The government is working on a set of regulations based on the Anti-Monopoly Law to protect the interests of consumers who provide personal information to Internet giants to use their services.
The new regulations will be designed to enhance the current regulatory framework based on the personal information protection law to govern operations of market-dominating companies that provide platforms for various Internet services.
Late last month, the Fair Trade Commission (FTC) published regulatory “ideas” to prevent “abuse of dominant position,” an antitrust violation, in transactions between “digital platformers” and consumers.
Platformers are companies that provide online platforms for e-commerce, Web searches, video sharing, social networking and other Internet-based services.
Traditionally, the Anti-Monopoly Law provision to prohibit “abuse of dominant position” has been invoked mainly when large, powerful companies impose disadvantageous business deals on smaller companies.
Smaller companies are often under strong pressure to accept such raw deals to avoid losing crucial businesses with their larger partners. The provision bans companies from taking advantage of their dominant positions to push weaker partners into accepting their terms.
The relationship between Internet behemoths and consumers has some similarities to that between corporate giants and their smaller business partners.
Many online services offered by dominant platform operators have deeply infiltrated the fabric of society and are often not replaceable.
There are probably many cases in which users have grudgingly agreed to provide their private information, despite concerns about the way it is used, because they have no choice but to use the services.
This kind of privacy risk was highlighted by recent revelations about how Recruit Career Co. used data collected through its popular “Rikunabi” job-placement website to estimate the odds of job-seeking students declining job offers.
There is little doubt that some new regulations are needed to deal with the problem. Use of the antitrust provision to ban “abuse of dominant position” is one plausible option.
The FTC’s “ideas,” however, contain some radical changes from the traditional implementation of the Anti-Monopoly Law. First of all, the new approach would concern transactions between businesses and consumers. Secondly, it regards personal information as the price consumers have to pay for the services.
While it has offered certain standards, the antitrust watchdog remains more vague than usual on some key issues, such as the definition of “dominant position” in cases involving IT powerhouses.
Another issue that needs clarification is how to determine and impose fines for offenses if “information” is considered a price for free services.
The FTC has described some typical examples of abuse, but the descriptions are mostly vague. One cited example refers to acquiring personal information “beyond the scope needed to achieve the purpose of its use.”
The FTC’s proposals would also subject information other than personal data to the new regulations, but only one typical example is described.
To be fair, it is a tough challenge for regulators to show standards and examples of cases concerning this area, where there is no rich reservoir of precedents and where technologies and services tend to change fast and radically.
That makes it all the more important to promote in-depth debate on the issue to develop transparent regulatory guidelines.
It is also necessary to clearly define the roles of other laws, including the personal information protection law and the consumer contracts law.
More work needs to be done to formulate effective and reasonable regulations that protect the rights of individuals and prevent unfair infringement of economic interests while avoiding, as much as possible, hampering the development of technologies and services that enrich society.