By Jeff Horwitz
When Dina Srinivasan quit her job as a digital advertising
executive two years ago, she wasn't looking to retool antitrust law
for the social-media age. She just wanted to spend some time
reading in coffee shops.
Then 36 years old, with a Yale law degree she had never put to
use, Ms. Srinivasan spent a few months in cafes around her
Connecticut home reading economic history, and mulling over her own
misgivings about the evolution of the digital advertising market.
One mystery nagged at her, she said: How could a company with
Facebook Inc.'s checkered privacy record have obtained so much of
its users' personal data?
Her conclusion was that rather than raising prices like an
old-school monopolist, Facebook harmed consumers by charging them
ever-increasing amounts of personal data to use its platform.
Eventually she emailed an unsolicited article to the Berkeley
Business Law Journal, which published it this year under the title,
" The Antitrust Case Against Facebook."
Her argument has had unexpected resonance. In the past year Ms.
Srinivasan has presented at the American Antitrust Institute's
annual conference and appeared at a private gathering of state
attorneys general investigating Facebook. Now based in northern
California, she is presenting her work at an international
antitrust conference in Brussels this week.
U.S. Attorney General William Barr, whose department is
currently probing big tech, said Tuesday he is "open to that
argument" that consumer harm can exist through the use of personal
data, even if a service is free. "I am inclined to think there is
no free lunch" he said at the WSJ CEO Council meeting in
Washington, D.C. "Something that is free is actually getting paid
for one way or the other."
The attention to Ms. Srinivasan's article took her by surprise,
given that when she wrote it, she had neither any institutional
affiliation or a law license. "Why would I think anybody was going
to read my paper?" she asked.
Yet Ms. Srinivasan believes it is important to study how we got
to this moment "so that we can catch these things earlier in the
future," she said. "We can correct this one now."
A person who has worked on Facebook's privacy policies disputed
Ms. Srinivasan's premise that the company tracks its users in an
aggressive or unique fashion, saying it was behind other big tech
companies in adopting such tactics. Nor does Facebook believe its
recent history demonstrates the disregard for user privacy that Ms.
Srinivasan alleges.
"The trend runs directly counter to what Dina is arguing," the
person said, citing the company's recent release of a feature
allowing users to review and block advertising based on their
off-Facebook activity. "We haven't degraded privacy protection,
we've increased it."
The rise of Ms. Srinivasan's privacy-as-antitrust idea owes a
great deal to an escalating argument over whether antitrust law had
grown too narrow. Though founded on statutes that gave enforcers
sweeping powers to protect competition, antitrust law has for the
past 40 years marched toward a singular focus on consumer welfare
in keeping with the Chicago School's free-market thinking. That can
be summarized as: If the end user of a product is better off as a
result of a dominant company's behavior, there isn't a viable
antitrust case to be made.
Big tech has complicated the picture. Companies such as
Facebook, Alphabet Inc.'s Google and Amazon.com Inc. built empires
based on free or near-free products and services, remaking the
economy in sometimes controversial ways without ever raising
prices, and in some cases lowering them.
A new breed of antitrust experts believes new approaches are
needed. Derided as "hipster antitrust" by critics, the movement
seeks to broadly wield antitrust law against concentrated corporate
power.
Ms. Srinivasan has sometimes been lumped in with the hipster
crowd but her argument has won credibility with mainstream
antitrust scholars precisely because it sticks to the consumer
welfare standard -- substituting consumers' payment to Facebook
with personal data for payment with money.
When it comes to Facebook, she says, "the Chicago paradigm is
dagger enough."
"You don't have to be radical or change the Chicago School,"
said Luigi Zingales, a University of Chicago economist. "Her paper
shows the protection of privacy at Facebook goes down as Facebook
faces less competition. I think the world is moving in this
direction."
Ms. Srinivasan's timing is significant in another regard: she
published her paper just months before the Federal Trade Commission
and a coalition of state attorneys general announced that they were
weighing potential antitrust cases against Facebook, creating an
opening to new approaches.
Ms. Srinivasan consults on the digital advertising market, and
is currently working with The Wall Street Journal's parent company,
News Corp. The Journal separately has a commercial agreement to
supply news through Facebook.
While Ms. Srinivasan's argument has been well received on the
legal-conference circuit, some believe it would face a chillier
reception in court. "You're facing a case in which there is no
precedent, you have no pricing, and you can't look at the normal
factors," Utah senior district court judge Clark Waddoups, a former
antitrust litigator himself, said at an October antitrust
conference at which Ms. Srinivasan presented. He said he found the
paper to be "a great piece of work" but that "there's going to be a
whole other side, saying this is just off the wall."
Ms. Srinivasan has taken a roundabout path to the front lines of
the tech antitrust debate. Born in Seattle but raised mostly in
Lebanon, she moved back to the U.S. alone at the age of 16 to
finish high school. She founded an early text messaging
interoperability startup in college, then went to law school. By
the time Ms. Srinivasan graduated from Yale in 2006, however, she
was expecting her third child and chose not to sit for the bar.
Instead, Ms. Srinivasan co-founded a digital advertising
technology company while raising her four children. She sold its
technology to a division of WPP Global, took a job with its
then-subsidiary Kantar Media, then quit in 2017.
Her paper draws on her own history: She recalls signing up as a
Facebook user while a law student precisely because it seemed like
a less rapacious form of social media than competitors such as
MySpace.
Later, as a specialist in the structure of the digital ad
market, she watched as Facebook increasingly tried to track its
users elsewhere on the internet.
Some early efforts were turned back amid user protest, and in
2009 Facebook even promised to put prospective change to Facbook's
terms of service up for a user vote. By Ms. Srinivasan's thinking,
these concessions were driven at least in part by competition.
But as Facebook's market share grew, and it vanquished
competition through acquisitions and shrewd appropriation, the
company rescinded users' prospective veto power. In 2014, Facebook
formally announced it would track users via the login and like
buttons embedded in millions of news sites, online retailers and
games.
The expansion benefited Facebook and advertisers through better
targeting and measurement of advertising effectiveness, even though
many users had said they objected to being tracked.
Unlike some Facebook critics, Ms. Srinivasan isn't advocating
for a breakup of the social media giant, or to force it to unwind
some of its major acquisitions, such as WhatsApp or Instagram. Ms.
Srinivasan would prefer that Facebook be forced to change certain
business practices, including how it tracks users when they are off
the company's platforms.
"It would be a mistake to go after Facebook and not include the
pattern and practice of deceptive conduct which allowed it to track
users across the web," she said.
Write to Jeff Horwitz at Jeff.Horwitz@wsj.com
(END) Dow Jones Newswires
December 10, 2019 15:59 ET (20:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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