Concealed Data Practices and Competition Law: Why Privacy Matters

By Katharine Kemp (University of New South Wales)

This paper 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 law. 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 paper defines, and provides examples of, a set of “concealed data practices”. These concealed data practices create objective costs and detriments for consumers, making them more susceptible to criminal activity, discrimination, exclusion, manipulation and humiliation. This paper argues that these practices 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 paper concludes by outlining four ways in which these factors should be taken into account by competition authorities.

Continue Reading…