SAGE Case Study: How Should A Company Adapt Its Strategy in an Evolving Privacy and Antitrust Environment?

The Client: A telecommunications company with operations in California

The Business Question: How should we adapt our strategy in an evolving privacy and antitrust environment?

Our client competed in a digital advertising space dominated by a few companies. Executives wanted to answer two intersecting questions: Would an upcoming referendum on bolstering California privacy law – meant to protect consumer data – end up strengthening the position of market leaders? And, if so, were antitrust enforcers likely to act in a way that would affect the competitive capability of our client as well as those few companies at the top? Answering those questions would help the client decide whether and how to alter its business strategy.

The Context

• Privacy advocates were urging voters in 2020 to adopt the California Privacy Rights Act, and polls suggested strong voter support. (Voters approved the law that fall. It took effect in 2023.)
• The California Privacy Rights Act sought to strengthen the California Consumer Privacy Act (CCPA), which marked a big shift in data privacy by giving consumers more control over the personal information businesses collect.
• The CCPA had solidified the position of market leaders in digital advertising. The California Privacy Rights Act seemed poised to further strengthen their dominance, raising the prospect of greater scrutiny from antitrust authorities.
• The California Privacy Rights Act promised to amend and amplify the CCPA by establishing additional consumer rights, imposing more guardrails around digital advertising and creating a state privacy-protection agency, among other things.

The Solution

Our team:

• Synthesized data, privacy, consumer protection and competition perspectives to show how an evolving legal landscape would likely affect the market.
• Analyzed risk under state and federal privacy regimes and shared prevailing regulatory views on protecting consumer data at the state and federal levels.
• Assessed the likelihood that voters would pass the California Privacy Rights Act and that other states would adopt similar laws.
• Evaluated the likelihood that antitrust enforcement agencies would increase scrutiny of market leaders or act in a way that could affect our client’s competitive capability.
• Weighed the advantages of market leaders, such as their ability to take a single view of consumers across web properties, integrate acquisitions, invest heavily in technical infrastructure and spend on R&D, against historical, structural, regulatory and strategic factors affecting our client’s competitive capabilities. Also shared known data infrastructure and policies of market leaders and related competition risks.
• Applied extensive industry knowledge and experience to analyze how factors such as the demise of third-party cookies would affect the relative strength of market competitors in the medium term.
• Collaborated with in-house decision-makers to develop options to maximize data enablement in light of likely changes to privacy law, such as aligning around a competitive strategy, investing tactically, and urging state, federal and sector changes to remove technical and regulatory impediments to strategic growth. Also outlined likely costs and benefits of these options with assistance from a strategy, economics, and technology consulting firm.

The Value

Company leaders were wrestling with questions at the intersection of privacy, data and antitrust enforcement and shifting consumer attitudes. We shared the past, current and likely future trajectory of privacy laws to contextualize the push for the California Privacy Rights Act, with a focus on how these trends had affected and would affect the client’s business and competitive capabilities in the digital advertising ecosystem. We also drew on our antitrust experience and knowledge to assess the likelihood of enforcement attention on market leaders.

The Result

After a thorough risk assessment, the company decided to sell a business most affected by California privacy law, building on a long relationship between that business and the buyer. The sale enabled our client to invest time and resources elsewhere.