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It has become almost an article of faith that large, zero-price platforms, such as Facebook and Google, exercise market power by offering lower levels of privacy. Yet, a rigorous examination of the assumptions underlying this data-price analogy is seriously lacking. Even more important, almost no empirical work has been done in this area. This Article contributes to the debate by filling these important gaps in the literature. After presenting a theoretical examination of the relationship between privacy and competition, we provide empirical evidence on the relationship between market power and privacy. First, using data from PrivacyGrade.org, we find no relationship between privacy grades and our proxies for market concentration—the Herfindahl-Hirschman Index (HHI) and market shares based on Google Play Store categories. Second, we collected website traffic data from SimilarWeb and matched it to DuckDuckGo’s privacy ratings for sites in thirty-seven website categories. Again, the data suggest a lack of a reliable relationship between privacy ratings and market concentration. Our theoretical analysis and empirical results cast serious doubt on the notion that firms exercise market power by reducing privacy levels. Challenging conventional wisdom, our results suggest that antitrust is a poor tool to address perceived privacy problems. Instead, if markets produce less than optimal levels of privacy, it is likely due to informational problems that have no relationship with competition. Accordingly, we conclude that privacy regulation and competition policy might be complementary, but only in one direction: consumer protection designed to increase consumer access to information about firms’ privacy practices—and firms’ ability to credibly commit to these promises—could help foster competition over privacy, but the converse is not true.

The extraordinary success of the digital sector of the domestic economy is indisputable. With this level of market success, growth, and influence, both economically and culturally, it is perhaps inevitable that these businesses are increasingly at the forefront of public policy discussions. Most relevant for our purposes are the now-common claims that these firms have systematically engaged in anticompetitive conduct, or are otherwise insulated from competitive forces, and that digital platforms’ exercise of monopoly power has remained unchecked at least in part due to gaps in our antitrust laws or lax enforcement of existing laws. This testimony provides insights on three important questions concerning the state of competition in the digital marketplace: (1) Are existing antitrust laws that prohibit monopolization and monopolistic conduct adequate for digital platforms?; (2) Are existing laws adequate to prohibit anticompetitive transactions including for vertical and conglomerate mergers, serial acquisitions, data acquisitions, or acquisitions of potential competitors?; and (3) Is the institutional structure of antitrust enforcement — including the current levels of appropriations to the antitrust agencies, existing agency authorities, congressional oversight of enforcement, and current statutes and case law — adequate to promote the robust enforcement of the antitrust laws?

Author(s): Barnett, Jonathan; Baye, Michael R; Cooper, James C; Crane, Daniel A; Elzinga, Kenneth G; Epstein, Richard; Garza, Deborah; Hazlett, Thomas W; Hurwitz, Justin Gus; Klein, Benjamin; Klick, Jonathan; Lambert, Thomas A; Lipsky, Tad; Manne, Geoffrey A; Masten, Scott E; Ohlhausen, Maureen; Rill, James; Rybnicek, Jan; Smith, Vernon L; Teece, David; Willig, Robert; Wright, Joshua D; Yun, John M

After North Carolina State Board of Dental Examiners v. FTC, it is clear that the antitrust laws have an important role to play in reforming occupational licensing, but the exact framework remains an open question. Under a rule of reason analysis, health and safety rationales are off limits. But if state board cannot draw on these types of consumer protection arguments to defend their actions, as a practical matter, can a state board ever win an antitrust suit? Some have suggested applying a modified rule of reason to incorporate non-competition justifications. But these approaches threaten to summon the ghost of Lochner and raise problems of subjectivity and predictability that are sure to arise when courts and enforcers are called on to weigh losses in competition against purported gains across other dimensions. Rather than expanding the rule of reason to accommodate non-competition concerns, there is a better path that draws from PolyGram Holding, Inc. v. FTC. Given the vast empirical literature pointing to the harms from state regulation of professions, board actions that restrain competition should be treated as inherently suspect as a matter of law. As such, in an antitrust challenge, the burden of persuasion immediately should fall to the board to provide an efficiency rationale that is both cognizable and plausible. If the board cannot muster a story involving cognizable benefits to competition to justify the restraint, it should be condemned as per se illegal, and the authorizing law subject to preemption. If the board is able to offer a justification that sounds in competition, it still must provide a plausible reason why either the restraint offers procompetitive benefits or does not harm competition. If they cannot meet this burden, the restraint should be condemned summarily. If they do, courts will conduct a full-blown rule of reason in inquiry.

