White House Won't Share Data On Whether It Interfered In AT&T Merger Review

from the something-fishy dept

The late 2017 DOJ announcement that it would be suing to stop AT&T's $86 billion merger with Time Warner turned more than a few heads. While the DOJ insisted that the move was driven entirely by an interest in protecting consumers, the decision was utterly discordant with the Trump administration's often facts-optional assault on consumer protections that have bipartisan support, ranging from net neutrality to basic environmental protections. And the DOJ's sudden concern about the impact of media consolidation was in stark contrast to Trump's FCC, where demolishing decades-old media consolidation rules has been a top priority.

At the time of the lawsuit, many wondered if some other motivations were really at play. After all, Rupert Murdoch had been pushing Trump for more than a year to scuttle the deal for anti-competitive reasons. Time Warner rejected a News Corp. acquisition offer in 2014, and more recently AT&T rebuffed the company's attempt to buy CNN... twice. Time Warner employees quoted at the time believed Murdoch was the driving motivation for the political pressure to quash the deal:

"According to executives I spoke with, the theory is that Murdoch privately encouraged Trump to scuttle the deal as revenge for Time Warner rejecting Murdoch’s $80 billion takeover offer in 2014. “A direct competitor, who was spurned from buying us, perhaps is trying to influence the judicial process? That’s corruption on top of corruption,” one Time Warner executive told me."

One obvious theory is that Murdoch convinced Trump to scuttle the deal as a competitive favor, perhaps with an eye on using the deal to force AT&T to divest CNN to Murdoch as a merger condition. This could have theoretically played well within Trumpland given Trump's personal disdain for critical CNN coverage, something that wouldn't be a problem under Murdoch control. Proving that of course is something else entirely, since it's unlikely that, were it true, anybody involved would put such an arrangement in writing.

Fast forward to last month, when a New Yorker piece on the Trump White House's close ties to News Corporation included this notable but overlooked bit:

"...in the late summer of 2017, a few months before the Justice Department filed suit, Trump ordered Gary Cohn, then the director of the National Economic Council, to pressure the Justice Department to intervene. According to a well-informed source, Trump called Cohn into the Oval Office along with John Kelly, who had just become the chief of staff, and said in exasperation to Kelly, “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened! I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked!”

That prompted House Judiciary Committee Chairman Jerrold Nadler and Representative David Cicilline to demand the White House turn over any correspondence that could help clear things up. But this week, the White House refused, insisting that all correspondence with advisors was protected:

"In a letter dated Monday and released on Tuesday by Cicilline, White House counsel Pat Cipollone declined to release any documents, saying he would not provide “protected communications between the president and his senior advisers that are the very core of the executive branch’s confidentiality interests."

Cipollone added that the Justice Department would be responding “in due course.”

Again, it remains entirely possible that Trump simply wanted the deal spiked out of spite for CNN. But Murdoch's involvement here would explain a lot. The Trump DOJ of course proceeded to do a face plant at trial thanks in part to a Luddite Judge, but also thanks to the DOJ lawyers' failure to mention net neutrality once at trial. It was a rather important contextual omission given AT&T's plans to use both its ownership of "must have" media (like HBO), and its domination of broadband networks anti-competitively. Was the DOJ just clueless or did it just not want to highlight the perils of the Trump FCC killing net neutrality?

It's certainly not out of the realm of possibility that the DOJ tried to stop the deal without any external motivation, but it would certainly be nice to see more data clearing that up one way or another.

Filed Under: antitrust, doj, donald trump, merger
Companies: at&t, cnn, time warner

Court Dismissed Lawsuit Brought Against Social Media Companies Alleging An Anti-Conservative Conspiracy

from the lawsuits-are-the-new-tinfoil dept

Alt-right sideshows Laura Loomer and Larry Klayman sued Twitter, Facebook, Google, and Apple for [checks filing] participating in a government-enabled conspiracy to deplatform Freedom Watch/Loomer in order to further a leftist agenda, etc. etc. ad nauseum. Their complaint alleged violations of the Sherman Act, DC's public accommodation law, and the First Amendment. In support of these allegations, the plaintiffs offered vague theories about "public platforms" and some misreadings of pertinent court precedent. (via Eric Goldman)

After a round of motions, the court has ruled in favor of everyone being sued. The decision [PDF] makes it clear none of the arguments made by the plaintiffs hold water, much less achieve complete coherence. The only thing the court agrees with is that Loomer and Freedom Watch have standing to bring the suit. But standing is only worth something when your arguments have merit.

While they have established standing, the Plaintiffs have failed to state viable legal claims. Consider first their Sherman Act arguments. Section 1 of the Sherman Act states that “[e]very contract, combination . . . , or conspiracy, in restraint of trade or commerce among the 7 several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. “Independent action is not prescribed” by § 1. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 760 (1984). So a valid claim must allege that the Platforms “had a conscious commitment to a common scheme designed to achieve an unlawful objective.” Id. at 764. The Plaintiffs’ claim fails to do this.

True, the Amended Complaint repeatedly states that the Platforms have engaged in a conspiracy or illegal agreement. See, e.g., Am. Compl. 4, 5, 12, 17. But it offers only these conclusory statements to suggest the existence of such an agreement. It includes no allegations, for example, that any of the Platforms met or otherwise communicated an intent to collectively suppress conservative content.

A conspiracy requires the participation of conspirators. But some of the alleged conspirators still played ball with the plaintiffs, which undercuts the conspiracy needed to sufficiently allege antitrust violations.

The Plaintiffs also suggest that the Platforms “have engaged in ‘conscious parallelism’ and in concert mimicked each others’ refusal to deal with Freedom Watch and Ms. Loomer.” Am. Compl. 21. But Freedom Watch admits that it “has and still does pay Google and YouTube, Facebook and the other Defendants for services.” Id. at 11. This admission contradicts assertions of a coordinated “refusal to deal” with the Plaintiffs.

The complaint fares no better when dealing with the second antitrust allegation -- the supposed "monopoly" power of the [checks notes] four defendants being sued. As the court points out, the plaintiffs could have brought some data to their legal fight. Instead, they chose to bring conclusory statements and assertions about "leftist agendas."

[T]he Plaintiffs offer no market share data for any of the Platforms in either the local or worldwide markets for media and news publications. Instead, they make claims about the “social network global market,” the “social networking advertising revenue” market, the “digital ad revenues” market, and the “mobile ad market.” Am. Compl. 18. And though the Amended Complaint states that “59% of Twitter users get their news through the Twitter platform” and that “48% of all American adults [get] their news from Facebook,” it offers no support for the notion that either firm has achieved or tried to achieve monopolization of the nationwide media and news publications market.

The allegations claiming that kicking Loomer/Freedom Watch violated DC's Human Rights Act is just as ridiculous. The court points out the law refers only to physical public spaces and it's not willing to re-litigate a DC circuit opinion and/or rewrite local law on behalf of the plaintiffs.

