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Competition and Consumer Privacy in the Cyberspace Market


Affiliations
1 Fisher Broyles LLP, 445 Park Avenue, Ninth floor, New York -10022, United States
2 Long Island University, CW Post Campus, 720 Northern Blvd, Greenvale, New York - 11548, United States
 

This paper will examine legal and marketing implications of certain Internet technological developments impacting competition and consumer protection in cyberspace. The paper will explore to what extent antitrust and consumer protection laws are adequate to deal with the challenges to a competitive marketplace and consumer privacy posed by the development of cyberspace technologies and markets, for example, Internet search engines, social networks and wearable devices. The paper concludes that legal tools for protecting a competitive cyberspace marketplace are fairly robust, while the legal tools to protect consumers from being tracked and profiled by marketers and from the potential intrusions of individual privacy made possible by even more advanced Internet connected sensor and related data-based technologies are still a work in progress. At the same time, the extent of further government regulation in this area must be carefully balanced so as not to unduly restrict data dependent innovation.

Keywords

Consumer Privacy, Cyber Security, Economics, Exclusivity, Social Media Networking, Google, Facebook, Apple, Internet Usage,header Should Be Klie EU Commission, Public Policymakers, Digital Marketing, Consumer Privacy Protection, Competition Commission of India, U.S. Antitrust Law, United States Federal Trade Commission.
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  • Demographic (Population) numbers in the site are based on data from the United Nations - Population Division. Internet usage information comes from data published by Nielsen Online, by ITU, the International Telecommunications Union, by GfK, by local ICT Regulators and other reliable sources, http://www.internetworldstats.com/stats.htm.

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  • Blum P & Goff B, 'Internet Of Things' 101: Legal Concerns Law360, 14 April 2014.

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  • Think about a residential thermostat that can be adjusted via a smartphone and authenticated web service, or that may self-adjust based on its awareness of the homeowner’s location (e.g., switching on the heating/cooling as it detects the owner nearing home), Rose A, The Internet of Things has arrived — And so have massive security issues, WIRED, 9 January 2013, http://www.wired.com/2013/01/securingtheinternet-of-things/.

  • Think about drug dispensers that can issue medication in response to sensing conditions in the human body through a set of apps, sensors, and other monitoring/feedback tools. Rose A, The Internet of Things has arrived — And so have massive security issues, WIRED, 9 January 2013, http://www.wired.com/2013/01/securing-the-internet-of-things/.

  • The Apple Watch is a current example of IoT, in the form of a wearable device. Wearables, like the Apple Watch, can track information about a person (via skin contact), the location (GPS), the activity, and an individuals’ vital signs.

  • Fewer than 10,000 households can generate 150 million discrete points of data a day FTC, Internet of Things Workshop, 2013, 89.

  • For example, health or life insurance companies can use data from fitness trackers for health or life insurance rates.

  • A connected device can be used by manufactures (or hackers) to eavesdrop on the television show being watched; or the temperature at which the thermostat is set.

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  • Galindo, Blanca Rodriguez 2007, Prohibition of the Abuse of a Dominant Position (The International Symposium on Anti Monopoly Enforcement); Communication from the Commission-Guidance on the Commission's Enforcement Priorities in Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings, 2009 O.J. (C 45) 7, 8.

  • http://www.cci.gov.in/sites/default/files/03201127.pdf, 39.

  • ‘Tying’ usually refers to situations where customers that purchase one product (the tying product) are required also to purchase another product from the producer (the tied product). ‘Bundling’ usually refers to the way products are offered and priced by the firm. In the case of pure bundling the products are only sold jointly in fixed proportions.” Galindo, Blanca Rodriguez 2007, Prohibition of the Abuse of a Dominant Position (The International Symposium on Anti Monopoly Enforcement); Communication from the Commission-Guidance on the Commission's Enforcement Priorities in Applying Article 82 of the EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings, 2009 O.J. (C 45) 7, 8.

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  • http://europa.eu/rapid/press-release_MEMO-17-1785_en.htm.

