How Looming Privacy Regulations May Strengthen Facebook and Google

In Europe and the United States, the conventional wisdom is that regulation is needed to force Silicon Valley’s digital giants to respect people’s online privacy. But new rules may instead serve to strengthen Facebook’s and Google’s hegemony and extend their lead on the internet. That’s because wary consumers are more prone to trust recognized names with their information than unfamiliar newcomers. And the laws may deter start-ups that do not have the resources to comply with the rules from competing with the big companies. “Regulations help incumbents,” said Avi Goldfarb, a marketing professor at the University of Toronto who has studied the effect of privacy regulations on competition.