Finally, the court addresses the most ridiculous of all the lawsuit's assertion: that moderation decisions by social media services somehow violated the plaintiffs' First Amendment rights. The plaintiffs cite the Packingham decision by the Supreme Court, completely misreading that decision's findings. In that case, the court said the government couldn't prevent people from accessing internet services. Loomer and Klayman pretend it actually said platforms can't ban people from accessing their platforms. The district court points out the distinction the plaintiffs are ignoring.

True, in Packingham, the Supreme Court recognized that Facebook and Twitter are among the “most important places (in a spatial sense) for the exchange of views” in society today. 137 S. Ct. at 1735. But the case involved a challenge to a state law that limited the speech rights of certain criminals on these platforms. Id. at 1738. It did not create a new cause of action against a private entity for an alleged First Amendment violation.

The second citation from the plaintiffs isn't any better, and the court again restates the obvious: moderation decisions by private companies are not actions taken by government entities, no matter how many users the platforms accommodate.

[T]he Plaintiffs here allege no nexus between the Platforms’ actions and a function traditionally reserved exclusively to the state. Nor do they contend that the Platforms were designated by the state to perform a governmental operation. Instead, the Amended Complaint focuses on the Platforms’ alleged suppression of conservative political content. It details, for instance, the seemingly disparate treatment of conservative news publishers on Facebook and of conservative commentators on Twitter. Am. Compl. 4-5. But while selective censorship of the kind alleged by the Plaintiffs may be antithetical to the American tradition of freedom of speech, it is not actionable under the First Amendment unless perpetrated by a state actor. Thus, their claim must be dismissed.

This will surely be appealed. But the outcome will be the same. Actions by private companies can't violate rights and the existence of multiple social media platforms simultaneously preemptively defeats most antitrust allegations.

Some conservatives are convinced there's a leftist agenda being played out in social media. But rather than fight it with more speech, they're trying to bring the government in to fix these perceived problems. Whatever floats your speech boat, but remember, any "fixes" you get will remain in place for years -- even if the perceived pendulum swings the other way. The rules that "level the playing field" will come back to bite these agitators in their asses if they ever manage to talk a court or a bunch of legislators into taking their bad ideas seriously.

Filed Under: antitrust, bias, conservative bias, first amendment, free speech, larry klayman, laura loomer, monopoly, social media
Companies: apple, facebook, google, twitter

Do People Want A Better Facebook, Or A Dead Facebook?

from the there's-a-difference dept

The question in the title is one that I actually think is worth discussing, because seeing the reactions to both Mark Zuckerberg's announced plans for greater privacy in Facebook's messaging tools, and to Elizabeth Warren's not very well thought out plan to break up Facebook, it seems quite clear that some people just want the company dead at any cost. Indeed, I've seen a lot of people pointing to this AP article, derisively, about how Facebook's plans for more privacy are all a misleading game because the the company might profit from it.

As if that's a bad thing.

For years, we kept getting told that the reason big companies like Facebook and Google didn't treat user privacy very carefully was because there was profit in scooping up all our data, and that there were no profits in privacy. This was seen as a problem. Yet, now that Facebook is exploring ways to provide more privacy and snoop less, some are still complaining that it might profit from it? Shouldn't we want to see business models that align with protecting user privacy? Shouldn't we want companies to realize that protecting user privacy both can and should be profitable as well? Won't that encourage companies to move away from data surveillance business models into ones that are more respectful to end users?

That's why I highlighted the positive concepts in Zuckerberg's post. Because I think it's good to encourage companies to go in the right direction.

But many people, clearly, do not agree. And, as far as I can tell, the thinking is that they don't care about a better Facebook or a Facebook that protects privacy. All they want is a damaged or (even better) a dead Facebook. And, frankly, that kind of thinking makes no sense to me. Look, I'm all for something better coming along and killing off Facebook that way. I'm all for creative destruction -- especially the kind that destroys big stodgy businesses by giving their customers a much, much better experience. But, focusing just on killing off Facebook for no reason other than "company bad" doesn't make much sense. Like it or not, billions of people use Facebook.

And most people can agree that Facebook has a history of fairly egregious behavior at times, but slamming the company for finally doing something positive, doesn't seem particularly productive. It doesn't encourage other companies to do the right thing either. Sure, it makes sense if your goal is just a "dead Facebook," but arguing for a "dead Facebook" for no other reason than you just don't like Facebook is irrational. I want to see more competition in the marketplace, and I'd love to see Facebook not be as dominant. But I'd also greatly prefer a Facebook that is a good actor, rather than a bad one.

Filed Under: antitrust, big tech, consumers, elizabeth warren, mark zuckerberg, privacy
Companies: facebook

Everyone's Overreacting To The Wrong Thing About Facebook (Briefly) Blocking Elizabeth Warren's Ads

from the again-and-again dept

I've made it clear that I don't think much of Elizabeth Warren's big plan to "break up big tech," which seemed not particularly well thought out and unlikely to accomplish its actual goals. Even so, I certainly cringed upon hearing the news that Facebook had blocked an ad that Warren's team had taken to promote the plan. I mean, come on. Here is Warren, talking about how Facebook is too powerful and can potentially influence policy by choosing what it allows and what it doesn't allow... and Facebook up and hands Warren the most beautiful gift she could ever hope for: blocking her own ad for her policy to break up Facebook. Basically everyone immediately spun the story as Facebook trying to censor this call to break up itself.

It sure looked bad.

Of course, the reality, again, is a lot more nuanced. And, while everyone will ignore this (and I'm sure some people will make bogus accusations in the comments), the reality is that this isn't proof of Facebook's nefarious attempts to censor people it doesn't like or messages it doesn't like. It's proof of the impossibility of content moderation at scale. As Facebook explained, the original ad violated a Facebook policy that had nothing to do with the message it was sending: you're apparently not allowed to use Facebook's logo in an ad:

“We removed the ads because they violated our policies against use of our corporate logo," the spokesperson said. "In the interest of allowing robust debate, we are restoring the ads.”

This is, indeed, true. If you look at Facebook's ad policies it shows the following:

You are, in fact, not allowed to use a Facebook logo in an ad. Warren's ad violated that. Of course, in this context, it looks really, really bad. As Buzzfeed's Ryan Mac noted, this policy -- "which was ostensibly put in place for good reason, is interpreted without nuance."

Yup. Except, here's the thing, as we discussed on our podcast last year, it is literally impossible to invoke nuance when discussing moderation of content at scale. To handle the kind of scale that Facebook and other giant platforms deal with, you need to have thousands (and maybe tens of thousands) of content moderators, and they need to be trained in a manner that they will apply the same rules pretty consistently (which is already an impossible standard). In such a world, there is literally no room for nuance. A system that allows nuance is one that allows arbitrary decision making... leading to just more complaints of inconsistent content moderation.