Economics at the Federal Trade Commission (FTC) covers both the antitrust and consumer protection missions. In this year's essay, we focus mainly on the competi- tion-side of the agency. Drawing on a wealth of recent research, we provide descriptive and analytical information about the petroleum industry. Mergers, as always, were a major preoccupation of the FTC, and we discuss a few oil industry mergers as well as one lead- ing litigated case - Arch Coal's acquisition of Triton Coal. Finally, we review the empir- ical literature on the effects of vertical restraints, noting that the literature supporting an animus toward such restraints is surprisingly weak.

This comment is submitted in response to the European Commission’s (EC’s) public consultation on the Regulatory Environment for Platforms, Online Intermediaries, Data, Cloud Computing, and the Collaborative Economy.The comment addresses: (1) concerns that the EC’s survey methodology and design is not conducive to generating reliable and policy-relevant data; (2) the economic analysis of platforms and multi-sided markets; (3) the dangers to competition and consumers of new ex ante regulation designed to regulate platforms, as opposed to relying upon existing European competition and consumer protection laws to address any potential anticompetitive effects or consumer harm arising from conduct by platform owners; and (4) the economic analysis of privacy and data security and its implications for new regulation.

Foreword: James C. Cooper INTRODUCTION: PLANTING THE SEEDS OF THE REGULATORY REVOLUTION Chapter 1: James C. Miller Causes and Implications of the Regulatory Revolution at the FTC Chapter 2: Panel Discussion Politics and Policy in 1981 PART I: JURISDICTION, POLICY, AND PROCEDURE Chapter 3: William E. Kovacic The Federal Trade Commission and the Assignment of Regulatory Tasks Chapter 4: Julie Brill The Future of FTC Jurisdiction Over Antitrust and Consumer Protection: A Commentary Chapter 5: Joshua D. Wright & Angela Diveley Do Expert Agencies Outperform Generalist Judges? Some Preliminary Evidence from the Federal Trade Commission Chapter 6: A. Douglas Melamed Paradigm Shopping: Section 5, the FTC, and the Courts PART II: CONSUMER PROTECTION Chapter 7: Fred S. McChesney Consumer Protection and James Miller at the Federal Trade Commission Chapter 8: J. Howard Beales, III, Timothy J. Muris & Robert Pitofsky In Defense of the Pfizer Factors Chapter 9: Paul H. Rubin & Thomas M. Lenard The FTC Then and Now: Privacy Chapter 10: Paul A. Pautler Regulation and Behavioral Economics in the Post-Miller FTC PART III: ANTITRUST Chapter 11: Richard S. Higgins & Mark Perelman Tying to Mitigate the Deadweight Loss of Monopoly Pricing Chapter 12: Daniel A. Crane Section 5 and the Innovation Curve CONCLUSION: IMPLICATIONS FOR FUTURE FTC ENFORCEMENT Chapter 13: Panel Discussion Lessons for Setting Priorities Index

Section 5 of the Federal Trade Commission (FTC) Act gives the FTC an undefined mandate to prosecute ‘unfair methods of competition’. For nearly 100 years, the FTC has searched tirelessly for the meaning of this amorphous concept. Since 1992, the FTC has continued to define Section 5 through a series of consent decrees. Absent any external constraint, the FTC appears to have broad discretion to define the reach of Section 5 beyond the Sherman Act. This discretion causes uncertainty, which is likely to deter beneficial conduct. It also creates incentives to divert resources from productive to redistributional purposes. The recent FTC investigation of Google illustrates the FTC’s discretion to define the reach of Section 5. This article suggests several reforms, including making Section 5 coterminous with the Sherman Act, or having the FTC issue guidelines that limit Section 5 to conduct that clearly harms consumers through adverse effects on competition, and that would not otherwise fall under the antitrust laws.

