AN OVERVIEW OF ALPHABET AND GOOGLE LLC
Google is the primary market participant in online data collection and monetisation, with its holding company, Alphabet generating revenues of USD 136.8 billion in 2018 (US-SEC, Alphabet Inc. Annual Report 2018), of which ~85% was Ad revenue. Alphabet has a market capitalisation of USD 921 billion and is the fourth largest company in the world by this metric.
Google's market primacy of the data search market of ~87% (Johnson J, 2020) enforces a significant level of data ownership by regulating information access on the internet and applications used on related digital devices.
Summarising Alphabet's Corporate strategy (Jurevicius O, 2020) as follows:
Business diversification and introduction of new services and products
Commercial acquisitions
Profit maximisation through platform envelopment and closed eco-system creation
Google's dominance in the search data market significantly advantaged by this corporate strategy and history of systematic acquisitions and closed eco-system creation across many industries.
Google owns Ad Mob and DoubleClick, effectively having a monopoly in the online advertising intermediary market. These and many other complimentary commercial purchases facilitate platform envelopment opportunities, where a provider in one platform market can enter another platform market, combining its functionality with the targets in a multi-platform bundle that leverages shared user relationships. (Eisenmann et al., 2011).
Google's Business strategy is that they will tend to offer "free" services, with the data collected then monetised in any way possible. YouTube's and Android's acquisitions followed this established pattern, and this strategy also cemented Gmail, Google Maps, and Chrome's market dominance (Borreau et al., 2020).
Monetisation in these instances may be through direct Ad targeting or indirect Ad targeting via third parties through collecting consumer demographics, geographic data, and psychometrics. This data is also leveraged into the many diversified markets that Alphabet enters.
The value of this data will only increase as Artificial Intelligence, and Machine Learning technologies are increasingly more effective in manipulating and monetising the data provided.
GOOGLES DATA POLICIES AND CONCERNS
Google's press release on the Fitbit merger assures users that no personal data will be used by other parts of Google's business (Osterloh R, 2019)
As the primary participant in search and data capture, Google has a fluid policy approach to data stewardship with a significant history of modifying these policies to enable profitability. However, often these changes are not to the benefit of the users, consumers, industries or wider society.
As of March 2012, Google made significant changes to its privacy policies, allowing the company to share data across services (Google Privacy Policy, 2012). In addition, in 2016 Google dismissed its ban on personally identifiable information with its DoubleClick ad service (Propublica, 2016).
As ACCC chairman Rod Sims stated during the Consumer Policy Research Conference in Melbourne in November 2019, referring to Google's promise not to combine DoubleClick's advertising data with Google search data, it "is a stretch to believe that commitment will still be in place five years from now" (Davidson J, 2019). With Google having a similar non-binding assurance on using Fitbits data, this is an implied potential future ethical violation.
Changes in these policies effectively allow Google to use deterministic and probabilistic linkages to identify and index data to specific users, building-specific health, interests and psychometric profiles based on any Google, or even Alphabet, held data sets.
Privacy International, a UK-based registered charity that defends and globally promotes the right to privacy, ranked Google as "Hostile to Privacy", its lowest rating on their report, in 2007. Google is the only company to receive that ranking (BBC NEWS | Google Ranked "worst" on Privacy, 2007)
Google was fined USD 207 million (Hunton A, 2020) (Satariano, 2020) (Sawers, 2020) in the last financial year (2019) in Europe.
ALPHABET'S HEALTH SCIENCE POSITIONING
Alphabet has two subsidiaries directly in the Health Science markets, namely Calico Life Sciences LLC (Wikipedia, 2020), which focuses on age-related health technologies, and Verily Life Sciences (Formerly Google Life Sciences) (Wikipedia, 2020), which focuses more broadly on all health sciences. Other Alphabet subsidiaries also have relationships with Health Science companies in various capacities.
Within these existing relationships, several legal and ethical issues recently occurred.