And, frankly, for all of Warren's attempt to frame this as evidence that Facebook has "too much power" and is "dominated by a single censor," what actually played out suggests why that's inaccurate. These ads weren't getting much attention. Indeed, they had almost no money behind them. According to Buzzfeed, these ads weren't designed to reach a wide audience:

Facebook’s ad archive shows that the four ads had less than $100 in backing each, with three garnering fewer than 1,000 impressions and one garnering between 1,000 and 5,000 impressions.

And then what happened? The ads got taken down, and rather being "censored," the story went crazy viral through other sources, almost as if the Warren campaign maybe found some silly rule to violate just to make this kind of thing happen.... And, of course, the Streisand Effect then guaranteed that for basically a tiny ad spend, a ton more people now became aware of these ads.

I fully expect that the details and nuance here will be ignored by most -- and we'll keep hearing for months (or, possibly, years) about how this somehow "proves" Facebook either "censors critics" or is too dominant and can stifle a message. And, yet, all of the details show something very, very different. Content moderation at scale is impossible to do well, and when Facebook does (for totally different reasons) try to stifle a message (after receiving tons of pressure from people like Elizabeth Warren to better police political ads...), it suddenly became headline news across the political and tech news realms.

Again, there are all sorts of reasons to be concerned about Facebook's market position. And I'd love to see more competition in the market. But, can we at least not jump on the easy narrative when it's wrong, even if it "feels" good?

Filed Under: advertisements, antitrust, censorship, content moderation, elizabeth warren, logos, message, policies, power
Companies: facebook

It Sure Sounds Like Elizabeth Warren Wants To Bring The EU Copyright Directive Stateside

from the maybe-think-on-that-a-bit-more dept

Last week we wrote a critical analysis of Elizabeth Warren's big plan to break up "big tech." As we noted, there was a lot in the plan that was nonsensical, unsupported by the facts or just plain confused. We'll be talking more about some of these ideas a lot over the next few years I imagine (stay tuned), but there was one line in Warren's plan that deserved a separate post: it appears that a part of Warren's big attack on big tech... is to give a massive handout to Hollywood. Here's the line:

We must help America’s content creators — from local newspapers and national magazines to comedians and musicians — keep more of the value their content generates, rather than seeing it scooped up by companies like Google and Facebook.

That may sound rather basic and lacking any details, but what's notable about it is that the language reflects -- almost exactly -- the language used in the EU in support of the absolute worst parts of the EU Copyright Directive (specifically, Article 11 and Article 13). For example, this Q & A page by the Legislative Affairs Committee of the EU Parliament uses quite similar language:

The draft directive intends to oblige giant internet platforms and news aggregators (like YouTube or GoogleNews) to pay content creators (artists/musicians/actors and news houses and their journalists) what they truly owe them;

Why, that sounds quite familiar. Indeed, Warren's announcement even uses "keep more of the value their content generates," which appears to be a reference to the completely made up notion of a "value gap" between what internet platforms make and what they should be paying artists.

It's no secret, of course, that those pushing strongest for Articles 11 and 13 plan to bring them to the US as soon as possible. Indeed, that's why we pointed out that it is quite important for Americans to pay attention to what's happening there -- as it's likely to follow across the Atlantic before too long. The fact that a leading Presidential candidate is already mimicking the language of such controversial European legislation is quite amazing, and suggests a Warren campaign that is very out of touch with what people actually want from their internet.

It's also kind of odd for someone who paints themselves as a "progressive politician" who will stand up "against big business" to be hinting at policies that are obviously designed solely as a wealth transfer mechanism to the giant Hollywood studios, major record labels, and large newspaper publishers. It's difficult to square that position with helping the little guy.

Similarly, one of our big concerns with Articles 11 and 13 is that, by their very nature, they will increase the monopoly issue. They are rules that only make sense if you have a few giant companies on each side negotiating with one another -- rather than a large number of competitors, and a wide variety of independent creators. So, it's doubly bizarre that Warren would include this suggestion in her big post about how terrible monopolies are and how she needs to break up big tech. Copyright-directive style proposals won't do that. They'll simply reinforce the dominant position of the big companies by making it nearly impossible for startups to even enter the market.

Filed Under: antitrust, article 11, article 13, artists, break up big tech, content creators, copyright, elizabeth warren, journalists, value gap
Companies: facebook, google

Elizabeth Warren Wants To Break Up Amazon, Google And Facebook; But Does Her Plan Make Any Sense?

from the tell-us-how-you-really-feel dept

This isn't necessarily a big surprise, given that she's suggested this many times over the past few years, but 2020 Presidential candidate Elizabeth Warren has just laid out her plan for breaking up Amazon, Google and Facebook. It's certainly worth reading to understand where she's coming from, and some of the arguments are worth thinking about -- but much of it does feel like just grandstanding populism in front of the general "anti-big tech" stance, without enough substance behind it.

Twenty-five years ago, Facebook, Google, and Amazon didn’t exist. Now they are among the most valuable and well-known companies in the world. It’s a great story — but also one that highlights why the government must break up monopolies and promote competitive markets.

I find this a very odd way to open this proposal. I don't see how the first sentence supports the second. Indeed, the first sentence would seem to contradict the second. Twenty-five years ago those companies didn't exist, and if you asked people what tech companies would take over the world, you'd get very different answers. Technology is an incredibly dynamic and rapidly changing world, in which big incumbents are regularly and frequently disrupted and disappear. One of my favorite articles to point people to was a 2007 article warning of the power of a giant monopolistic social network that would never be taken down by competition. That social network? MySpace. The article briefly mentions Facebook, but only to note that it "will always be on MySpace's periphery."

Let me make my position clear on all this too: I am always supportive of greater competition, and have always been a huge supporter of disrupting incumbents, because I believe that's how we get to better innovations. But I also believe that this is rarely done by government intervention, and usually comes from new technologies and new innovations in the marketplace. For years now I've been talking about why the real way to "break up" big tech platforms is to push for a world of protocols, rather than platforms, which would push the power out to the ends of the network, rather than keeping them centralized under a single silo with a giant owner.

But I fear that nearly all of these plans to "break up" big tech actually make that harder. It doesn't open up new opportunities for a protocol-based approach, and simply assumes that the world will always be managed by giant platform companies -- just slightly smaller, and highly regulated, ones. And that might actually lead us to a much worse future, one that is still controlled by more centralized systems, rather than more decentralized, distributed protocols where the users have power.

The internet is a constant challenge with lots of new upstarts hoping to disrupt the big guys. And sometimes it works, and sometimes it doesn't. We should be wary of companies with too much power abusing that position to block competition. And I'm certainly open to looking at specific situations where it's alleged that these companies are blocking competitors, but a general position that says breaking up the internet giants seems more opportunistic and headline-grabbing than realistic.

In the 1990s, Microsoft — the tech giant of its time — was trying to parlay its dominance in computer operating systems into dominance in the new area of web browsing. The federal government sued Microsoft for violating anti-monopoly laws and eventually reached a settlement. The government’s antitrust case against Microsoft helped clear a path for Internet companies like Google and Facebook to emerge.

