Digital data collection began with the breakthrough of the internet over twenty years ago. The amount of data collected and its use have led to remarkable social progress, but at the same time they lead to problems. What can economics contribute to solving these problems? What role can it play in regulating of digitization? Gregory Crawford, Professor of Economics at the Department of Economics and Affiliated Professor at the UBS Center provides insights into his work and shows how his findings can contribute to the regulation of digitization in our society.

This interview was conducted by Solenn Le Goff, communications manager at the Department of Economics and first published in .inspired Magazine in German. Adapted by the UBS Center.

Gregory Crawford is Professor of Economics at the University of Zurich and is also a member of the European Commission's Economic Advisory Group on Competition Policy (EAGCP).

Gregory Crawford, nine of the ten most valuable companies by capitalization in the world today are digital platforms. Is this a worrying situation?

Yes. These companies make good products in markets where the economic characteristics often favor “winner-take-all” outcomes, but public policy has not done enough to prevent some of them from becoming dominant (especially Google and Facebook). Two examples are underenforcement in merger control and failing to prevent dominance in one market from spilling over into another. In addition, not enough attention has been paid to how important data is to competition in the digital space. Lack of competition is a privacy problem because dominant companies do not have to worry about competing on privacy. But lack of privacy is also a competition problem, as companies are able to collect ever more data and leverage that data into other markets.

Tech giant Google recently acquired Fitbit, a health-focused company. What is particularly problematic about this purchase?

Fitbit has health and fitness data that Google will now be able to exploit. The problem with this is that Google can combine this data with its own unrivaled demographic, location, and interest data. The ability of a firm dominant in one source of data to combine it with new data will enable the exploitation of consumers, as there are no restrictions yet on how the data can be used, and there will be no competition to discipline Google’s plans. I foresee exploitation of consumers in insurance markets, in “health tech” markets, maybe even in employment markets. It would not have been easy under existing law, but the European Commission should have learned from the numerous international reports on this topic, including its own, and tried to block this merger.

What needs to be done to better protect consumers?

A good start would be enforcing existing data protection regulations by privacy regulators. But competition authorities also must do their part. The way consumer data is used is problematic. Services that appear to be free are not: there is the old saying that “if you’re not paying for the product, then you are the product!”. Lack of privacy (via data collection) is a price, and policymakers should treat it as such. More generally, there should be special rules and obligations for dominant digital platforms to prevent further consumer exploitation and loss of competition.

Some countries have acted more than others in addressing the harm due to competition from digital dominant platforms. What do you think would be the best way to address this?

The European Commission and the UK have been pushing the agenda in Europe with the introduction of “gatekeeper” regulations. The UK is also changing its merger review policies for dominant digital platforms. The U.S. also seems to be more proactive, with new legislation being proposed not only for digital platforms but for the economy as a whole. This is all a good opportunity to see what works.

Do you think we will be able to create a better regulated digital market in the future?

My hope is that we will get some proper regulation as long as those governments are in power that are willing to limit the power of the dominant digital platforms. In the EU, the Digital Services Act and the Digital Markets Act are steps in the right direction, but the devil is in the details. They need to be implemented in a good way. Given the European Commission's recent track record, I am concerned, but hopeful.