Thursday, August 6th, 2020

The tech titans appeared before Congress—now what?

Last week, the chief executives of the four major tech platforms—Google, Amazon, Apple, and Facebook—appeared before Congress (virtually, at least) as part of a year-long investigation into whether antitrust regulators need to take action against any or all of them for anti-competitive behavior. Was the hearing mostly a sideshow, or was it a sign that Congress is planning significant changes to the rules that apply to these digital behemoths? And if regulations are going to change, or antitrust action is going to proceed, what could—or should—that look like? How can regulators apply laws that were designed a century ago for railroads and oil companies to digital networks whose products are ephemeral and cost nothing? In an attempt to answer some of these questions, we’ve been interviewing a number of journalists, academics, and other experts on antitrust, politics, and technology using CJR’s Galley discussion platform.

Our first interview was with Zephyr Teachout, an associate professor of law at Fordham University, a former Democratic candidate for governor of New York, and the former national director of the Sunlight Foundation. She said going into the hearing she felt “like a teenager on Christmas, ready to be pleased and ready to be horribly disappointed,” but came away thinking that the members of the committee posed some tough questions to the four tech titans, and even managed to draw out some “revelations,” as she put it—such as an admission from Jeff Bezos, Amazon’s chief executive, that sellers who use Amazon’s shipping services are more likely to get access to the coveted “buy box” at the top of the page with recommended purchases. Teachout also said that the way Apple treats app developers renewed her commitment to antitrust regulation: “The 30 percent commission is just on its face highway robbery,” she said, adding that it “proves how monopoly is theft.”

David Dayen, the executive editor of The American Prospect and author of a new book entitled “Monopolized: Life in the Age of Corporate Power,” said that he felt the hearing exposed a number of obvious antitrust violations, and that the Federal Trade Commission and Department of Justice could have taken action to prevent some of this conduct but chose not to. Why? A lack of political will, he said. “Many of the top officials at FTC and DoJ Antitrust have ties to corporate law firms and have worked for the large companies they are now supposed to regulate,” Dayen said. “It’s kind of staggering how many conflicts there are.” Sandeep Vaheesan, legal director at the Open Markets Institute, said the hearing was an important reassertion of Congress’s power to regulate markets. The legislative body “has been silent for so long on these questions,” he said. “It felt like a throwback to an earlier time when Congress took its oversight function and matters of market governance seriously.”

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Not everyone agreed that the hearing was a success, or that it proved regulation is necessary. Scott Rosenberg, technology editor at Axios, said the members of the committee showed the four tech giants competing, but didn’t come close to proving that any of them have a monopoly. “A lot of the conduct that the members of Congress were appalled at was conduct that’s neither surprising nor illegal—unless you’ve got a monopoly,” Rosenberg said. “Showing evidence of rough elbows or price-gouging or underselling isn’t the point. Proving that a company has a monopoly is the point, and the committee just didn’t tackle that.” Dipayan Ghosh, who runs the Digital Platforms and Democracy Project at Harvard and is a former advisor to Facebook and the Obama administration, argued that there is plenty of evidence these companies have monopolies “and that they are perpetuating harms in price to society, quality of service rendered to society, and the pace of market innovation.”

So what happens now? Matt Stoller, research director at the American Economic Liberties Project, said that breaking up Facebook or forcing it to sell off Instagram or WhatsApp is a real possibility. An acquisition is illegal if the effect of this combination “may be substantially to lessen competition, or to tend to create a monopoly,” he said, and such mergers can be reversed. Vaheesan, meanwhile, said that while breaking up any or all of the tech titans is a possibility, Congress should also look at implementing “conduct remedies,” including forcing the platforms to allow interoperability with other services. This could weaken the advantages that Facebook and others enjoy from network effects, he said, and allow for rival social media platforms to grow. And the FTC could also “use its consumer protection powers to restrict targeted advertising and data collection,” he said.

Here’s more on tech and antitrust:

  • Harm: An antitrust case has to show that a monopolist has caused harm to consumers and/or the market, and Ghosh argues that Facebook meets this test, even though antitrust cases typically look at consumer prices to determine harm. “It has gobbled up smaller competitors and we haven’t seen much innovation of note in social media; the [intake] of data and attention occurs at a monopolistic rate as evidenced by the historic profit margin of the company; and the extreme amount of noise and dirtiness in the media environment in the form of disinformation, misinformation, hate speech, algorithmic bias, hateful conduct online, and other areas illustrates the deficiencies in quality of service.”
  • Apple: Vaheesan said that while Apple seemed to get less attention from the antitrust hearing, there’s an argument to be made that it deserves to be looked at as well, because of the way it monopolizes the mobile app economy. “Apple’s antitrust issues are more discrete so it often flies under the radar in these debates but it deserves close scrutiny too,” he said. “It wields great power through the App Store, deciding which apps are sold and on what terms to iPhone users [and] it prohibits iPhone app developers from selling their apps directly to iPhone owners or through a rival intermediary. In other words, it has set up the App Store as a bottleneck for the distribution of iPhone apps.”
  • Disruption: Will Oremus, a technology writer with One Zero, said that perceptions of the tech giants have changed fairly dramatically in less than a decade, from seeing them as plucky innovators to seeing them as aggressive monopolists. Facebook bought Instagram in 2012, he said, and that “was one of the last years when it was still possible to believe that the Internet was such a dynamic space that today’s leader in a given space would be disrupted at any moment, and so you should have a light touch on antitrust because the market was topsy-turvy anyway.” Despite that, Oremus said even at that time, it was obvious that Facebook was dominant and Instagram was a competitor.