Two things on this. First, Microsoft was clearly engaged in anti-competitive practices that were designed to restrict competition and harm consumers. There was clear evidence of the company proactively seeking to undermine competitors. There is (to date!) little such evidence of the same thing with the big internet companies. It is entirely possible that such evidence will eventually be found, and if that's the case, then it's reasonable to punish the companies for such practices. But, to date, all of the examples people cite as "evidence" of anti-competitive practices by the big internet companies really looks like reasonable steps to improve consumer welfare with their products (i.e., the opposite of what Microsoft was doing in the 90s.)

Second, I know some may disagree, but I find it difficult to believe that the government's antitrust case against Microsoft truly "helped clear a path" for Google and Facebook. After all, that antitrust case fizzled with the DOJ, despite "winning" the case, eventually getting basically no real concessions from Microsoft at all. The argument that some will make was that merely being involved in the antitrust case helped clear the path by (a) distracting Microsoft and forcing it to spend a bunch of resources on fighting the DOJ and (b) by making the company more hesitant to continue its historical practices, but I'm not sure there's much evidence to support either of those claims. Microsoft fell behind Google and Facebook because the company was structurally oblivious to the power of the internet, and when it finally realized the internet was important, really couldn't make the necessary shifts to be a truly internet native company. Yes, it took over the browser market, temporarily, but was easily beaten back when better browsers came on the market.

The story demonstrates why promoting competition is so important: it allows new, groundbreaking companies to grow and thrive — which pushes everyone in the marketplace to offer better products and services. Aren’t we all glad that now we have the option of using Google instead of being stuck with Bing?

Again, this seems to contradict the larger message here. If Microsoft were a stronger company, then, uh, wouldn't that mean Google had less dominance?

Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.

It may be true that they have too much power. But the way to deal with that is by encouraging more innovation. A heavily regulated market... tends not to do that.

As for Warren's actual plan, it has two steps:

First, by passing legislation that requires large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform.

Companies with an annual global revenue of $25 billion or more and that offer to the public an online marketplace, an exchange, or a platform for connecting third parties would be designated as “platform utilities.”

These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.

So, first thing on that: passing legislation is the job of Congress, not the President. And Warren is already in Congress. So if this is part of her Presidential platform, it seems like, maybe she should start by introducing such legislation now, while she's actually in the legislative body.

Second, while "fair, reasonable, and nondiscriminatory dealing with users" sounds nice -- and is used in other things such as FRAND patent licensing -- it's not entirely clear what it truly means in these situations. Everyone likes the words "fair," "reasonable" and "nondiscriminatory," but in the context of users on a platform, does it mean that internet platforms can no longer ban trolls for harassment? Because right now there are a lot of trollish people who are insisting that being banned from Facebook, Twitter or YouTube is unfair, unreasonable and discriminatory. Indeed, this seems like a huge gift to the trolls and grifters who pretend to be "conservative" and then whine when platforms cut them off. Certainly, at the very least this would lead to a huge burst of such lawsuits, as Warren's plan allows basically anyone to sue over this:

To enforce these new requirements, federal regulators, State Attorneys General, or injured private parties would have the right to sue a platform utility to enjoin any conduct that violates these requirements, to disgorge any ill-gotten gains, and to be paid for losses and damages. A company found to violate these requirements would also have to pay a fine of 5 percent of annual revenue.

This is a recipe for insane amounts of litigation -- often vexatious litigation, just seeking to ding a company for being "unfair" in its choices.

Incredibly, this includes "search results." Warren specifically calls out Google search as a "platform utility," and says that under her plan:

Google couldn’t smother competitors by demoting their products on Google Search.

And that sounds good if Google was legitimately "smothering competitors" by "demoting their products on Google search" but there's no evidence that it does. The very nature of search is that Google is expressing its opinion by ranking the search results in the order it thinks best serves you. If it believes that your particular site is not relevant, it's going to demote it. But, under Warren's plan, if you're not showing up at the top of Google results, you can sue for massive damages. In other words, SEO-by-litigation and anyone who isn't happy with where they show up is going to sue.

Indeed, in her plan, she links to the big NY Times article about the site Foundem that has been at the center of various antitrust challenges against Google over the past decade. And, as we wrote all the way back in 2010, Foundem's argument makes no sense. The company made a shopping search engine, and insists that it was anticompetitive that Google's search engine kept dropping Foundem's site in Google's search results further and further. But the reason for that was that when people were searching on Google for products, they wanted links to actual products and not to another search engine. Foundem's search results dropped not because Google suddenly feared competition from Foundem, but because pointing users to another search engine was a bad experience for users. Back in 2009 there was a great analysis that explained why Google downranked Foundem and it had nothing to do with competition, but because Foundem was a crappy link directory (with affiliate codes attached) that was basically just a spam site hoping to live off of Google traffic.

Now imagine if every such spam company could now sue Google for not ranking high enough? Is that really the world we want?

The second part of Warren's plan is to break up already consummated tech merger deals:

Second, my administration would appoint regulators committed to reversing illegal and anti-competitive tech mergers.

Current antitrust laws empower federal regulators to break up mergers that reduce competition. I will appoint regulators who are committed to using existing tools to unwind anti-competitive mergers, including:

Amazon: Whole Foods; Zappos
Facebook: WhatsApp; Instagram
Google: Waze; Nest; DoubleClick

Unwinding these mergers will promote healthy competition in the market — which will put pressure on big tech companies to be more responsive to user concerns, including about privacy.

First of all, I should note that just recently lots of people were totally up in arms over Donald Trump supposedly trying to interfere with the DOJ's analysis of the AT&T / Time Warner merger. And I'm curious if those people feel the same way about a potential President Warren announcing ahead of time -- without any actual investigation by a supposedly independent DOJ -- that it's okay to declare that they should be broken up? It certainly seems like the same form of bogus interference, even if for different reasons. The DOJ is supposed to be an independent agency for a reason. We shouldn't cheer when Donald Trump ignores that and we shouldn't cheer when any other President or Presidential candidate does it either.

Second, while I might find myself much more supportive of a more aggressive DOJ that blocks future acquisitions by these companies, I'm not sure I see how the specifically listed divestiture plans would... do much of anything (with the one possible exception of Google/Doubleclick, which I'll get to). While I'm sure that Amazon, Facebook and Google would grumble about breaking off all of the others, for the most part, all of the listed divestitures involve companies that were mostly left alone and run as separate subsidiaries, which don't necessarily have much to do with any of those companies' core business. Sure, there might be some revenue or growth hits in spinning those off, but it doesn't really change their fundamental ways of doing business. Amazon loses Zappos? Meh. It'll still sell lots of shoes and maybe ramp up its efforts there in a way that ends up making Zappos tough to sustain by itself. Google loses Waze? Well, it already has Google Maps which probably has more users anyway.

Facebook might be a little different, since Instagram and Whatsapp clearly seem to be a key part of Facebook's future strategy, but at least for now they're pretty separate.

