Chairman Nadler Statement at Subcommittee Hearing on "Online Platforms and Market Power, Part III: The Role of Data and Privacy in Competition"
Washington, D.C. – Today, House Judiciary Committee Chairman Jerrold Nadler (D-NY) delivered the following opening remarks during a Subcommittee on Antitrust, Commercial and Administrative Law hearing on “Online Platforms and Market Power. Part III: The Role of Data and Privacy in Competition.”
"Digital technologies have provided Americans with a remarkable array of services. It has never been easier to share news and information, to publish content, and to communicate with loved ones, all at a moment’s notice.
"But, as with technological revolutions of the past, this transformation has upended the balance of power across our economy. It is important for Congress to study and understand how these imbalances are affecting Americans, what is causing these asymmetries of power, and whether these new and growing inequalities are compatible with our democratic values. The Committee’s ongoing oversight of competition in digital markets is a key part of this process.
"Today’s hearing will examine the role that data plays in creating and maintaining inequalities of power and how this affects competition. As previous hearings have shown, a growing share of commerce and communications is now controlled by a small number of companies. Because these platforms are, in essence, large intermediaries, they are perfectly positioned to closely track each transaction and communication that passes through their channels.
"While intermediaries have long-collected information on the economic activity that flows through their platforms, the large firms of the digital economy have unprecedented ability to track and surveil users across the Internet. This data collection includes information not only about a person’s shopping and reading habits, but also about the time that they wake up and go to sleep, their precise location at each hour of the day, and the content of their most private communications.
"Because several of these platforms derive the vast majority of their revenue through digital advertising, these firms also have an incentive to collect as much information as possible so that they can target consumers with precision. This trove of personal information can also be used by companies in even more nefarious ways to discriminate based on a user’s race, gender, or income, or otherwise to intrude on personal privacy.
"In light of these trends, there are at least two questions that I hope will be addressed in today’s hearing. First, how are digital technologies—and the constant data-collection they enable—affecting competition? Is there something unique about digital markets that enables firms to acquire and maintain market power in novel ways?
"In digital markets, maximizing data collection can provide a company with a significant competitive advantage. A large and constantly growing set of user data allows firms both to improve existing products and services and to expand into new lines of business, often with a competitive edge.
"Frequently, the most dominant companies in the digital economy are those that have captured the most data from as many sources as possible. In recent years, scholars have described this dynamic as leading to ‘winner-take-all’ markets, where the first company to establish a competitive lead wins the market, crushing any potential competition.
"In other words, competitors in digital markets have a strong incentive to collect as much information on users as possible—as quickly as possible—as part of a long-term strategy to compete in the marketplace and to achieve market dominance.
"This raises serious questions about whether it is good for society for unrelenting data collection to be the key dimension on which companies are looking to out-compete one another. The fact that several major digital platforms make most of their profits by selling targeted advertisements heightens these incentives.
"The second question that I hope will be addressed in today’s hearing is how data collection increases the number of ways that dominant companies can abuse their market power. Does the collection and use of data enable new forms of conduct that lawmakers and regulators should recognize as anti-competitive? For example, platforms that serve as intermediaries for commerce have critical insight into their rivals’ business models, a dynamic that raises significant competition concerns.
"With these issues in mind, I look forward to hearing from our esteemed panel of witnesses today, and I yield back the balance of my time."