  • Google is dominant in each national market for general internet search throughout the European Economic Area (EEA), that is, in all 31 EEA countries. Google was dominant in each country since 2008, except in the Czech Republic where the Decision found Google to have been dominant since 2011. Since 2008 Google's search engine held very high market shares in all EEA countries, exceeding 90% in most. http://www.statista.com/statistics/267161/market-share-ofsearchengines-in-the-united-states/

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  • The antitrust leveraging doctrine is relevant to potential manipulation of Google’s dominant market power in general search to favor its own ads. Rule of Reason analysis would determine the extent of the problem in particular circumstances, but we should not underestimate customer inertia in moving from relatively easy-to-use and well branded Google general search to less content-rich, less wellknown specialized search engines.

  • http://europa.eu/rapid/press-release_SPEECH-12372_en.htm?locale=en.

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  • http://europa.eu/rapid/press-release_IP-15-4780_en.htm.

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  • http://www.comscore.com/Insights/Market-Rankings/comScore -Releases-April-2014-US-Search-Engine-Rankings.

  • https://www.comscore.com/Insights/Rankings/comScoreReleases-February-2016-US-Desktop-Search-EngineRankings

  • According to the FTC closing statement on the Google case. “As is well known, when a user types a word or words into a Google search box, Google, guided by proprietary algorithms, searches its index of the Internet and assembles a ranked listing of relevant websites, known as “organic” search results. These organic results – together with advertising, links to Google products, and other information judged to be relevant to the user’s query – are returned to the user as the Google search results page. Google is a “horizontal,” or general purpose, search engine because it seeks to cover the Internet as completely as possible, delivering a comprehensive list of results to any query. General purpose search engines are distinct from “vertical” search engines, which focus on narrowly defined categories of content such as shopping or travel. Although vertical search engines are not wholesale substitutes for general purpose search engines, they present consumers with an alternative to Google for specific categories of searches. Some vertical websites alleged that Google unfairly promoted its own vertical properties through changes in its search results page, such as the introduction of the “Universal Search” box, which prominently displayed Google vertical search results in response to certain types of queries, including shopping and local. Prominent display of Google’s proprietary content had the collateral effect of pushing the “ten blue links” of organic search results that Google had traditionally displayed farther down the search results page. Complainants also charged that Google manipulated its search algorithms in order to demote vertical websites that competed against Google’s own vertical properties.” https://www.ftc.gov/system/files/documents/public_statements/295971/130103Googlesearchstmtofcomm.pdf.

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  • http://www.livemint.com/Companies/5D4c8f9kKB41IyL99R fm4H/Why-did-CCI-write-Google-a-bad-report-card.html (The original report of the Director General could not be found on the website of the CCI).

  • The commission itself will then take its own independent view of the reports filed by the Director General. It can overrule these findings.

  • Section 4 of the Competition Act of 2002:

  • Abuse of dominant position.—

  • (1) No enterprise shall abuse its dominant position.

  • (2) There shall be an abuse of dominant position under subsection (1), if an enterprise,—

  • (a) directly or indirectly, imposes unfair or discriminatory—

  • (i) condition in purchase or sale of goods or services; or

  • (ii) price in purchase or sale (including predatory price) of goods or service; or Explanation—For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or services referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub clause (ii) shall not include such discriminatory conditions or prices which may be adopted to meet the competition; or

  • (b) limits or restricts—

  • (i) production of goods or provision of services or market therefor; or

  • (ii) technical or scientific development relating to goods or services to the prejudice of consumers; or

  • (c) indulges in practice or practices resulting in denial of market access; or

  • (d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or

  • (e) uses its dominant position in one relevant market to enter into, or protect, other relevant market.

  • Explanation —For the purposes of this section, the expression—

  • (a) “dominant position” means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to—

  • (i) operate independently of competitive forces prevailing in the relevant market; or

  • (ii) affect its competitors or consumers or the relevant market in its favour;

  • (b) “predatory price” means the sale of goods or provision of services, at a price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors.

  • Section 27b of the Competition Act of India, 2002: “impose such penalty, as it may deem fit which shall be not more than ten percent. of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse”

  • Section 28 of the Competition Act of India, 2002.

