Mind Your Own Business: Protecting Proprietary Third-Party Information From Digital Platforms

Vendors must expose proprietary information, such as sales data or logistic information, to digital platforms like Amazon or Facebook in order to reach customers on those platforms. This gives digital platforms the ability to use vendor proprietary information to create, price, and market rival products, enabling platforms to unfairly benefit from the work, business acumen, and risks taken by third-party vendors. Although accusations against Amazon have received the most press coverage, the problem goes well beyond Amazon and undermines competition broadly. 

The paper proposes a solution modeled on Section 222 of the Communications Act (47 U.S.C. §222), which imposes requirements on telecommunications carriers to protect “customer proprietary network information,” or “CPNI.” The paper proposes a new draft statute to create a “platform CPNI” rule that would:

• For the first time, define “digital platform” in statutory language;
• Limit the use -- not the collection -- of vendor proprietary information by digital platforms to the purpose stated, absolutely prohibiting platforms from using this information for marketing or strategy related to rival products; and,
• Limit the use of buyer proprietary information to prevent ‘reverse engineering’ vendor proprietary data.