The Google Doubleclick one could be a bigger deal, since that is a core part of Google's business. Warren's "plan" talks about Google buying up DoubleClick as if that were done for anticompetitive reasons, and pretending that the DOJ "waved through" the deal while ignoring the monopoly issues, leaving out the fact that it happened way back in 2007 when the marketplace was very, very different, and Google's current position was far from certain. And while Doubleclick, as part of Google, may end up handling a lot of the ad serving market, there are tons of alternatives. The online ad market is crammed with tons and tons of companies. It's not difficult to find confusing maps laying out the state of the market -- and many companies are looking to take down Google Doubleclick, which is often seen as the provider of last resort (it works, but the quality is shit and the payouts are worse).

In other words, this entire plan gets headlines (duh) because so many people are (perhaps reasonably!) angry at the power of big tech companies. But, very little in the actual plan makes much sense. The "platform utility" idea will lead to massive, wasteful, stupid lawsuits. The unwinding of old mergers will involve interfering with an independent agency, and seem unlikely to do much to change the main "concerns" that Warren raises in the first place.

And, again, none of this is to say we shouldn't be concerned about big internet companies with too much power. It's a perfectly reasonable concern, but just because you want to "do something" and "this is something," doesn't mean that it's the something we should do. The way to attack the positions of these big internet companies is to enable more competition -- and you do that by encouraging alternatives in the marketplace. This is why I'm actually hopeful that some of these companies will actually start to explore an idea of moving to protocols, rather than owning the whole platform themselves, or that we'll see new protocols springing up.

Meanwhile, if Warren were truly concerned about "monopolies" and a lack of competition, why isn't her plan looking at the lack of competition in the broadband and mobile markets -- cases where we have legitimate competition problems due to bad regulatory policies going back decades?

Filed Under: antitrust, big tech, breaking up, doj, elizabeth warren, fairness, internet, platform utilities
Companies: amazon, facebook, google

Report Claims Trump Pushed For AT&T Time Warner DOJ Lawsuit To Hurt CNN, Help Rupert Murdoch

from the old-boys-club dept

The late 2017 DOJ announcement that it would be suing to stop AT&T's $86 billion merger with Time Warner turned more than a few heads. While the DOJ insisted that the move was driven entirely by an interest in protecting consumers, the decision was utterly discordant with the Trump administration's often facts-optional assault on consumer protections with bipartisan support, ranging from net neutrality to basic environmental protections. And the DOJ's sudden concern about the impact of media consolidation was in stark contrast to Trump's FCC, where demolishing decades-old media consolidation rules has been a top priority.

At the time of the lawsuit, many wondered if some other motivations were really at play. After all, Rupert Murdoch had been pushing Trump for more than a year to scuttle the deal for anti-competitive reasons. Time Warner rejected a News Corp. acquisition offer in 2014, and more recently AT&T rebuffed the company's attempt to buy CNN... twice. Time Warner employees quoted at the time believed Murdoch was the driving motivation for the political pressure to quash the deal:

"According to executives I spoke with, the theory is that Murdoch privately encouraged Trump to scuttle the deal as revenge for Time Warner rejecting Murdoch’s $80 billion takeover offer in 2014. “A direct competitor, who was spurned from buying us, perhaps is trying to influence the judicial process? That’s corruption on top of corruption,” one Time Warner executive told me."

No hard evidence has proven any such connection, though if it were true, it's hard to think anybody involved in such an effort would put of of it in writing.

Another unproven theory generally gained more widespread public acceptance: that Trump had pressured the DOJ to intervene in the deal because of Time Warner-owned CNN's critical coverage of Trump. That obviously raised a lot of First Amendment questions about whether the President was pressing a government agency to help hamstring or otherwise silence a critic.

Trump and the DOJ repeatedly stated that Trump played no role in the the pressure for the suit. And Trump himself repeatedly stated he was "not going to get involved" in the case. Yet a New Yorker piece this week quotes sources who say that promise was never actually adhered to:

"...in the late summer of 2017, a few months before the Justice Department filed suit, Trump ordered Gary Cohn, then the director of the National Economic Council, to pressure the Justice Department to intervene. According to a well-informed source, Trump called Cohn into the Oval Office along with John Kelly, who had just become the chief of staff, and said in exasperation to Kelly, “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened! I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked!"

Cohn, a former president of Goldman Sachs, evidently understood that it would be highly improper for a President to use the Justice Department to undermine two of the most powerful companies in the country as punishment for unfavorable news coverage, and as a reward for a competing news organization that boosted him. According to the source, as Cohn walked out of the meeting he told Kelly, “Don’t you fucking dare call the Justice Department. We are not going to do business that way."

Whether that was the end of it isn't clear. I'll note that many consumer advocates I've spoken to over the last few years believe that the DOJ under Makan Delrahim genuinely believed it was doing the right thing in challenging the suit. That of course doesn't mean Trump and Murdoch didn't try hard all the same. The piece also quotes former government insiders like Blair Levin, who ponders whether Murdoch was an architect of Trump's ire toward the deal:

"Blair Levin, the former F.C.C. official, told me, “There may be innocent explanations.” But, he adds, “Trump famously said you’re going to get sick and tired of winning, and that may not be true for the rest of America, but it sure is true of Murdoch.” He says of Murdoch, “He’s an incredibly cunning political player. He leaves no fingerprints. He’s been in the game of influencing government behavior to his benefit longer than most of us have been alive."

Of course hunches, theories, and anonymous sources aren't proof. And it remains possible that the DOJ under Makan Delrahim was just suddenly and genuinely concerned about vertical integration. Still, that flies in the face of everything the Trump administration (and particularly his friend Ajit Pai at the FCC) has stood for as they've worked tirelessly to make it easier for giant companies and broadcasters to merge. And it seems entirely possible that having been rebuffed by AT&T twice, Murdoch hoped the DOJ would win its case and force AT&T to sell off CNN to News Corporation. All under the guise of consumer protection.

If this all really was Murdoch gamesmanship, it ended in a remarkable face plant. The DOJ not only lost its initial case challenging the merger, it recently lost on appeal. In part because decades of lobbying have weakened antitrust, making it harder than ever for DOJ lawyers to make even the most obvious of points (in this case that AT&T would quickly raise its competitors prices for must have content, something that occurred before the ink deal was even dry).

The DOJ also failed because it refused to draw attention to net neutrality. The elimination of net neutrality by the Trump FCC opened the door wide to AT&T abusing its role as network operator to hamstring its competitors, most notably by only applying usage caps and overage fees on users that use competing streaming services. But the DOJ didn't mention net neutrality once during the trial, likely in part because it would have only highlighted the FCC's culpability in making this megamerger even more problematic than it already was.

Congress is still investigating whether politics and personal gain played a starring role in the Trump administration's sudden, uncharacteristic concern about monopoly power. One gets the sneaking suspicion there will be more details forthcoming.

