To win a monopolization suit under Section 2 of the Sherman Act, the government has to prove not only that a company is a monopoly, but that it has used its power to harm consumers—to do things it can get away with only because there’s nowhere else to go. (This rule, which is controversial, is called the “consumer welfare standard.”) The typical example is when a dominant firm raises prices after cornering the market. Since Facebook’s main products are free, that argument won’t work against it. But there’s another way to show an impact on consumer welfare: declining product quality. That’s the role privacy plays in the Facebook case. According to the lawsuits, the erosion of user privacy over time is a form of consumer harm—a social network that protects user data less is an inferior product—that tips Facebook from a mere monopoly to an illegal one. (This allegation, which the company denies, is only one of many antitrust claims raised against Facebook.)
That argument against Facebook illustrates the leading theory of how antitrust and data privacy intersect: As you turn up the competition dial, you get more privacy, because companies will try to woo customers by offering better protections. If a market gets monopolized, that incentive to compete disappears.
Sometimes, however, the privacy and competition relationship is inverted: As you turn the privacy dial up, you get less variety in the market. This is increasingly the case now that the most monopolistic companies are often the ones making the most extensive and lucrative use of personal data. In March, Google announced that it was moving ahead with a plan to block third-party trackers from Chrome, which has a global market share in the 60 percent range. Under its Privacy Sandbox framework, instead of cookie-based ad targeting, Google says it will implement a new system in which the browser does the tracking, and serves ads to users based on cohorts they fit into rather than targeting them individually.On its face, this is a step forward for privacy. Getting rid of cookies will make it harder for strangers to get hold of your personal data. According to Texas, however—and the dozen or so experts I’ve discussed the matter with—the Privacy Sandbox will further entrench Google’s staggering position in the advertising market. By cutting off other companies’ ability to track users in Chrome, while keeping that power for itself, the company will add to its already formidable user-data advantage, and make it even harder for rival companies and publishers to compete for advertising dollars.