Following on from the shock of the Snowden revelations, it is now well established empirically that chilling effects from government surveillance and other privacy violations exist, that they can at least sometimes be quantified, and that significant proportions of citizens in many countries both describe themselves as being harmed by them, and alter their actual behavior in response. What is less well established or understood is how a government’s interest in maintaining mass surveillance programs could affect competition. This article studies this question.
By Alex Marthews & Catherine Tucker[1]
I. GOVERNMENT SURVEILLANCE MAY LEAD TO A NATURAL TENDENCY TO FAVOR INCUMBENTS
History offers substantial reason to suspect that governments conducting surveillance may well actively prefer long-term, stable partnerships with incumbent firms, over an environment of small, intensely competing firms with a rapidly changing cast of senior managers. For example, the U.S. National Security Agency is reported to have developed over the years a “highly collaborative,” “extraordinary, decades-long partnership” with AT&T codenamed “FAIRVIEW,” and a further partnership with Verizon and MCI codenamed “STORMBREW,” to surveil Internet traffic passing through their servers.[3]
Early literature on the topic of the interaction between surveillance concerns and antitrust speculates about an opposite concern: That expanding government surveillance powers might en
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