 

Other notable stories:

  • The New York Times reported that its digital revenue exceeded its print revenue for the first time, but part of the reason for that change could be that the newspaper’s print-advertising revenue fell by 55 percent in the most recent quarter compared to the same quarter last year, a result of the decline in advertising due to the coronavirus pandemic (print subscription revenue also fell). Digital-advertising revenue did somewhat better, only dropping 32 percent in the quarter. The Times laid off 68 staffers in June, most of them in the advertising and marketing department. The company said it now has almost six million digital subscribers.
  • Pete Hamill, a journalist who some called the quintessential New York writer, passed away on Wednesday at the age of 85. A high school dropout who said he was searching for a future after years of academic frustration, Navy life and graphic design work, Hamill walked into the city room of The New York Post in 1960 and worked his way up to the top job there, and later became the editor of its competitor the Daily News. He worked as a foreign correspondent for The Post and The Saturday Evening Post, as a writer for Newsday, The Village Voice, Esquire and other publications. Along the way he also drew attention for his romantic liaisons with famous women like Jacqueline Kennedy Onassis, Shirley MacLaine, and Linda Ronstadt.
  • Facebook removed a post from Donald Trump’s official account. It was a video clip from a Fox News interview in which Trump falsely said that children are “almost immune” to COVID-19. A Facebook spokesperson told NBC News that the post was removed because the video “includes false claims that a group of people is immune from COVID-19, which is a violation of our policies around harmful COVID misinformation.” Twitter temporarily restricted the official Trump-campaign account’s ability to post until a tweet containing the video was removed. 
  • Former MSNBC producer Ariana Pekary wrote a personal essay explaining why she felt she had to quit her job at the news network. “My colleagues are very smart people with good intentions,” she wrote. “The problem is the job itself. It forces skilled journalists to make bad decisions on a daily basis.” The focus on ratings, Pekary said, “blocks diversity of thought and content because the networks have incentive to amplify fringe voices and events, at the expense of others… all because it pumps up the ratings.”
  • James Yeh writes for CJR about how protesters, organizers, and citizen-journalists are staying informed and informing others about the ongoing Black Lives Matter protests, and whether this moment has changed their views on traditional media. “To be honest with you, I’m not even watching the news,” said Joseph Blake, a forty-eight-year-old club promoter, barber, and Portland native. “They’re going to give you their story. I’m out here—I am the news for our people. I’m doing a lot of live-streaming for people who can’t get down there to see. I give it to ’em rough and raw.”
  • A study of Washington journalists and how they interact with each other on Twitter shows that they not only spend a lot of time talking to others like themselves, but also tend to congregate in even smaller “micro-bubbles.” That could mean that Beltway journalism “may be even more insular than previously thought,” according to the authors of the study, Nikki Usher and Yee Man Margaret Ng, both of whom are journalism professors at the University of Illinois at Urbana-Champaign. The researchers say that their findings “raise additional concerns about vulnerability to groupthink and blind spots.”
  • TikTok, the Chinese-owned social networking app that is currently the subject of a debate over whether it will be banned in the US or forced to sell its US operations to Microsoft, announced that it has tightened its rules regarding misinformation, expanded its partnerships with fact-checking services like Politifact and Lead Stories, and is working with working with with the US Department of Homeland Security’s Countering Foreign Influence Task Force. The company also said it is working with other “industry-leading threat assessment platforms.”
  • The fall of one of Hungary’s last major independent media outlets “has exposed how Brussels lacks both the political will and the legal tools to help preserve a vibrant free press in EU member countries,” Politico writes. The vast majority of reporters and editors at Hungary’s largest news site, Index, quit their jobs in July, following the dismissal of their editor-in-chief, who had warned that the publication was at risk of losing its independence, says Politico. It says the demise of Index comes two years after some 400 media organizations were consolidated into a conglomerate that dominates the media landscape with coverage sympathetic to Prime Minister Viktor Orbán.
  • The public broadcaster in the Netherlands got rid of advertising “cookies,” those tiny pieces of code that are used by media sites to track the behavior of users in order to target them with ads. But instead of falling, the company’s digital revenue has risen dramatically since January of this year, according to a report in Wired magazine, even after the economic shock of the coronavirus pandemic.

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