New Public Knowledge Paper Urges Congress to Adopt Law Protecting Vendor Data from Digital PlatformsJuly 7, 2020
Today, we’re happy to announce our newest white paper, “Mind Your Own Business: Protecting Proprietary Third-Party Information From Digital Platforms,” by Public Knowledge Senior Vice President Harold Feld. The paper stems from a platform competition research project led by Public Knowledge and supported by Omidyar Network.
The paper addresses a narrow but important problem. Vendors must expose proprietary information, such as sales data or logistic information, to digital platforms like Amazon or Facebook in order to reach customers on those platforms. This gives digital platforms the ability to use vendor proprietary information to create, price, and market rival products, enabling platforms to unfairly benefit from the work, business acumen, and risks taken by third-party vendors. Although accusations against Amazon have received the most press coverage, the problem goes well beyond Amazon and undermines competition broadly.
The paper proposes a solution modeled on Section 222 of the Communications Act (47 U.S.C. §222), which imposes requirements on telecommunications carriers to protect “customer proprietary network information,” or “CPNI.” The paper proposes a new draft statute to create a “platform CPNI” rule that would:
- For the first time, define “digital platform” in statutory language;
- Limit the use — not the collection — of vendor proprietary information by digital platforms to the purpose stated, absolutely prohibiting platforms from using this information for marketing or strategy related to rival products; and,
- Limit the use of buyer proprietary information to prevent ‘reverse engineering’ vendor proprietary data.
The following can be attributed to Harold Feld, Senior Vice President at Public Knowledge:
“It’s fundamentally unfair for dominant platforms to take advantage of third-party vendor data. The small business or individual puts in the work to define a product, calculate profitable features, and set a fair price point — assuming all the risk while dominant platforms reap the reward. It doesn’t have to be this way.
“In last year’s book, The Case for the Digital Platform Act, we proposed a comprehensive regulatory framework for digital platforms to promote competition and protect consumers. Now, we’re proposing actual first-draft legislation to help Congress protect the data of third-party vendors on dominant platforms. Our proposal targets a specific example of the broader anti-competitive problem of platforms’ data access recognized by both American and European antitrust experts. Congress could adopt this legislation tomorrow to take an important step toward curbing the market power of the handful of digital platforms dominating online commerce.”
You may view the paper here. You may also view our latest blog post, “An Ounce of Preventive Regulation is Worth a Pound of Antitrust Enforcement: The Case for Platform CPNI,” for more information on our proposal.