is “not very much my preoccupation.”
But many European analysts agree that data concerns could evolve into other competition concerns.
“Data has such an economic value. It’s sometimes characterised as the raw materials of the new economy,” said Christopher Kuner, co-chair of the Brussels Privacy Hub at the Free University of Brussels, who said he has watched his students seek to bring together privacy and antitrust issues in novel ways.
“It’s hard to see how this wouldn’t become more important in the future. There seems to be growing concern about the market power of digital services,” he said.
The European Commission already reviews whether companies that are merging could bring together a volume of data that would close the market to competitors. Vestager said she has also directed members of her team to explore whether control over data could create a violation of antitrust law more broadly.
Antitrust regulators face a range of challenges in taking on data concerns. It can be hard to assign a value to data. Some can easily be shared or copied. And the economic value of some user information can be fleeting: News Corp. bought the social networking site MySpace for $580 million (roughly Rs. 3,900 crores) in 2005, only to sell it for $35 million six years later.
Vestager said she sometimes doubted the value of the targeted advertising that drives much of the companies’ business. Her pixie-cut hair is unapologetically salt and pepper, but, she said, “I get a lot of advertising on how to cover your gray hair. So obviously they don’t know that I wear it with pride.”
She said that her job, though, is to keep watch over the industry, no matter the effectiveness of its advertising.
Later this month, a broad new set of privacy regulations will go into effect in the European Union, forcing companies to hand over far more control of personal data to the 500 million consumers of the bloc. Facebook chief executive Mark Zuckerberg has said US Facebook users will also be granted some of those increased controls.
In congressional hearings with Zuckerberg last month, lawmakers appeared to be considering imposing new regulations on the way Facebook and other Internet giants use their users’ information.
But, so far, US antitrust regulators have been cautious about getting involved in what they say is an evolving market for privacy. Some have said they are worried that too much regulation could stifle innovation – and they say that as consumer attitudes change about how much value to place in privacy, regulators should stand aside unless there are clear market abuses.
“The mentality regarding free platforms may well be changing. I know that for me, it has changed,” said Makan Delrahim, the assistant attorney general for the Justice Department’s antitrust division, in a speech last month. “Antitrust enforcers may need to take a close look to see whether competition is suffering and consumers are losing out on new innovations as a result of misdeeds by a monopoly incumbent.”
Many Europeans are sceptical of the cautious US approach.
“Data is itself valuable, and people give it in exchange for services,” said Alec Burnside, a lawyer at the Dechert law firm in Brussels who has taken part in antitrust complaints against Google. “I think they are wrong in believing that data must have all the characteristics of cash.”