Filed Under: antitrust, doj, donald trump, gary cohn, john kelly, mergers, rupert murdoch
Companies: at&t, cnn, fox, time warner

Yes, Actually, There Is A Lot Of Good News In Zuckerberg's New Plans For Facebook

from the surprisingly-interesting dept

On Wednesday morning, there was a flurry of discussion and articles concerning Mark Zuckerberg's giant new post, laying out a new strategy for Facebook. Having first read some of the commentary -- nearly all of it someone on the spectrum from "critical" to "mocking," I expected the actual post to have lots of problems, or just be pointlessly vague, like too much of Facebook's public communications over the past few years. However, having read through the whole thing, it's actually a lot more thoughtful, nuanced, and detailed than I expected -- and there's a lot that's important in there that we should be encouraging, rather than mocking. There are still some questions raised, but rather than the kneejerk "but Facebook is pure evil" response some like to default to, I thought it might be useful to look more closely at the different aspects of what Zuckerberg is saying, where it might be really good, where it might be problematic, and where more info is necessary.

At the very least, rather than simply attacking absolutely everything that Facebook says, there is value in encouraging steps in the right direction.

Messaging Integration:

A key part of the announcement is one that was first reported by the NY Times back in January: a plan to integrate the messaging features on Facebook's three key platforms: Facebook Messenger, Whatsapp, and Instagram. From Zuck's post:

People want to be able to choose which service they use to communicate with people. However, today if you want to message people on Facebook you have to use Messenger, on Instagram you have to use Direct, and on WhatsApp you have to use WhatsApp. We want to give people a choice so they can reach their friends across these networks from whichever app they prefer.

As soon as this was hinted back in January, the cynical response to this was that it was really just an effort to make a possible breakup of the company harder. There is a (potentially reasonable!) school of thought around antitrust that even if it makes no sense to break up the big internet platforms' key business areas, it could make sense to break off the various other services they've included. Indeed, a key line that many people noticed in the announcement just last week of a new FTC taskforce on competition was that it would conduct "reviews of consummated technology mergers," which many people took to mean looking back at things like whether or not it was appropriate to allow Facebook to have purchased Instagram and Whatsapp in the first place.

While it may be true that such integration could make any possible breakup more difficult, it also is actually a good thing. Or, rather it could be depending on how Facebook does it. It is true that it's not great that we now have so many communication data silos. In the old days, we had a nice open standard in email, and everyone could and did put their own spin on it, and users could choose different flavors of email -- but they could all communicate with each other. The same was true on mobile with SMS -- though, in that case, carriers got greedy and started charging way too much for SMS. And that helped create the rise of all of these third party apps for messaging one another. A more integrated approach would be great. And it's good that Facebook at least seems to be thinking about expanding it out beyond its own platforms, saying it could connect to SMS as well:

We plan to start by making it possible for you to send messages to your contacts using any of our services, and then to extend that interoperability to SMS too. Of course, this would be opt-in and you will be able to keep your accounts separate if you'd like.

That's a good start, but I don't think it goes far enough. If Zuckerberg/Facebook were truly committed to interoperability across communications platforms, why not actually create a new standard for it, rather than still going the proprietary approach? And, yes, I'm already familiar with the relevant xkcd:

But that doesn't take away from the point. If anyone could create a new standard that might be more widely adopted, it would be Facebook. And, it might help get at another point in Zuckerberg's post...

Spreading End-to-End Encryption:

Another key point in Zuckerberg's announcement that we should absolutely celebrate is that full end-to-end encryption is a key part of his plan:

There is a growing awareness that the more entities that have access to your data, the more vulnerabilities there are for someone to misuse it or for a cyber attack to expose it. There is also a growing concern among some that technology may be centralizing power in the hands of governments and companies like ours. And some people worry that our services could access their messages and use them for advertising or in other ways they don't expect.

End-to-end encryption is an important tool in developing a privacy-focused social network. Encryption is decentralizing -- it limits services like ours from seeing the content flowing through them and makes it much harder for anyone else to access your information. This is why encryption is an increasingly important part of our online lives, from banking to healthcare services. It's also why we built end-to-end encryption into WhatsApp after we acquired it.

I saw some people claiming that Mark was really just talking about encryption of data in transit, but it's clear that's not true at all. He's talking about full end-to-end encryption where even Facebook won't have access to your messages. This should be widely supported and celebrated, because we need more use of real encryption. Facebook adopting it even more seriously than it already has (in Whatsapp and parts of Facebook Messenger) would be good. It would, again, be even better if this was driving a new standard that anyone could tap into and which wasn't just owned by Facebook. But it's a huge step in the right direction and should be encouraged absolutely.

There are some who are still arguing that this is a "trick" because it's possible (likely?) that Facebook will retain the metadata of who is communicating with whom, but that is part of the fundamental nature of most messaging systems these days -- and is true for email providers as well. It feels a bit ridiculous to hold Facebook to a standard far beyond what any other messaging service has. And, frankly, encrypting content is a really big deal and should be supported. Attacking Facebook, even when it does the right thing, seems entirely counterproductive.

A second area of concern about this is the headfake nod that Zuckerberg makes to the idea that encryption could hinder law enforcement. As we've been discussing for years, there's little evidence to actually support that. Law enforcement has access to more data than ever before in history about people, and the examples of encryption truly hindering a legal investigation are very, very limited. The reality is that encryption is what makes people safer: it makes them safer from snooping from stalkers, abusive ex's, authoritarian governments, and more. Zuckerberg tries to walk a balancing line between all of this and talk about "tradeoffs" but I wish he'd just come out more strongly on pointing out that there is no real tradeoff here. True end-to-end encryption increases both privacy and security.

In the last year, I've spoken with dissidents who've told me encryption is the reason they are free, or even alive. Governments often make unlawful demands for data, and while we push back and fight these requests in court, there's always a risk we'll lose a case -- and if the information isn't encrypted we'd either have to turn over the data or risk our employees being arrested if we failed to comply. This may seem extreme, but we've had a case where one of our employees was actually jailed for not providing access to someone's private information even though we couldn't access it since it was encrypted.

At the same time, there are real safety concerns to address before we can implement end-to-end encryption across all of our messaging services. Encryption is a powerful tool for privacy, but that includes the privacy of people doing bad things. When billions of people use a service to connect, some of them are going to misuse it for truly terrible things like child exploitation, terrorism, and extortion. We have a responsibility to work with law enforcement and to help prevent these wherever we can. We are working to improve our ability to identify and stop bad actors across our apps by detecting patterns of activity or through other means, even when we can't see the content of the messages, and we will continue to invest in this work. But we face an inherent tradeoff because we will never find all of the potential harm we do today when our security systems can see the messages themselves.

Reducing Permanence:

I have less to say about Zuckerberg's belief that content should, in certain cases, expire over time. I get the arguments for it, and recognize that there are some communications that are worth preserving forever, and others that, by their nature, feel like they should be ephemeral. But, to some extent, that's a market question in terms of what users actually want (and we're already seeing some of that demand for ephemeral messaging in the initial success of Snapchat and, of course, Facebook's and Instagram's clones of Snapchat with both platforms' "Stories" feature). There are good arguments for having ephemeral messaging and there are good arguments for enabling permanent content, and having more options is always a good thing.

