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Roger Clarke's 'Digital Monopoly'

The Impact of the Digital Surveillance Economy
on Competition in Australia

Notes of 28 July 2018

Roger Clarke **

© Xamax Consultancy Pty Ltd, 2018

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This document is at http://www.rogerclarke.com/EC/DSEC.html


Since 2005, the user-friendly World Wide Web that Tim Berners-Lee delivered to us has been converted into a tool for marketers. Consumers yield up vasts quantities of data, almost entirely unaware of the covert operations that are going on behind their browser's window. The data that's expropriated in this way is used to build up a rich model of their behaviour, attitudes and interests which is usefully described as their 'digital persona' (Clarke 1994).

These vast volumes of data have driven the emergence of a new form of business model. This is based on the exploitation of digital personae in order to target advertisements, manipulate consumer behaviour, and price goods and services at the highest level that each individual is willing to bear.

The term 'the digital surveillance economy' usefully describes the infrastructure and processes that enable marketing corporations to acquire and exploit consumer data (Clarke 2018). So successful is the new approach that marketing corporations have largely abandoned relationships with people in favour of analysis of digital personae.

The frontline impact of the digital surveillance economy is a massive increase in the power of marketers over consumers. But it also has very substantial implications for competition, across many industry sectors. The early movers in each field have gained a dominant share of the market. Unusually, however, the first-mover advantage is so great that their market dominance is proving very difficult for other corporations to challenge.

The most obvious brands are the FANGS - Facebook, Apple, amazoN, Google and microSoft. Each of these achieved early domination of a key segment: Facebook in social media, Apple in music-playlists, Amazon in eCommerce, Google in web-search, and Microsoft in office-suite products and services. Each has utilised its scale, network effects and insights into consumer behaviour to dominate its initial markets. And each has leveraged its substantial base, through innovation and acquisition, into nearby marketspaces.

The fact of monopoly is bad enough. The demise of each corporation's original competitors is a serious concern. And this has been compounded by the inability of new entrants both to gain a sufficient foothold in the existing market, and to redefine markets and compete on some alternative basis.

A further factor has compounded the problem. For most of the world's consumers, the FANGS are beyond the effective reach of their domestic laws. Moreover, those corporations are domiciled in a data haven, because the USA generally (with some qualifications in the case of California) provides a climate that is highly favourable to corporate activities and hostile to the economic and social interests of consumers. Not even the European Union is proving capable of combatting the monopolists' arrogance and achieving significant improvements in either consumer rights or competitiveness.

The result has been the collapse of competition policy. Monopoly power has been consolidated in the hands of corporations that are larger than most countries. And those corporations now wield institutional power that exceeds that of regulators, policy-makers, and parliaments.


References

Clarke R. (1994) 'The Digital Persona and its Application to Data Surveillance' The Information Society 10,2 (June 1994) 77-92, PrePrint at http://www.rogerclarke.com/DV/DigPersona.html

Clarke R. (2018) 'Risks Inherent in the Digital Surveillance Economy: A Research Agenda' Forthcoming, Journal of Information Technology, PrePrint at http://www.rogerclarke.com/EC/DSE.html


Author Affiliations

Roger Clarke is Principal of Xamax Consultancy Pty Ltd, Canberra. He is also a Visiting Professor in Cyberspace Law & Policy at the University of N.S.W., and a Visiting Professor in the Research School of Computer Science at the Australian National University.



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Created: 28 July 2018 - Last Amended: 28 July 2018 by Roger Clarke - Site Last Verified: 15 February 2009
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