Consumer Financial Protection Bureau Director Rohit Chopra expressed concern over big tech companies efforts to offer financial services, given the wealth of information they have already collected on Americans online and shopping behavior during a congressional hearing Thursday.
“Our country is turning into a bit of a surveillance state when it comes to some these tech companies,” Chopra told the Senate Banking Committee, noting that companies like Facebook /zigman2/quotes/205064656/composite FB -2.33% , Google /zigman2/quotes/205453964/composite GOOG -2.67% , Amazon /zigman2/quotes/210331248/composite AMZN -2.12% and Apple /zigman2/quotes/202934861/composite AAPL -3.17% have the ability to “combine browsing information, geolocation information, health information” and more to understand and predict consumers’ economic decisions.
The comments come a week after the CFPB ordered Google, Apple, Facebook, Amazon Square /zigman2/quotes/205989440/composite SQ -1.66% and Paypal /zigman2/quotes/208054269/composite PYPL -0.49% to turn over information about their payment products and practices to further an investigation into how big tech companies are leveraging consumer data.
Chopra expressed concerns not just over Americans privacy, but how the use of such data could make competing with these companies difficult for small companies or startups.
“This is actually a major concern when it comes to how small businesses…can meaningfully compete,” Chopra said. “I am concerned that [big tech companies] may have the incentive to, at their whim, kick off participants based on their own business incentives.”
He also expressed concern that the dominance of these platforms will “freeze up capital formation” because venture capitalists and other investors will decline to fund companies that seek to compete with the dominant tech platforms.
Last week, the director pointed to the market for payment services in China, dominated by Alipay and WeChat, to illustrate the risks posed to consumers by tech giants in the U.S. entering the financial services space. These services “are deeply imbedded into the lives of the Chinese public, combining messaging, e-commerce and payment functionality into super-apps,” the regulator said in a statement. “In such a market consumers have little choice but to use these apps and little market power to shape how their data is used.”