THE BLOG
01/22/2013 01:18 pm ET Updated Mar 24, 2013

The EU's Opportunity to Enhance Privacy in a More Competitive Market

As we began 2012, many predicted it would be the year of internet freedom. As we begin 2013, privacy and competition are top of the agenda.

I've written before why I believe privacy and competition are intertwined as regulatory issues. The challenge for regulators is not just to ensure that remedies protect competition, but to look at the broader development of the internet and how the data-fueled explosion of wealth will impact on citizens' rights.

Of particular concern is the fact that if consumers do not have a choice of services, how can their consent to share data with one particular service be taken as free and informed consent? This question is most vividly illustrated by the impending regulatory decisions in Europe facing Google.

When the FTC ended its two year investigation at the end of 2012, without a legally enforceable consent decree, Bloomberg's response included a warning that "lawmakers never envisioned that one company would emerge as a public utility of sorts for e-commerce." They are absolutely right.

Europe is currently tacking both issues. On the one hand, the culmination of the EU's competition investigation into Google's operations is expected to report shortly. At the same time, member states are formulating new data protection laws to protect citizens from the unfair and unlawful processing of their personal data in an internet age.

Unlike the FTC's investigation, the EU's own efforts look set to be in a binding form, although concerns still exist about how superficial the remedies may be. The EU's most senior competition official, Joaquín Almunia, has stated he believes there is abuse of Google's dominant position and has made clear that he believes there is a clear link between privacy and competition, saying, a "single dominant company could of course think to infringe privacy laws to gain an advantage over its competitors."

At the highest levels in Europe, decisions are being made that will have wide-ranging repercussions for how companies use our data and the markets that consumers engage with. In 2013 the EU has the opportunity to both reinforce competition and enhance citizens' rights over their own data.

Consumers on both sides of the Atlantic would be well served by a precedent that restores the emphasis on competitive markets and the essential role of consumer consent and choice to the digital economy. This opportunity relies on decisive and legally binding action, setting down the boundaries that consumers expect and markets demand.

Remedies must go beyond visual nudges and aesthetic tweaks, nor must it be left to fortune to effect change. Regulators must step up and regulate, making change a reality for consumers and protecting the fundamental conditions that effective markets depend upon.

If business models are to evolve, Google's dominance cannot be allowed to perpetuate a status quo where the only option consumers have is if they engage with their personal information or do not engage at all.

The digital economy is an immature economy, barely two decades old and full of promise but hindered by self-interest and imperfect protections for consumers and start-ups. If it is to fulfill its promise, these imperfections must be tackled with vigor. The EU must now show this vigor.