“Don’t Believe Proven Liars”: The Absolute Minimum Standard of Prudence in Merger Scrutiny

“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.” -President George W Bush

Anti-monopoly enforcement has seen a significant shift since the 1970s. Where the Department of Justice once routinely brought suits against anticompetitive mergers, today, that’s extremely rare, even between giant companies in highly concentrated industries. (The strongest remedy against a monopolist—breaking them up altogether—is a relic of the past). Regulators used to go to court to block mergers to prevent companies from growing so large that they could abuse their market power. In place of blocking mergers, today’s competition regulators like to add terms and conditions to them, exacting promises from companies to behave themselves after the merger is complete. This safeguard continues to enjoy popularity with competition regulators, despite the fact that companies routinely break their public promises to safeguard users’ privacy and rarely face consequences for doing so. (These two facts may be related!) When they do get sanctioned, the punishment almost never exceeds the profits from the broken promise. “A fine is a price.” Today, we’d like to propose a modest, incremental improvement to this underpowered deterrent:

If a company breaks its promise, and then it makes the same promise when seeking approval for a merger, we should not believe it.

Read on for three significant broken promises we’d be fools to believe again.

“There’s a sucker born every minute” -Traditional (often misattributed to PT Barnum)

Amazon promised not to use data from the sellers on its platform to launch competing products. It lied. In the summer of 2019, Amazon’s General Counsel Nate Sutton made the company’s position crystal clear when he told Congress, “We don’t use individual seller data directly to compete.” In April, the Wall Street Journal spoke to 20 former Amazon employees who said they did exactly this, confirming the suspicions of Amazon sellers, who’d been told that it was just a coincidence that the world’s largest online retailer kept cloning the most successful products on its platform.

“Insanity is doing the same thing over and over again, but expecting different results.” -Rita Mae Brown (often misattributed to Albert Einstein)

In 2014, Facebook bought WhatsApp for $19b, and promised users that it wouldn’t harvest their data and mix it with the surveillance troves it got from Facebook and Instagram. It lied. Years later, Facebook mixes data from all of its properties, mining it for data that ultimately helps advertisers, political campaigns and fraudsters find prospects for whatever they’re peddling. Today, Facebook is in the process of acquiring Giphy, and while Giphy currently doesn’t track users when they embed GIFs in messages, Facebook could start doing that anytime.

“Once is happenstance. Twice is coincidence. The third time it’s enemy action.” -Ian Fleming

In 2007, Google bought DoubleClick, a web advertising network. It promised not to merge advertising data with Google user profiles. It lied. Like most Big Tech companies, much of Google’s growth comes from buying smaller companies. Because Google’s primary revenue source is targeted advertising, these mergers inevitably raise questions about data-mining. As Google’s role in online advertising is under scrutiny, antitrust enforcers must not accept a new “We mean it, this time. Seriously, guys” promise to protect user data. It would be easy to argue that promises made in a formal settlement with antitrust enforcers will carry more weight than mere public statements about what a company will do. But those public promises can keep customers unaware, and enforcers away, as the company extends its dominance. Those promises have to mean something. Hiding privacy abuses behind false promises “
“>effectively raises rivals’ costs, as they try to compete against what appears to be high quality, but is, in truth, low quality.” That could raise antitrust liability. An overhaul to competition enforcement is long past due, but while that’s happening, can we take the absolute smallest step toward prudent regulation and stop believing liars when they tell the same lies?

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About The Author

Cory Doctorow

The Electronic Frontier Foundation is the leading nonprofit organization defending civil liberties in the digital world. Founded in 1990, EFF champions user privacy, free expression, and innovation through impact litigation, policy analysis, grassroots activism, and technology development. We work to ensure that rights and freedoms are enhanced and protected as our use of technology grows. Visit https://www.eff.org

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