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  • Active users are those which have logged in to Facebook during the last 30 days. http://www.statista.com/statistics/264810/number-of-monthly-active-Facebook-users-worldwide/.

  • http://www.prnewswire.com/news-releases/Facebookreportsthird-quarter-2013-results-229923821.html

  • Facebook measures "monthly active users" as users that have logged in during the past 30 days. The site defines a mobile MAU as a user who accessed Facebook via a mobile app or via mobile-optimized versions of the website such as m.Facebook.com, whether on a mobile phone or tablet such as the iPad, during the period of measurement. http://www.statista.com/statistics/277958/number-of-mobileactiveFacebook-users-worldwide/.

  • https://www.emarketer.com/Article/Google-FacebookIncrease-Their-Grip-on-Digital-Ad-Market/1015417.

  • http://files.shareholder.com/downloads/AMDA-NJ5DZ/ 3517992167x0x770575/481ba943-c7b2-4336-9d70-6453934517db/FB_News_2014_7_23_Financial_Releases.pdf.

  • http://www.statista.com/statistics/193538/market-share-ofnetus-digital-ad-revenues-of-Facebook/

  • Network effects block only frontal competition, but not lateral competition. Lateral competition means that in order to be successful, a company should not go head-to-head with the leaders in the industry, but rather find niches alongside them.

  • “If the costs of adapting are negligible, and there are no other entry barriers, the market will be perfectly competitive”, Michael L Katz & Carl Shapiro, Network externalities, competition, and compatibility, American Economic Review, 75 (1985) 424, 426-27.

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  • Facebook’s terms state “You will not collect users’ content or information, or otherwise access Facebook, using auto-mated means (such as harvesting bots, robots, spiders, or scrapers) without our permission.” https://www.Facebook.com/terms.

  • The Case of Facebook and Cambridge Analytica

  • a. Cambridge Analytica a data firm hired by the Trump 2016 Presidential Campaign gained access to private information of 50 million Facebook users. These included details on user identities; friend networks and user “likes”. Facebook’s position was that what Cambridge Analytica did was not a “data breach”, because of the consent given by its users when a Facebook account is opened. But Cambridge Analytica acknowledged that it had acquired the data through a third party violating Facebook’s rules prohibiting third parties of copying and transferring data.

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  • Third-party tracking refers to tracking done by websites that a user never navigates to explicitly. Many Internet users are vaguely aware that their information may be collected online.

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  • Competition and Consumer Privacy in the Cyberspace Market

Abstract Views: 160  |  PDF Views: 97

Authors

Joseph A. Klien
Fisher Broyles LLP, 445 Park Avenue, Ninth floor, New York -10022, United States
P. M. Rao
Long Island University, CW Post Campus, 720 Northern Blvd, Greenvale, New York - 11548, United States
Manoj Dalvi
Long Island University, CW Post Campus, 720 Northern Blvd, Greenvale, New York - 11548, United States

Abstract


This paper will examine legal and marketing implications of certain Internet technological developments impacting competition and consumer protection in cyberspace. The paper will explore to what extent antitrust and consumer protection laws are adequate to deal with the challenges to a competitive marketplace and consumer privacy posed by the development of cyberspace technologies and markets, for example, Internet search engines, social networks and wearable devices. The paper concludes that legal tools for protecting a competitive cyberspace marketplace are fairly robust, while the legal tools to protect consumers from being tracked and profiled by marketers and from the potential intrusions of individual privacy made possible by even more advanced Internet connected sensor and related data-based technologies are still a work in progress. At the same time, the extent of further government regulation in this area must be carefully balanced so as not to unduly restrict data dependent innovation.

Keywords


Consumer Privacy, Cyber Security, Economics, Exclusivity, Social Media Networking, Google, Facebook, Apple, Internet Usage,header Should Be Klie EU Commission, Public Policymakers, Digital Marketing, Consumer Privacy Protection, Competition Commission of India, U.S. Antitrust Law, United States Federal Trade Commission.

References