ANTITRUST authorities probing Facebook Inc. and Alphabet Inc.’s Google have struggled with scrutinizing companies whose products are popular and free. Now they may have a solution: Use privacy as a test.

As the US Justice Department, Federal Trade Commission, Congress and the states investigate whether internet companies are flouting antitrust laws, academics and even some regulators are pushing to go beyond the traditional focus on price as a determinant of harm. Enforcers, they say, should also consider privacy lapses as a proxy for anti-competitive behavior.

Their legal reasoning goes like this: Monopolists generally stop innovating, let product quality slip and treat customers poorly, knowing no competitor has the ability to grab market share. Repeated privacy lapses can be a sign that a company — Facebook is often cited as a prime example — has let product quality and customer service slip, knowing its social-media dominance is unassailable.

Senator Josh Hawley, the Republican senator from Missouri, buys this argument. Facebook, he said, has suffered few real consequences despite its shoddy record on protecting users’ privacy. Consumers have nowhere else to go to get the totality of what Facebook offers — a classic antitrust problem of degrading quality.

“One of the reasons data privacy concerns are so pressing is because these companies are monopoly size,” Hawley, a big-tech antagonist who sued Google when he was his state’s attorney general, told Bloomberg last week. “If we had a viable alternative to Facebook that wasn’t scooping up someone’s data, that wasn’t selling our information without telling us, then I would be less concerned.”

Hawley echoed a view that is gaining traction with federal and state antitrust enforcers, as well as the leaders of a congressional probe into big internet platforms. One advantage of the privacy-erosion-is-antitrust theory is that no new laws are needed to enforce it.

Days after the Justice Department’s Google probe was revealed in June, for instance, its antitrust chief, Makan Delrahim, linked the two issues, noting that quality can figure in antitrust analysis in addition to price and that “privacy can be an important dimension of quality.”

Delrahim noted that the 1998 case against Microsoft Corp. didn’t revolve around higher prices. Instead, the US alleged that the software company illegally maintained a monopoly over personal-computer operating systems by blocking manufacturers from installing a browser that competed with its own. Both browsers were free to consumers.

Including privacy in the investigations would expand the range of issues enforcers are known to be looking at, including Facebook’s past acquisitions and Google’s conduct in the digital advertising market. Facebook and Google declined to comment.

US Representative David Cicilline, the Rhode Island Democrat leading the House probe of the tech sector, referred in a hearing earlier in November to “the obvious cost to personal privacy that has resulted from consolidation in the digital marketplace.”

Privacy and competition have long been treated as distinct areas of the law. Google and Facebook have agreed to pay fines for privacy violations under consumer-protection statutes, but they have faced little antitrust action.

One reason is that federal courts have clung to the consumer-welfare standard and often demand evidence of higher prices before deciding cases in favor of enforcers. Just last year, the US Supreme Court ruled 5-4 for American Express Co. and against the US and 11 states alleging that cardholders were harmed when American Express prohibited merchants from steering customers to cards with lower fees. The majority’s rationale? There was no evidence that American Express’s policy harmed consumers by pushing up the price of credit-card transactions.

Now, Hawley, Delrahim and Cicilline are signaling a shift in the way the government thinks about antitrust enforcement, particularly in technology. State attorneys general are exploring similar ideas.

New York Attorney General Letitia James, who is leading the states’ Facebook probe, said the coalition will “use every investigative tool at our disposal to determine whether Facebook’s actions may have endangered consumer data, reduced the quality of consumers’ choices, or increased the price of advertising.”

The public interest in the overlap is relatively new, said Dina Srinivasan, a former digital ad executive who has written that Facebook’s data practices could form the basis of an antitrust case.

“We’ve seen this momentum in many of those circles since the beginning of the year,” she said.

Srinivasan argued in a February article in the Berkeley Business Law Journal that consumers were able to rebuff Facebook’s tracking of users on third-party websites when the social media market was competitive. After the demise of rivals such as MySpace, Facebook expanded tracking to millions of websites to further its advertising business despite consumer pushback, she noted. A truly competitive market would swiftly punish such practices, Srinivasan wrote.

Not all legal experts agree that privacy violations could be part of any antitrust suit. A case that’s “based on a data privacy theory of harm is not in the cards,” said Jim Tierney, who oversaw tech-sector antitrust enforcement at the Justice Department from 2006 to 2016 and is now a partner at Orrick Herrington & Sutcliffe LLP, a law firm that counts Facebook as a client. Tierney said he doesn’t do any work for the company.

Others see a different problem. “Consumers seem just willing to give up the data,” said Sam Weinstein, a professor at Cardozo Law School. “If that’s what’s happening, it’s hard to see antitrust interceding.”

Some non-US jurisdictions have sought to twin privacy and antitrust, with mixed results. Germany’s competition authority, the Federal Cartel Office, in February ordered Facebook to overhaul how it tracks users off its site over allegations that the company used its dominance to force consumers to accept unfair terms. Facebook responded that the agency misapplied German law because the company faces “fierce competition.”

In August, however, a German court suspended the ruling, expressing “serious doubts about the legality” of the order. The agency is appealing. — Bloomberg

SAN FRANCISCO/WASHINGTON — A US-based foundation overseeing promising semiconductor technology developed with Pentagon support will soon move to Switzerland after several of the group’s foreign members raised concerns about potential US trade curbs.

The nonprofit RISC-V Foundation (pronounced risk-five) wants to ensure that universities, governments and companies outside the United States can help develop its open-source technology, its Chief Executive Calista Redmond said in an interview with Reuters.

