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Big Data and Competition Policy by Stucke, Maurice; Grunes, Allen (1st June 2016)

Part I The Growing Data-Driven Economy, 3 Smartphones as an Example of How Big Data and Privacy Intersect

Maurice E. Stucke, Allen P. Grunes

From: Big Data and Competition Policy

Maurice Stucke, Allen Grunes

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: null; date: 23 April 2019

Market power — Free movement of IPR — Rights — Internet — Mobile telephony — Technology

(p. 29) Smartphones as an Example of How Big Data and Privacy Intersect

3.01  Smartphone subscriptions have accelerated. Reaching the first billion of smartphone subscriptions (in 2012) took over five years; reaching the second billion took less than two years.1 Ericsson predicts smartphone subscriptions, between 2015 and 2020, will more than double to 26 billion connected devices.2 Ninety per cent of the world’s population over six years old will have a mobile phone by 2020.3

3.02  People are spending more time on their smartphones. Between 2013 and 2015, Americans’ overall digital media usage grew 49 per cent.4 In this period, their average time on mobile apps increased by 90 per cent, their average time browsing the web increased by 53 per cent, and even their average time on desktop computers increased by 16 per cent.5 Both Google’s and Apple’s mobile platforms have grown as well, with 1.6 million apps available in July 2015 in the Google Play store and 1.5 millions apps available in June 2015 in Apple’s App store.6

3.03  With more people spending more time on their smartphones they are using (and producing) more data. Mobile data traffic was 55 per cent higher in the first quarter of 2015 than in the first quarter of 2014.7 Indeed, AT&T (p. 30) sought to justify its acquisition of T-Mobile in large part by the growth in mobile data usage:

This transaction quickly provides the spectrum and network efficiencies necessary for AT&T to address impending spectrum exhaust in key markets driven by the exponential growth in mobile broadband traffic on its network. AT&T’s mobile data traffic grew 8,000 percent over the past four years and by 2015 it is expected to be eight to 10 times what it was in 2010. Put another way, all of the mobile traffic volume AT&T carried during 2010 is estimated to be carried in just the first six to seven weeks of 2015. Because AT&T has led the U.S. in smartphones, tablets and e-readers—and as a result, mobile broadband—it requires additional spectrum before new spectrum will become available. In the long term, the entire industry will need additional spectrum to address the explosive growth in demand for mobile broadband.8

3.04  Smartphones nicely illustrate the intersection of Big Data and privacy. What are the privacy implications when more people spend more time on their smartphones browsing the web, watching videos, texting, emailing, or using apps that reflect their interests, political, religious, or social views, or connecting with others on Facebook or other social networks? Do people have a reasonable expectation of privacy in the data their smartphones collect? If so, is that expectation of privacy objectively reasonable?

A.  Why the Odds Favoured the Government in Riley

3.05  A 2014 US Supreme Court case, Riley v California, addresses these privacy issues in the context of the government’s warrantless search.9 The Fourth Amendment to the US Constitution prohibits unreasonable searches and seizures, and requires the government first to obtain a warrant, supported by probable cause. Several expanding exceptions exist for warrantless searches and seizures. The issue in Riley was whether the police may, without a warrant, search ‘digital information on a cell phone seized from an individual who has been arrested’.10

3.06  The odds favoured the United States and state of California, who argued for a warrantless search. Relying on its precedent, the Supreme Court could have easily agreed.

3.07  First, warrantless searches and seizures occur more frequently under the Court’s exceptions than searches and seizures pursuant to a warrant. Thus, the term ‘exception,’ the Court recognizes, is a misnomer.11

(p. 31) 3.08  Second, one of the Court’s significant exceptions for requiring a warrant is when the police lawfully arrest a person. As part of a search incident to arrest, the police can conduct a warrantless search of any physical object on the accused (such as his wallet’s contents). If the accused had both a wallet and a smartphone, then, arguably, the police could search the contents of both.

3.09  Third, a year earlier, the Court, in upholding the warrantless collection of a DNA sample from persons arrested, but not convicted, of a felony, emphasized how an individual’s legitimate privacy expectations are necessarily diminished when the individual is taken into police custody.12

3.10  Fourth, a lot of information on a smartphone is shared with third parties, so the accused—under another line of Supreme Court cases—would have no reasonable expectation of privacy.13

3.11  Fifth, in a 2011 decision, the Court deliberately avoided the issue of whether a constitutional privacy interest exists in avoiding disclosure of personal matters.14 Two Justices in that case expressly rejected any right to informational privacy under the Fourteenth or Fifth Amendment of the US Constitution.15

3.12  Finally, the facts in Riley were damning. The information on Riley’s smartphone implicated him with an attempted murder by a violent street gang, the ‘Bloods’.

