Focusing on digital markets and consumer privacy, the first annual Conference and Policy Forum of the Berlin Centre for Consumer Policies (BCCP) was held in Berlin on June 17, 2016.
Touching upon an issue at the forefront of current European and US policy debates, over 150 participants, including academics from law and economics, policy makers, professionals, BCCP Fellows, and the interested public came together at the Senatssaal of Humboldt University Berlin.
Big data is transforming the world we live in. The instant availability of information impacts how individuals consume, how businesses thrive or fail, how society makes scientific discoveries, as well as how governments design and implement informed policies. At a pace and scale unanticipated just 20 years ago, information technology is enabling consumers globally. Uncountable services make use of a wealth of information that is largely generated by recording consumer actions. As a result, privacy concerns have been growing and there is a call to identify ways to regulate those businesses handling sensitive information.
The conference highlighted the benefits and challenges related to consumer privacy concerns triggered by the big data revolution , as well as two important policy areas where the tremendous growth of information and analytic capabilities have had a major impact: competition policy and consumer protection.
The second annual BCCP Conference on Regulatory Challenges in Digital Markets will take place on June 1st, 2017.
Alessandro Acquisti (Carnegie Mellon University) and Dorothea Kübler (WZB Berlin) started the first session, in which they presented their research on the economics of privacy and privacy preferences. While individuals value privacy, socializing, and disclosing, what reliable empirical evidence do we have, not only regarding the existence of such preferences, but also their respective importance? How much do consumers value privacy? Do (or should) consumers unambiguously strive for stronger privacy protection? Can notice and consent regulation even be effective?
In the second session, Florencia Marotta-Wurgler (New York University) and Deirdre Mulligan (University of California, Berkeley) discussed their research insights on privacy compliance. Privacy regulation is becoming increasingly important for firms. What are firms doing to protect the privacy of their customers? Are firms responding to market forces more or less than to regulatory pressure? Florencia Marotta-Wurgler showed that formal compliance with US FTC guidelines has been rather low overall and, in particular, with respect to data practices and privacy by design. On the other hand, Deirdre Mulligan emphasized informal practices in her research, pointing out that different countries have very different privacy and data protection cultures and institutions, leading to very different actual compliance outcomes. In particular, she noted that empowering privacy and data protection experts within firms may, in places, be more effective than focusing narrowly on formal compliance to externally set regulations.
Susan Athey (Stanford University) and Hal Varian (Google) concluded the academic part of the conference by discussing the tremendous benefits and challenges facing data-driven businesses and regulators. Online platforms play a key role in revolutionizing our interactions in society as they shape the way consumers and firms use and commercialize the Internet. On data-driven platforms, product quality is improved as the amount of available data increases; for example search results and the targeting of advertisements. Real-time experimentation to improve products and innovate is a reality in many firms today. However, big data alone are not sufficient to provide a firm with monopolistic market power. In order to reap returns to data-scale, businesses must the technologies necessary to analyze and monetize data, which is typically achieved via learning by doing. At the same time, for example in internet search, demand-size network effects are likely to play a role in generating market power as, in order to serve the tremendous variety of potentially niche search terms, big data are essential. Ultimately, market fundamentals will determine whether harmful market power can arise in specific industries.
During the concluding policy roundtable, State Secretary Gerd Billen (German Federal Ministry of Justice and Consumer Protection), Julie Brill (Hogan Lovells, former US FTC Commissioner), and Elisabeth Kotthaus (European Commission) provided a lively discussion about the political process leading up to the recent Privacy Shield agreement between the EU and the USA. While a political compromise, the Privacy Shield promises improvements to data protections, increased legal certainty and stability for European and US businesses, as well more empowered consumers. Finally, the panelists agreed that competition on privacy will become an increasingly important phenomenon. Antitrust authorities may then have reasons to evaluate competition cases focusing on privacy concerns, an area typically within the realm of consumer protection. In particular, the distinct separation of consumer protection and competition policy in the EU will continue to trigger political discussions about the issues at the intersection between these crucial consumer policy areas, including privacy protection.
The conference program and further information about the speakers can be found at the conference website.