She said the foundation’s global collaboration has faced no restrictions to date but members are “concerned about possible geopolitical disruption.”

“From around the world, we’ve heard that ‘If the incorporation was not in the US, we would be a lot more comfortable,’” she said. Redmond said the foundation’s board of directors approved the move unanimously but declined to disclose which members prompted it.

Created in 2015, the RISC-V Foundation sets standards for the core chip architecture and controls who can use the RISC-V trademark on products, as other organizations do for Wi-Fi and Bluetooth chips. It does not own or control the technology.

More than 325 companies or other entities pay to be members, including US and European chip suppliers such as Qualcomm Inc. and NXP Semiconductors, as well as China’s Alibaba Group Holding Ltd. and Huawei Technologies Co. Ltd.

The foundation’s move from Delaware to Switzerland may foreshadow further technology flight because of US restrictions on dealing with some Chinese technology companies, said William Reinsch, who was undersecretary of commerce for export administration in the Clinton administration.

“There is a message for the government. The message is, if you clamp down on things too tightly this is what is going to happen. In a global supply chain world, companies have choices, and one choice is to go overseas,” he said.

In a statement to Reuters, the US Department of Commerce said its controls were designed to safeguard US national security and to “ensure bad actors cannot acquire technology that harms US citizens or interests, while promoting innovation to fuel continued American technological leadership.” The department said it meets regularly with private industry to gauge market conditions and the effects of its regulations.

Some Republican US lawmakers said they are concerned the United States will lose influence over RISC-V chip architecture, which can be used to make microprocessors for almost every type of electronic device, making it a crucial building block of a modern economy. The technology came from labs at the University of California, Berkeley, and later benefited from funding by the Pentagon’s Defense Advanced Research Projects Agency (DARPA).

The lawmakers warn that the foundation’s Chinese members could influence the technology’s development to help China’s semiconductor industry.

“The Chinese Communist Party is trying to circumvent our export control system to support national security threats like Huawei — we cannot let it succeed,” Representative Mike Gallagher, a Republican from Wisconsin, told Reuters.

Arkansas Republican Senator Tom Cotton said moving the foundation to ensure it could retain Chinese members was “short-sighted at best.” He added that “if American public funds were used to develop the technology, it’s also completely outrageous.”

Redmond said in follow-up emails after speaking to Reuters that given the technology is open source and available to anyone, she does not see how the move could be against the US national interest.

A DARPA spokesman told Reuters the agency intended for RISC-V work it funded to be publicly available to companies and academics around the world.

Morgan Reed, president of The App Association, which receives funding from major US technology firms such as Apple Inc. and Microsoft Corp. in Washington, likened the RISC-V Foundation’s work to efforts between US and Chinese companies to jointly develop Wi-Fi chip standards.

“The notion that China can be barred from participating in standards alongside the US and the EU is simply not viable,” Reed said. “China is too important as a manufacturer and an end-market to ignore.”

INSURANCE POLICY
The RISC-V Foundation announced at a meeting last December it would seek a “neutral” country before making a formal decision to go to Switzerland earlier this year, a decision that got little public attention. Final approvals in Switzerland for the move are expected as soon as the end of November, Redmond said.

Chinese companies have had access to the RISC-V architecture, which is publicly available, since its creation, Redmond said.

Alibaba claimed in July it had developed the fastest RISC-V processor to date. The company declined to comment for this story.

The RISC-V Foundation’s move shows how US-China trade tensions could make the United States a harder place to host technology standards groups, according to two attorneys who represent such groups.

The lawyers said it is unclear whether standards groups are allowed to work with Huawei. These groups are concerned US authorities may decide that some closed-door technical discussions involve the transfer of sensitive technology to the Chinese or others on banned lists, said one of the attorneys, Brad Biddle, who works for several standards groups.

In June, more than two dozen standards groups — including those overseeing SD memory cards and Ethernet and HDMI cables — wrote a letter to US Commerce Secretary Wilbur Ross asking for clarification of the rules on working with Huawei.

The groups warned Ross that the Huawei restrictions posed a “serious risk” that standards work could move out of the United States, which could end a long-held trend where US-based groups set de facto standards for the rest of the world, they wrote.

The Commerce Department published an advisory opinion seeking to clarify the issue in August, but standards lawyers said the rules remain confusing.

The RISC-V Foundation’s Redmond does not yet see a “credible threat” to international collaboration. “But we’re taking out an insurance policy against that type of action by moving our incorporation,” she told Reuters.

HUAWEI SUPPORTS MOVE
The board’s seven current members are all based in North America. After the move, the foundation’s board will be expanded and European and Asian members will be added, said Redmond. Reuters could not confirm whether any Chinese companies planned to join the board.

Andrew Updegrove, an attorney who does work for standards groups, said that US restrictions on transferring US-origin technology to Chinese companies will still apply regardless of where the RISC-V Foundation is headquartered.

At Netherlands-based NXP Semiconductors, which is a member of the foundation, customers have asked the company to detail where the technology in its chips comes from, said Lars Reger, its chief technology officer. The customers do not want to be cut off in future trade disputes, he said.

US officials and some lawmakers have alleged Huawei’s telecom equipment may enable surveillance by China. The resulting backlash has prevented it from making inroads into the US market. Huawei has denied the claims.

In response to Reuters questions, a Huawei spokesman said: “We support RISC-V Foundation identifying Switzerland as a neutral venue for open source development. Making open source as open as possible is important for the industry.”

He said that RISC-V “might fit well into Huawei’s vision of this heterogeneous, open world.” — Reuters