3.13  Thus, this case should have been an easy win for the Obama administration and state police departments who argued that the police do not need a warrant to search the digital information on a smartphone seized from those lawfully arrested.

B.  The Surprising Unanimous Decision

3.14  So is searching your smartphone the same as searching your wallet or purse? Shocking many observers, the Supreme Court unanimously16 responded no. The (p. 32) Court declined to extend its precedent to smartphones, or even simpler cell phones, in part because the data they contain quantitatively and qualitatively differ from other physical objects.17 Smartphones’ ‘immense storage capacity’ had for the Court several significant consequences for privacy.

3.15  First was the variety of data typically stored on one’s phone, which ‘collects in one place many distinct types of information—an address, a note, a prescription, a bank statement, a video—that reveal much more in combination than any isolated record’.18

3.16  Second was the volume of data on any one facet of a person’s life:

[A]‌ cell phone’s capacity allows even just one type of information to convey far more than previously possible. The sum of an individual’s private life can be reconstructed through a thousand photographs labelled with dates, locations, and descriptions; the same cannot be said of a photograph or two of loved ones tucked into a wallet.19

The volume and variety of data also provided a historical timeline:

[T]‌he data on a phone can date back to the purchase of the phone, or even earlier. A person might carry in his pocket a slip of paper reminding him to call Mr. Jones; he would not carry a record of all his communications with Mr. Jones for the past several months, as would routinely be kept on a phone.20

3.17  Third was ‘an element of pervasiveness that characterizes cell phones but not physical records. Prior to the digital age, people did not typically carry a cache of sensitive personal information with them as they went about their day. Now it is the person who is not carrying a cell phone, with all that it contains, who is the exception.’21

3.18  The data captured on a smartphone, the Court found, were also qualitatively different from physical records:

An Internet search and browsing history, for example, can be found on an Internet-enabled phone and could reveal an individual’s private interests or concerns—perhaps a search for certain symptoms of disease, coupled with frequent visits to WebMD. Data on a cell phone can also reveal where a person has been. Historic location information is a standard feature on many smart phones and can reconstruct someone’s specific movements down to the minute, not only around town but also within a particular building.22

(p. 33) 3.19  The volume and variety of data on one’s phone are amplified with the mobile application software or ‘apps’. The Court noted that ‘[t]‌he average smart phone user has installed 33 apps, which together can form a revealing montage of the user’s life’.23 The apps

… offer a range of tools for managing detailed information about all aspects of a person’s life. There are apps for Democratic Party news and Republican Party news; apps for alcohol, drug, and gambling addictions; apps for sharing prayer requests; apps for tracking pregnancy symptoms; apps for planning your budget; apps for every conceivable hobby or pastime; apps for improving your romantic life. There are popular apps for buying or selling just about anything, and the records of such transactions may be accessible on the phone indefinitely.24

3.20  The Supreme Court historically elevated the privacy expectations in one’s home. For example, the Court held that convicting someone for privately possessing obscene materials in one’s home violated the person’s First Amendment rights.25 But, in Riley, the Court observed how a smartphone, which fits in one’s back pocket, passively and actively collects more personal data than typically found in one’s home: ‘A phone not only contains in digital form many sensitive records previously found in the home; it also contains a broad array of private information never found in a home in any form—unless the phone is.’26

C.  Reflections

3.21  To be clear, Riley involved the Fourth Amendment to the US Constitution. The Court never addressed our specific competition issues. Nor does the Court’s ruling limit private companies from collecting and using personal data from our smartphones. But what was remarkable for our purposes was the Court’s foresight of the privacy implications as smartphones become the key platforms for collecting and analysing personal data. The Court recognized that the sharing of data on (p. 34) smartphones with third parties did not undercut an individual’s reasonable expectation of privacy in the data. Many apps, for example, permit developers to use the private information for commercial ends. Smartphones are becoming the key platform for targeted advertising.27 Nonetheless, the fact that citizens share private information with third-party app and operating system developers and smartphone providers did not undercut one’s reasonable expectation of privacy under the Fourth Amendment. Likewise, the fact that some of the data was stored on remote servers rather than on the smartphone itself did not undercut the expectation of privacy.28