All sorts of communications historically have been ephemeral, and some of that allows people to be more true to themselves (and perhaps a bit less "performative"). At the same time, deleting digital messages still feels odd. Still, if people have more choices, and they can opt-in to the appropriate setup for however they want to share content, we can let the market decide, and that's good. Though, again, it might be nice if Facebook were willing to step things up and move to more of an approach of providing a protocol for this kind of thing, rather than being the silo in charge of everything.

Concerns and Opportunities:

I did want to address some of the concerns I've seen some people raise about this announcement, but since I think some of them could be turned into opportunities, I'm going to combine both things into this one section.

Antitrust: I discussed this one above a bit. Integrating all of its own systems raises some more competitive questions around anti-trust. I do think making sure that those systems are end-to-end encrypted and not feeding the Facebook data collection beast is actually a good sign, but if Facebook wanted to do the right thing (again, as mentioned) it should focus on building an open standard that others could adopt to make it not just Facebook's own silo and proprietary system, but an open standard, a la the protocols, instead of platforms concept I've been focused on lately (more on that soon).

Harassment: A few people have pointed out that there have been a lot of recent controversies concerning private groups on WhatsApp leading to mob violence in places like India or spreading disinformation in Brazil. And, they argue, nothing in these new plans seems designed to solve that. That might or might not actually be true. First of all, as we've pointed out in the past, spreading disinformation is more of a human problem, rather than a technology problem, and it's a bit bizarre to blame the technology for the disinformation. Second, as Kevin Bankstron rightly points out, disinformation is spread over email all the time, and no one demands that Google fix it. And, indeed, the very same people would likely have a shit fit if Google suddenly jumped in and started trying to block your crazy aunt's latest viral nonsense email forward:

But, perhaps more to the point of dealing with those kinds of issues on such a platform, if Facebook were to move to more of a "protocols" approach to messaging, rather than controlling everything, they might then be able to open up the system so that end users themselves could make use of third party apps or filters to help them decide if messages were legit or not, rather than leaving it entirely up to Facebook. Still, I'd leave this as an open question. As Professor Kate Starbird noted on Twitter, people appear to be more susceptible to misinformation and disinformation from smaller social circles, and the more that that's hidden away, the more difficult it is for people to identify what's happening. Again, that may be true, but that's also already true of small social circles meeting up at a coffee shop or bar or restaurant.

Business Model: Wired wrote up a big thing suggesting that the big thing that was "missing" in this announcement (or, as they put it, the "crucial" thing) was the business model. Obviously, right now, Facebook's business model involves sucking up a bunch of data about its users in order to push highly targeted ads at those users. With fully end-to-end encrypted messaging, Facebook doesn't get access to that content and can't use it for targeted advertising.

In a later interview that Wired' editor-in-chief Nick Thompson did with Mark Zuckerberg about all of this, Zuckerberg pointed out that they already don't use message content for advertising:

One is that we aren’t really using the content of messages to target ads today anyway. So we weren’t planning on doing that. So it’s not like building a system and making it end-to-end encrypted and now we can't see the messages is really going to hurt ads that much because of the way we were already thinking about that.

But I do think there's another separate story that also broke in the NY Times last week that also caused a lot of snickering and mockery, but could be very much tied to this: and it's that Facebook is experimenting with cryptocurrency. I'm actually working on another post about why I think that's significant in ways that most people are missing, and part of it is in enabling new privacy-supportive business models. But, you'll need to stay tuned for that post...

On the whole, lots of people are skeptical about this for good reasons. Zuckerberg himself notes that the company doesn't have a good track record on "privacy-focused" aspects:

I understand that many people don't think Facebook can or would even want to build this kind of privacy-focused platform -- because frankly we don't currently have a strong reputation for building privacy protective services, and we've historically focused on tools for more open sharing.

But the line right after that strikes a nerve with me as well:

But we've repeatedly shown that we can evolve to build the services that people really want, including in private messaging and stories.

Many people forget this, but Facebook has completely shifted its focus a few times, including switching from a more privacy focused service to a more open one. Indeed, almost exactly a decade ago I actually (incorrectly!) predicted that Facebook would have trouble becoming a more open content sharing service, because its DNA was about being a closed system for more private interactions with friends. I was wrong -- though, part of that was Facebook being a bit careless in how it treated content that had originally been more restricted, leading to some of the problems it's facing today. But the ability of Facebook to completely shift like that is notable. Not many companies successfully do that, and I'd argue that Facebook has actually done it a few times.

I had recently discussed on our podcast the question of whether or not Zuckerberg understands the Innovator's Dilemma better than most other big tech CEOs, and this message again has me thinking that, at the very least, he's much more open to it than most CEOs. Rather than just supporting a core product into oblivion, he's legitimately thinking about the big shifts that could change the entire company and trying to get ahead of them. That doesn't mean he'll succeed, of course. Indeed, there are all sorts of ways this could flop. And, certainly, Facebook has made a whole bunch of missteps on a variety of fronts over the years, so they shouldn't get any benefit of the doubt.

But I will admit that Zuckerberg's detailed writeup was a lot more thorough, thoughtful and careful than I had expected given all the snark I saw about it. And given my personal preference that we move to a world of open protocols, over closed platforms, I found it encouraging that even Facebook might make a move in that direction, even if it doesn't go nearly as far as I would eventually like to see. Still, considering that the alternative was a more locked up platform with Facebook even more in control and with more access to data, a step in this direction should be encouraged, rather than outright mocked.

Filed Under: antitrust, competition, encryption, integration, mark zuckerberg, permancne, platforms, privacy, protocols, social networks
Companies: facebook, instagram, whatsapp

The FTC Probably Doesn't Need A New 'Big Tech' Task Force. It Just Needs To Do Its Job

from the dog-and-pony-show dept

This week the FTC turned a few heads by announcing that the agency would be creating a new "task force" designed specifically to monitor large technology companies. According to the agency's announcement, this new task force will feature approximately 17 staff attorneys whose mandate will be to more closely examine the competitive tech landscape, and take action if necessary. According to the FTC, this includes taking a closer look at both pending mergers, and large technology mergers that have already happened.

"In addition to examining industry practices and conducting law enforcement investigations, the Technology Task Force will, among other things, coordinate and consult with staff throughout the FTC on technology-related matters, including prospective merger reviews in the technology sector and reviews of consummated technology mergers."

Some, like former Chief FTC technologist Ashkan Soltani, took the announcement to mean that the FTC might just start taking antitrust more seriously in the wake of numerous embarrassing enforcement face plants on this front (like the government's comedic inability to address the glaringly obvious anticompetitive impact of AT&T's latest merger):

Others were justly more skeptical. After all, examining the health of the tech market, contemplating the impact of mergers, and taking actions to address market imbalance and fraud is the FTC's entire job to begin with. And, given the FTC often fails utterly to do that job (especially in the telecom sector), a lot of folks were quick to wonder if this task force was a bit of a show pony:

"I’m scornful of the new seating arrangements, because the FTC has consistently proven they do not want to wield power,” says Matt Stoller, a fellow at the Open Markets Institute, an antimonopoly think tank that has called for a breakup of Facebook. “They want to hold hearings. They want to get their friend economists and antitrust lawyers to fly into DC and talk to each other. They don’t want to do their No. 1 job, which is to police markets for unfair and anticompetitive behavior.”