Project Nightingale is a data processing and storage collaboration and research agreement with the Ascension, the largest private hospital group and healthcare system in the United States and several other private hospitals, such as the Mayo Clinic, for the use of Google's Cloud in which Google can access "anonymised" patient information to train algorithms (Google, 2019). This collaboration allowed Google to collect approximately a year of patient data in 21 US states in the form of lab results, doctor diagnoses and hospitalisation records, among other categories, which effectively amounts to complete health history, including patient names and dates of birth (Wikipedia, 2020).
In 2015 DeepMind AI, a subsidiary of Alphabet was the recipient of ~1.6 million patient records through an agreement with the Royal Free Hospital (RFH) in the UK. The Information Commissioners Office, the UK's data protection regulator, ruled that RFH broke data protection laws as the data was shared without informing the patients (ICO, 2017).
In 2019 Verily Health Science and Sanofi, a leading French pharmaceutical manufacturer, have recently had to redefine the nature of their joint venture into diabetes management due to a European Commission notification of Concentration (Official Journal of the European Union, 2016). These notifications prohibit monopolistic concentrations within corporate mergers, which may unduly affect the public in the EU.
The irreversible nature of data violations makes the potential to quantify the damage and effect these events will have on the lives of those affected and wider society an impossibility. Nevertheless, they are potentially, and realistically, very significant.
SPECULATION ON POTENTIAL HARMS
We see four direct ways that the addition of another consumer-rich data set, as the acquisition of Fitbit would provide, is of concern.
Market dominance could be easily achieved by collating opportunistic, deterministic and probabilistic data into diagnostic meta-data, providing a commercial advantage that no other health care diagnostics and analytics provider could match. The nature of Fitbit's data set, which tracks Breathing rate, Heart-rate variability, Skin temperature, Oxygen saturation, and Resting heart rate (Fitbit, 2019), is uniquely suited to this use case.
Secondly, various data sets could also be synthesised into a hugely profitable asset in Health Insurance markets, whether monetised through direct involvement (a Health Insurance subsidiary) or by sale to existing Health Insurers affecting Australian citizens through insurance denial or actuarial policy valuations.
Thirdly, Alphabet can leverage Google's online search and advertising market dominance to impact related markets, such as health care diagnostics and analytics, in favour of its health science-related subsidiaries or commercial partners.
Finally, potentially the most significant, would be the ability to leverage machine learning and artificial intelligence on these data sets for monetisation in currently unknowable ways. The combination of this data could potentially solve the "last mile" problem of healthcare by providing virtual agents that can pre-diagnose and consult with patients directly, for instance (Davenport T, Kalakota R, 2019)
AUSTRALIAN LEGAL PERSPECTIVE
Within the Australian Privacy Act 1988, there are only two provisions under section 28 that cover data matching and linkages, which can be effectively circumvented by either anonymisation or notification to a commissioner, if appointed by a minister (Privacy Act, 1988)
We do not believe these are effective safeguards, as a recent study has concluded that 'anonymised' data cannot be anonymous (Rocher, 2019).
We would also ask the ACCC to prohibit the proposed acquisition in accordance with its powers under section 50 of the Competition and Consumer Act 2010 (Competition and Consumer Act, 2010).
RECOMMENDATIONS & CONCLUSION
We put forward that the acquisition of Fitbit by Google is not in the public interest and could be detrimental to the health care of Australians by reasons of Market Dominant stifling of competition, which usually manifests as inferior quality and high potential costs to the public for diagnostic or prognostic services.
A condition of acquisition should stipulate that if the various data sets are synthesised into a health meta-data set, they be heavily regulated by the Federal or State government and that this would be available to all qualified medical providers, albeit at a reasonable market price.
Should this acquisition go forward at the minimum, we would propose that the Privacy laws be expanded to include provisions that would Chinese wall data sets between all Alphabet subsidiaries and have this enforced by a blockchain verification data custody mechanism (Google Patents, 2018). Ironically, this technology is a Google patent.
REFERENCES
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