3.22  In contrast to its earlier decisions,29 the Court did not leave citizens with a Hobson’s choice: do you want a smartphone (and forfeit any expectation of privacy for information divulged to others) or do you want a judicially protected expectation of privacy (which requires you to withhold the data including through the use of smartphones).30 The Court recognized that cell phones ‘are now such a pervasive and insistent part of daily life’.31 It ‘is no exaggeration’, the Court said, ‘that many of (p. 35) the more than 90% of American adults who own a cell phone keep on their person a digital record of nearly every aspect of their lives—from the mundane to the intimate’.32 Nowhere in Riley did the Court suggest that individuals should willingly sacrifice their expectations of privacy in order to benefit from their phones’ many technological benefits: ‘With all they contain and all they may reveal, they hold for many Americans the privacies of life.’33

3.23  Riley shows how Big Data and privacy interests intersect. The volume and variety of data on a smartphone invariably raise multiple privacy interests, including associational privacy (in our choices of the persons, groups, or causes with which we wish to associate), physical privacy (in not having our movements tracked), informational privacy (in choosing with whom we wish to disclose our personal information), decisional privacy (in not having the government intrude in our personal decisions), and intellectual privacy (namely, the freedom to explore topics and issues without governmental monitoring). The Court implicitly recognized that personal information in the age of Big Data will invariably be shared with others. That by itself does not forfeit our privacy interests.

3.24  Riley also resurrects the importance of our control over our information. Yes, Apple may track my smartphone’s location (to enable me quickly to locate it). But this should not mean the government can search without a warrant my iPhone for this data. With the rise of the Internet of Things and Big Data, there will be few facts, if any, that will not, at one time or another, be divulged to another. Thus an important aspect of privacy will be our right to control to whom and for what purpose the data is divulged.

3.25  Finally, the Court recognized the distinction between scattered disclosure of bits of information to the public and the electronic compilation of data. A few taps on one’s phone reveal information that 30 years ago would have been far too costly or time-consuming to obtain. The police could never track your movements as efficiently as your smartphone can. Freed from the cost of buying and developing film, we take far more pictures that reveal our preferences and behaviour. And the very fact that smartphones collect and store so much data (including things that we may not ever use, such as our movements or search history) and that there are over a million apps, many of which are free or for a nominal fee, reflects what we give up in exchange (our personal data) is valuable. The next chapter addresses the rise of data-driven business models and the strategic implications of Big Data. It examines why companies invest so heavily to develop apps to access our data, and spend money to maintain, index, and analyse the increasing volume of data.


1  Ericsson, Mobility Report: On the Pulse of the Networked Society, June 2015, p 7, http://www.ericsson.com/res/docs/2015/ericsson-mobility-report-june-2015.pdf.

2  Ibid, p 3.

3  Ibid, p 6.

4  comScore, The 2015 US Mobile App Report, 22 September 2015, p 5, https://www.comscore.com/Insights/Presentations-and-Whitepapers/2015/The-2015-US-Mobile-App-Report.

5  Ibid.

6  Statistica, ‘Number of Available Applications in the Google Play Store from December 2009 to February 2015’, http://www.statista.com/statistics/266210/number-of-available-applications-in-the-google-play-store/; Statistica, ‘Number of Available Apps in the Apple App Store from July 2008 to June 2015’, http://www.statista.com/statistics/263795/number-of-available-apps-in-the-apple-app-store/.

7  Ericsson, above note 1, p 3.

8  AT&T, ‘AT&T to Acquire T-Mobile USA from Deutsche Telekom’, Press Release, 20 March 2011, http://www.att.com/gen/press-room?pid=19358&cdvn=news&newsarticleid=31703.

9  Riley v California, 134 S Ct 2473 (2014).

10  Ibid, p 2480.

11  Ibid, p 2482.

12  Maryland v King, 133 S Ct 1958 (2013).

13  United States v Miller, 425 US 435, 443, 96 S Ct 1619, 1624 (1976) (government, consistent with the Fourth Amendment, can obtain ‘information revealed to a third-party and conveyed by him to government authorities, even if the information is revealed on the assumption that it will be used only for a limited purpose and the confidence placed in the third-party will not be betrayed’); The Executive Office of the President, Big Data: Seizing Opportunities, Preserving Values, May 2014, pp 32–3, https://www.whitehouse.gov/sites/default/files/docs/big_data_privacy_report_may_1_2014.pdf.

14  National Aeronautics and Space Administration v Nelson, 562 US 134, 131 S Ct 746 (2011).

15  Ibid, p 159 (Justice Scalia, with whom Justice Thomas joins, concurring in the judgment).

16  Justice Alito filed a separate opinion where he concurred in part and concurred with the result. He agreed that ‘because of the role that these devices have come to play in contemporary life, searching their contents implicates very sensitive privacy interests that this Court is poorly positioned to understand and evaluate.’ Riley, above note 9, p 2497.