Most professions in the United States are regulated by boards composed of industry practitioners, who in their official roles routinely engage in anticompetitive conduct. Until the Supreme Court’s landmark decision in North Carolina State Board of Dental Examiners v. FTC, many believed that such conduct was beyond the reach of antitrust enforcement as long as it was taken pursuant to state policy to displace competition — a standard met with relative ease. After North Carolina Dental, states now must additionally take ownership of the anticompetitive actions of these boards to avoid the full force of the antitrust laws. In this manner, North Carolina Dental has the potential to prompt a large-scale restructuring of the state regulatory apparatus. This article explores the potential for antitrust preemption to play a role in this restructuring. I argue that, to the extent that unsupervised boards’ anticompetitive conduct would be justified on non-competition concerns, they are rendered defenseless in any rule of reason inquiry, and hence are subject to a de facto per se standard. Rather than adjusting the rule of reason inquiry to allow courts to weigh non-competition concerns in these cases, the better alternative would be to preempt the laws altogether. This approach has several advantages. First, it would avoid a dissonance between antitrust and due process inquiries into the same conduct. Second, it would act as a penalty default for states, and like penalty defaults in contracts, such a rule would assign the regulatory decision to the low-cost information provider — the state, rather than the court. Finally, this approach vindicates federalism to a greater extent than a modified rule of reason. The only role for a federal court under a preemption approach would be to uphold or strike down the law granting the board authority to engage in the suspect conduct. This decision, moreover, would be based on an objective analysis of the board’s regulatory structure, rather than a subjective weighing of competition and non-competition concerns.

This article was prepared as part of a recent symposium celebrating the Ninetieth Anniversary of the founding of the Federal Trade Commission. In addition, Fall 2004 marks the Thirtieth Anniversary of a pivotal moment in the establishment of the modern advocacy program at the FTC, Chairman Lewis Engman's speech on the economic burden that inefficient transportation regulation policies were imposing on the American economy. Although the FTC has been involved in advocacy activities since its founding, Engman's speech symbolized a new aggressiveness on the part of the FTC in using its expertise to work with other governmental actors at all levels of the political system and in all branches of government to design policies that further competition and consumer choice. Notwithstanding the beneficial impact that advocacy activities have had on the economy, the fortunes of the advocacy program have waxed and waned over time. In part, these mixed fortunes may reflect a lack of fundamental grounding of advocacy within the core mission of the FTC. The advocacy program, moreover, often has been politically controversial, exposing the Commission to criticism from special interests, Congress, and other governmental actors. This article explores the theory and practice of competition advocacy, with the goal of explaining why the advocacy program should be recognized as a core element of the Commission's mission. Advocacy can be used in conjunction with many of the FTC's other tools, and in many situations the judicious use of advocacy can provide a low-cost and effective alternative to other enforcement options. The advocacy program is a unique and cost-effective tool for carrying out this mission. Because consumers are disadvantaged in the political arena vis-a-vis industry, they are likely to be unable to stop anticompetitive regulation on their own. Antitrust immunities, moreover, sometimes put anticompetitive regulation beyond the reach of traditional enforcement. By providing a means for the FTC to represent consumers' interests directly in the policy-production mechanism, the advocacy program can overcome these two hurdles and provide protection for consumers at relatively low cost.

In recent years divergence between United States ("US") and European Union ("EU") competition policy has garnered a lot of attention. One particular area where these differences are evident is the treatment of vertical restraints. In the USA, an antitrust plaintiff must show that a vertical agreement is likely to harm competition - that is, reduce economic welfare. EU competition law, on the other hand, places a lower burden on the European Commission ("EC"). The EC recently has promulgated a block exemption regulation ("BER") that defines circumstances under which vertical arrangements are automatically exempted under Article ("Art.") 81(3); still, European competition law condemns many more vertical agreements than does US antitrust law. "Dominant" firms entering into vertical agreements receive even harsher treatment under EU competition law. Because the Guidelines to the BER explicitly exclude dominant firms from exemption under Art. 81(3), it appears that Art. 81 proscribes dominant firms from entering into vertical agreements that restrict the behavior of the contracting parties. Additionally, Art. 82 discourages dominant firms from entering into vertical agreements. This paper uses a Bayesian framework to analyze the disparate treatment of vertical arrangements in the USA and EU. The practice of antitrust is the problem of inferring the competitive consequences of various types of market conduct. We argue that an optimal enforcement estimator would minimize an expected social loss function, where the expectation is taken over the posterior probability that a given practice is anticompetitive, given evidence in a particular case. Empirical literature informs priors, whereas theory informs the likelihood. We show how differences in antitrust treatment of vertical practices can be explained by different loss functions, even when each jurisdiction shares the same beliefs regarding the theoretical and empirical effects of vertical restraints.