Big Tech’s privacy promise to consumers could be good news — and also bad news 

News: Recently, Facebook accused Apple of abusing its market power. It has been criticized for introducing a new AppTrackingTransparency feature on its app store, which aims to enhance the user’s privacy.

However, in the name of enhancing privacy, it has been alleged to cause disadvantages to competitors. 

What is the new feature? 

Apple’s new feature requires apps to request permission from users. The users grant permission for tracking them across other apps and websites or sharing their information with and from third parties.  

Why the new feature has been introduced? 

The new privacy measures are poised to enhance user privacy. These features will check “permissionless” tracking over the internet. It has given consumers more control over how their data is used.   

Privacy has become a dimension of Quality of Service (QoS). It has also become a method of non-price competition.

– For example, Apple and DuckDuckGo are employing enhanced user privacy as a competitive metric. In 2018, OECD accepted that privacy is a relevant dimension of quality.  

In case privacy becomes a competitive constraint, then companies will be incentivized to innovate and create privacy-preserving and enhancing technologies. 

Worldwide regulators recognise privacy as a serious metric of quality.

– For instance, the Competition Commission of India (CCI) in WhatsApp’s “take-it” or “leave-it” privacy policy case observed that the WhatsApp policy amounted to degradation of privacy and therefore quality. 

What are the potential issues of using privacy as a measure of competition?

A market-based approach is being used to regulate privacy in digital platforms. It has been found that a website which does not face strong competition are significantly more likely to ask for more personal information than other services.  

It can hurt small businesses. They benefit from targeted advertising services. However, features like this debar them from accessing data.

– For example, Facebook has shown itself as a provider of privacy-centred alternatives. It has been misusing its market power. It has misused privacy in order to reduce competitor in the market, and The Google’s Privacy Sandbox project has been criticized by the UK’s competition authority (CMA) for concentrating on online advertising. 

The proposed changes aim to reduce competition in the market. For example, the Big Tech often acquires other firms to eliminate potential competition. It has been described as a “kill zone” by specialists.  

There is an absence of a modern framework for competition in the digital market. They continue to rely on the Bork’s theory of consumer welfare, i.e., the objective of antitrust should be to maximise consumer welfare. It is best pursued through promotion of economic efficiency.  

The Big Tech, can create barriers for newer entrants in the name of privacy 

Way Forward 

Care must be taken so that Big Tech does not misuse privacy to create barriers for newer entrants.  

The tracking restriction on third-party tracking should not be arbitrary and extensive. 

The use of privacy as a tool for market development must balance enabling and stifling competition.  

The regulators need to balance user autonomy, consumer protection, innovation, and market competition in digital markets. 

Source: The post is based on an article “Big Tech’s privacy promise to consumers could be good news — and also bad news” published in the Indian Express on 13th April 2022.