Google's antitrust problem is all about privacy.

Agenda-Setting Financial Insight.
June 7 2012 12:47 PM

Google's Antitrust Problem is All About Privacy

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Google’smarket dominance is largely fueled by its access to users’ personal data.

Photo by Justin Sullivan/Getty Images

Google’s antitrust problem is actually about privacy. They seem like separate issues - Google has argued as much - but the internet search giant’s market dominance is largely fueled by its access to users’ personal data. Limiting that could give competition a useful jolt.

U.S. and European regulators are already poised to pounce. France gave the company until June 8 - this Friday - to demonstrate that its new practice of informing searches with data from YouTube, Gmail and related sites won’t impinge on user privacy. Germany is probing whether information was snitched from wireless connections while the company’s high-tech cars snapped pictures for Google Maps’ Street View. 

European trustbusters are threatening to sue next month unless Google, with 80 percent of Europe’s searches, demonstrates that it doesn’t favor Google products in search results. And the U.S. Federal Trade Commission is investigating several antitrust issues.

Google says privacy and antitrust aren’t connected. But its new practice of sharing data across sites - possibly including information swiped on drive-bys - not only worries privacy advocates, it creates enormous advantages in targeting online advertising. That advantage could unfairly suppress competition for advertisers - and raise ad prices.

Privacy can also affect consumer satisfaction and the quality of Google services, traditional concerns of antitrust law. Users who want privacy lose out if Google grows powerful enough to ignore their wishes and offers services lacking protections for personal data.

Regulators could help resolve these antitrust issues by forcing Google to tighten up security. It could allow users of, say, YouTube to veto use of their information for targeting ads at them on other Google sites. It could also show users exactly what data it collected and allow them to keep all or some of it private. Without as much information under its control, Google might wield less market power, which could give other companies a better shot at competing.

Of course, Google may have done nothing improper. It’s also unclear that users prefer privacy to the tailored, and arguably more useful, searches and ads that come from sharing personal data. And advertisers are already willing to pay more for the company’s targeted ads. But antitrust regulators need at least to keep privacy in mind as they move closer to taking on Google in a courtroom showdown.

Read more at Reuters Breakingviews.

Reynolds Holding is a Breakingviews columnist who writes from New York about the law in conjunction with Reuters Legal. Before joining Breakingviews, he was a national editorial producer for the Law & Justice Unit at ABC News, a senior writer for Time magazine and the executive editor of Legal Affairs, the first general interest magazine about the law.