Addressing the Competitive Harms of Opaque Online Surveillance and Recommendation Algorithms

• Date: 01 March 2022
• Published date: 01 March 2022
• DOI: 10.1177/0003603X211066983
• Author: Marc Jarsulic

https://doi.org/10.1177/0003603X211066983

The Antitrust Bulletin

2022, Vol. 67(1) 100 –112

© The Author(s) 2022

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DOI: 10.1177/0003603X211066983

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Article

Addressing the Competitive Harms

of Opaque Online Surveillance and

Recommendation Algorithms

Marc Jarsulic*

Abstract

Facebook and Alphabet operate free internet services that are widely used. They provide these services

for free because users are online ad targets. Together Facebook and Alphabet have a large share of the

market for online advertising in the U.S. Their dominance delivers monopolistic returns, reflected in

the persistently high valuations financial markets place on each company. Online ad sales depend on the

ability of these platforms to individually target ads and messages to huge numbers of people. Targeting

is made possible by surveillance which is large in scale, scope, and effectiveness. User engagement,

which helps determine target numbers, is stimulated and directed by “recommendation” algorithms

on Facebook and Alphabet’s YouTube platform. These algorithms can affect what users read and

view, and can influence their attitudes, emotions, and behavior. While surveillance has negative effects

on user privacy, and algorithms have had powerful effects on user attitudes and behavior, platform

users have limited knowledge about how these practices operate or their impacts. These information

asymmetries between platforms and users have important competitive effects. They divert users from

competing platforms that do not engage in these business practices, and inhibit entry and the innovation

it would stimulate, thereby helping sustain the monopoly power of dominant incumbents. Section 5

of the Federal Trade Commission Act, which prohibits “unfair methods of competition” and includes

rulemaking authority, may be the most effective way to address anticompetitive practices that are

technically complex, can evolve rapidly, and are difficult for industry outsiders to observe.

Keywords

Unfair competition, online surveillance, algorithms

I. Introduction

Both Facebook and Alphabet operate free internet services that are widely used. The Facebook social

media platform has nearly two billion daily active users worldwide, and hundreds of millions in the

United States. Alphabet provides a variety of free services including the dominant Google search and

YouTube video platforms.

Facebook and Alphabet provide these services for free because users are online ad targets. Together

Facebook and Alphabet have a large share of the market for online advertising—they sell over half of

*Senior Fellow and Chief Economist, Center for American Progress, Washington, DC, USA

Corresponding Author:

Marc Jarsulic, Center for American Progress, 1333 H Street N.W., Washington, DC, 20005, USA.

Email: mjarsulic@americanprogress.org

1066983ABXXXX10.1177/0003603X211066983The Antitrust Bulletin XX(X)Jarsulic

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