17  Ibid, p 2489.

18  Ibid.

19  Ibid.

20  Ibid.

21  Ibid, p 2490.

22  Ibid; see also OECD, Supporting Investment in Knowledge Capital, Growth and Innovation, October 2013, p 321, http://www.keepeek.com/Digital-Asset-Management/oecd/industry-and-services/supporting-investment-in-knowledge-capital-growth-and-innovation_9789264193307-en (‘Mobile telephones have become a leading data collection device, combining geo-location data and Internet connectivity to support a broad range of new services and applications related to traffic, the environment or health care.’); OECD, Data-Driven Innovation for Growth and Well-Being: Interim Synthesis Report, October 2014, p 36, http://www.oecd.org/sti/inno/data-driven-innovation-interim-synthesis.pdf (‘Mobile broadband in particular is essential as mobile devices are now becoming the leading means for data collection and dissemination. These multi-purpose mobile devices generated more than 1.5 exabytes (billions of gigabytes) of data every month in 2013 worldwide.’).

23  Riley, above note 9, p 2490.

24  Ibid.

25  Stanley v Georgia, 394 US 557, 565, 89 S Ct 1243, 1248 (1969) (‘Whatever may be the justifications for other statutes regulating obscenity, we do not think they reach into the privacy of one’s own home. If the First Amendment means anything, it means that a State has no business telling a man, sitting alone in his own house, what books he may read or what films he may watch.’). It is unclear whether the constitutional principle underlying the holding in Stanley is the privacy of one’s home or intellectual privacy. Ibid, p 565 (‘Our whole constitutional heritage rebels at the thought of giving government the power to control men’s minds.’).

26  Riley, above note 9, p 2491.

27  OECD, Supporting Investment, above note 22, p 321 (in 2011, almost 6 billion mobile subscriptions worldwide of which roughly 13% (780 million) were smartphones capable of collecting and transmitting geo-location data and that these ‘mobile telephones generated approximately 600 petabytes (millions of gigabytes) of data every month in 2011’); OECD, Exploring the Economics of Personal Data: A Survey of Methodologies for Measuring Monetary Value, OECD Digital Economy Papers, No 220, 2 April 2013, p 14, http://dx.doi.org/10.1787/5k486qtxldmq-en.

28  Riley, above note 9, p 2491 (‘Cell phone users often may not know whether particular information is stored on the device or in the cloud, and it generally makes little difference.’).

29  See, eg, Whalen v Roe, 429 US 589, 97 S Ct 869 (1977) (patient either had to forego prescribed needed medication or have the medical information disclosed to a state agency); Nelson, above note 14, p 139 (to continue conducting the pure scientific research they did for decades at Jet Propulsion Laboratory, which the government owned and California Institute of Technology operated, contract employees had to subject themselves to a background check and disclose personal information or find a new job).

30  Google, for example, relied on the Miller doctrine to argue that even non-Gmail users have no expectation of privacy in not having their emails scanned when communicating with Gmail users. Google recognized that the non-Gmail plaintiffs were not bound to Google’s contractual terms, but ‘they nonetheless impliedly consent to Google’s practices by virtue of the fact that all users of email must necessarily expect that their emails will be subject to automated processing’, which presumably includes scanning for behavioural advertising. In re Google Inc Gmail Litigation, Case No 5:13-MD-02430-LHK (US Dist Ct (ND Cal), 13 June 2013), Google’s Motion to Dismiss Complaint, Memorandum of Points & Authorities, p 19, http://www.consumerwatchdog.org/resources/googlemotion061313.pdf. Moreover, Google argued that the fact that some continued to email Gmail users—despite knowing of Google’s automated scanning (as confirmed in their complaints)—showed ‘that Google’s automated scanning was completely immaterial to these Plaintiffs’ decisions to communicate with Gmail users and suggests that they were aware of Google’s automated scanning all along’. Ibid, p 20. The Court rejected Google’s argument that all Gmail users had consented to the alleged interceptions based on Google’s Terms of Service and Privacy Policy, which ‘did not provide sufficient disclosures to conclude that Gmail users had consented to the alleged interceptions’. The Court also rejected Google’s contention ‘that all email users, regardless of whether they had viewed any disclosures, had impliedly consented to the alleged interceptions, because all email users, including non-Gmail users, understand that such interceptions are part of how emails are transmitted’. In re Google Inc Gmail Litigation, 2014 WL 1102660 *9 (US Dist Ct (ND Cal), 18 March 2014).

31  Riley, above note 9, p 2484.

32  Ibid, p 2490.

33  Ibid, pp 2494–5 (internal quotation omitted).