Discover more from regs to riches
privacy + competition
💫 This edition of “Regs to Riches” is co-authored by Ana Qarri, a law student in her final term at the McGill Faculty of Law.
Last week, the Chair of the Federal Trade Commission (FTC) Lina Khan put out a statement asserting that, “policing data privacy and security is now a mainstay of the FTC’s work.”
In Canada, the Competition Act does not currently contemplate data privacy practices when evaluating anti-competitive behaviours, though it has considered data management in the context of deceptive marketing. The yet-to-be-named new role of Data Commissioner - charged with overseeing new regulations for large digital companies aimed at protecting individuals’ personal data and encouraging greater competition in the digital marketplace - may be able to bring a lens that integrates privacy and algorithmic pricing into antitrust investigations.
There is a natural opportunity for the Office of the Privacy Commissioner (OPC) and the Competition Bureau to work together on these issues - especially because misleading advertising falls under the Bureau’s jurisdiction. In fact, the two offices have collaborated just once in the aftermath of Facebook’s Cambridge Analytica scandal. Following an investigation that took place between 2012-2018, the Commissioner pursued investigations for misleading advertising and the OPC pursued its investigation into contraventions of Canada’s private-sector privacy act (PIPEDA), resulting in a $9M penalty to settle concerns about misleading privacy claims.
Last year, deputy commissioner for the Competition Bureau's deceptive marketing practices group, Josephine Palumbo, advocated for the reform of Canadian law to permit the sharing of information between her office and the OPC.
The otherwise strict and artificial separation of competition policy from privacy considerations does not serve citizens or businesses well. There are plenty of practices where unclear privacy policies could empower novel anti-competitive behaviours, like: self-preferencing, algorithmic pricing, monopsony on job platforms, throttling referral schemes, and even access to work.
The US is currently considering the prohibition of discriminatory conduct by dominant platforms, including a ban on self-preferencing and picking winners and losers online through the recently proposed, “American Innovation and Choice Online Act.”
An abuse of dominance case considering whether Amazon leverages data it collects from third-party vendors to inform its marketing strategy for its private-label products and self-preference them on the platform could inform how we approach similar self-preferencing by platforms like Loblaw media.
Other scholars and lawmakers are considering whether the use of data to inform algorithmic pricing regimes that have come to characterize gig platforms like Uber can constitute a collusive practice (or anti-competitive agreement).
Christopher Mim’s fantastic new book about shipping, “Arriving Today,” notes that data is a mechanism to achieve monopsony (a market system in which there is one buyer) and observed that, “a number of shipping platforms allow shippers to see what rates their competitors are paying, which leads to a form of “monopsony” in which the buyers of truckers’ services hold the balance of power and truckers have none.”
The EU is considering the opportunities and challenges that self-employed people face in providing services through online platforms. The lessons they derive will be applicable here, too.
Online platforms can even throttle online referral schemes; optimizing for “referring a friend,” but withholding achieving a bonus in a specified amount of time because the platform controls access to work.
It is time for the Competition Bureau to deeply consider the value and power of consumer data and the associated advantages it can create when it undertakes merger reviews. This was essentially one of the recommendations in the 2018 Canadian House of Commons report “Democracy Under Threat: Risks and Solutions in the Era of Disinformation and Data Monopoly”: to “study the potential economic harms caused by data-opolies and determine whether the Competition Act should be modernized.”
The discourse in Canada is currently anchored around the central challenge of balancing privacy with innovation; but privacy can be used to squelch innovation just as much as it can protect it. In the digital age, appeals to privacy can undermine competition and control markets by raising barriers to entry for entrepreneurs and raising operational costs for small business owners beyond what they can afford. Canada should similarly interrogate the overlap between data privacy and competition. We have an opportunity to do that as the returning Liberal government committed to re-introducing Bill C-11: Consumer Privacy Protection Act.
Canada’s competition regime already suffers from being decoupled from two critical provincial connections: consumer protection and labour laws. Divorcing our competition regime from privacy considerations hurts consumers by preventing the kind of coordination across policy leaders that the digital economy demands, limiting each actor’s ability to be truly effective while also disadvantageous to consumers and entrepreneurs. We keep letting the genie out of the bottle, and then consulting on what the bottle should look like years later. But that’s a failure of policy making, and not of competition law.
Other jurisdictions are having novel, modern conversations about competition that Canada should participate in more actively. For instance, the US is our natural trading partner and is contemplating new antitrust laws. We should be in general alignment with their regime.
We’ve been having the same conversation on competition in Canada for some time: fretting about access and price in telecommunications, noticing and rallying around the implications of media consolidation for the vibrancy of our democracy, and lamenting the obvious co-ordination among banks and even grocers. These are important debates, but they have come to overshadow the unique challenges that entrepreneurs and small businesses face when accessing markets and scaling in an online environment.
In seeking to better support a thriving digital economy, Canada has a massive opportunity to leverage the potential of competition reform to strengthen labour markets, level-set on guidance for competing in digital markets, and integrate privacy considerations into modernization efforts. Sometimes meaningful policy innovation is modest and incremental. The Competition Bureau doesn’t need a monopoly on competition-relevant interventions, and should be able to - at the very least - share information with the Privacy Commissioner.
🙌 Bonus content from R2R reader Phil Dawson:
And the video from our conversation on “Silicon Values: Free Speech, Democracy and Big Tech” is now online.
Vass Bednar is the Executive Director of McMaster University’s new Master of Public Policy in Digital Society Program and a Public Policy Forum Fellow.