Imperial academic discusses why data privacy is a problem at US Congress

Consumers are at risk of being exploited by tech companies through lack of understanding about how their data is used.

This was the view expressed by Tommaso Valletti, Professor of Economics at Imperial College Business School, speaking at the US Congress at the House of Representatives in Washington D.C last week. Professor Valletti was one of four experts called to testify in a session on the role of data and privacy in competition.

Between September 2016 and August 2019, Professor Valletti was Chief Competition Economist of the European Commission. In this role he led economic investigations involving digital platforms including Google, Apple, Amazon and Facebook.

Professor Valletti argued that data privacy and protection are at the core of many business models for tech companies. However, he said: “Little is known about data use and consumer preferences over privacy because of a conscious decision by the very same incumbent platforms not to disclose any data to independent researchers.”

He argued that the collection and use of personal data are key features of digital markets and have created significant benefits for consumers. However, he said they also pose considerable challenges, especially in concentrated markets and in the presence of market power.

He spoke about a “privacy paradox” – the idea that people care about protecting their data but are not taking steps to share less of their personal information online. This observation is sometimes used to argue that people should not worry about privacy, as consumers “reveal” they do not really care about privacy. However, in reality, consumers’ choices are shaped by very complex factors, which often include a lack of understanding about data collection practices.

“Who has actually read lengthy and obscure privacy policy terms? Even if you have, what do they mean?” He argued that the main issue was the lack of transparency about current and future data practices and people not really understanding what was meant by phrases such as “we may collect your personal information for marketing purposes”, or “we may share your personal data with affiliates and trusted businesses.”

He concluded by giving examples of how antitrust cases centered around data and privacy could be run by enforcers.

You can view a video of Professor Valletti’s testimonial at the US Congress below. His speech starts at 1:21:30 followed by another section at 2:37:40.