While I'm not sold on the need to break up Facebook, it's a solid point that the FTC should maybe focus on doing the job it already has, and layering additional bureaucracy on a broken apparatus may not be the best path forward. The FTC routinely does nothing to address problematic sectors like telecom, where anti-competitive megamergers and ripping off customers is an almost daily occurrence. For example, the FTC could easily crack down on the bogus fees companies like Comcast use to jack up your advertised rate using its power under the FTC Act, yet I've never seen the agency so much as fart in the direction of the problem when bigger companies are involved.

While there's certainly a lot of solid complaints to be made about "big tech" giants like Facebook and Google (especially on the privacy front), it's also pretty obvious that a lot of the recent criticisms of "big tech" aren't being made in good faith. Claims of "censorship" of conservatives, for example, usually don't hold up under scrutiny, and are often driven by folks who wouldn't be facing these problems if they didn't behave like legendary assholes on the internet in the first place.

Similarly a lot of the recent criticism of big tech is coming from telecom giants eager to saddle Silicon Valley giants with unnecessary regulation in a bid to hoover up a bigger slice of the online advertising pie. On the one hand, telecom giants like AT&T and Verizon just got done convincing the FCC to effectively neuter itself, leaving any remaining oversight in the lap of an FTC they know won't (and often can't) hold them accountable. At the same time, telecom lobbyists like Mike Powell have spent the last few years drumming up frothy calls to regulate "big tech," intentionally ignoring their own anticompetitive ambitions:

"Our governmental authorities need to get a handle on what kind of market power and harm flow from companies that have an unassailable hold on large pools of big data, which serve as barriers to entry, allowing them to dominate industries throughout the economy. For years, big tech companies have been extinguishing competitive threats by buying or crushing promising new technologies just as they were emerging. They dominate their core business, and rarely have to foreclose competition by buying their peers. Competition policy must scrutinize more rigorously deals that allow dominant platforms to kill competitive technologies in the cradle."

You're to ignore that telecom monopolies engage in all of this exact behavior, yet government regulators from both parties routinely turn a blind eye to it. And while Comcast desperately wants to be seen as in line with tech giants like Apple, you'll notice that here, telecom has somehow mystically excused itself from the table of accountability, despite being arguably the most problematic sectors in all of "tech" thanks to their actual, growing monopoly over internet access.

Yes, if the task force genuinely results in the FTC finally taking its mandate seriously, enforcing antitrust, and policing terrible behavior, all the better. But given the recent climate, it's probably wise to be wary of this effort being little more than a show pony scripted by sectors and individuals not entirely arguing in good faith.

Filed Under: antitrust, competition, consumer protection, ftc, monopolies, oversight, tech, telcos

Good For The World, But Not Good For Us: The Really Damning Bits Of The Facebook Revelations

from the anti-competitive,-anti-consumer-issues dept

As expected, UK Parliament Member Damian Collins released a bunch of documents that he had previously seized under questionable circumstances. While he had revealed some details in a blatantly misleading way during the public hearing he held, he's now released a bunch more. Collins tees up the 250 page release with a few of his own notes, which also tend to exaggerate and misrepresent what's in the docs, and many people are running with a few of those misrepresentations.

However, that doesn't mean that all of these documents have been misrepresented. Indeed, there are multiple things in here that look pretty bad for Facebook, and could be very damaging for it on questions around the privacy protections it had promised the FTC it would put in place, as well as in any potential anti-trust fight. It's not that surprising to understand how Facebook got to the various decisions it made, but the "move fast and break things" attitude also seems to involve the potential of breaking both the law and the company's own promises to its users. And that's bad.

First, the things that really aren't that big a deal: a lot of the reporting has focused on the idea that Facebook would give greater access to data to partners who signed up to give Facebook money via its advertising or other platforms. There doesn't seem to be much of a bombshell there. Lots of companies who have APIs charge for access. This is kind of a standard business model question, and some of the emails in the data dump show what actually appears to be a pretty thoughtful discussion of various business model options and their tradeoffs. This was a company that recognized it had valuable information and was trying to figure out the best way to monetize it. There isn't much of a scandal there, though some people seem to think there is. Perhaps you could argue that allowing some third parties to have greater access Facebook has a cavalier attitude towards that data since it's willing to trade access to it for money, but there's no evidence presented that this data was used in an abusive way (indeed, by putting a "price" on the access, Facebook likely limited the access to companies who had every reason to not abuse the data).

Similarly, there is a lot of discussion about the API change, which Facebook implemented to actually start to limit how much data app developers had access to. And the documentation here shows that part of the motivation to do this was to (rightfully) improve user trust of Facebook. It's difficult to see how that's a scandal. In addition, some of the discussions involve moving specific whitelisted partner to a special version of the API that gives them access to more data... but in a way that the data is hashed, providing better privacy and security to that data, while still making it useful. Again, this approach seems to actually be beneficial to end users, rather than harmful, so the attempts to attack it seem misplaced -- and yet take up the vast majority of the 250 pages.

The bigger issues involve specific actions that certainly appear to at least raise antitrust questions. That includes cutting off apps that recreate Facebook's own features, or that are suddenly getting a lot of traction (and using the access they had to users' phones to figure out which apps were getting lots of traction). While not definitively violating antitrust laws, that's certainly the kind of evidence that any antitrust investigator would likely explore -- looking to see if Facebook held a dominant position at the time of those actions, and if those actions were designed to deliberately harm competitors, rather than for any useful purpose for end-users. At least from the partial details released in the documents, the focus on competitors does seem to be a driving force. That could create a pretty big antitrust headache for Facebook.

Of course, the details on this... are still a bit vague from the released documents. There are a number of included charts from Onavo included, showing the popularity of various apps, such as this:

Onavo was a data analytics company that Facebook bought in 2013 for over $100 million. Last year, the Wall Street Journal broke the story that Facebook was using Onavo to understand how well competing apps were doing, and potentially using that data to target acquisitions... or potentially to try to diminish those competing apps' access. The potential "smoking gun" evidence is buried in these files, but there's a short email on the day that Twitter launched Vine, its app for 6-second videos, where Facebook decides to cut off Twitter's access to its friend API in response to this move, and Zuckerberg himself says "Yup, go for it."

Now... it's entirely possible that there's more to this than is shown in the documents. But at least on its face, it seems like the kind of thing that deserves more scrutiny. If Facebook truly shut down access to the API because it feared competition from Vine... that is certainly the kind of thing that will raise eyebrows from antitrust folks. If there were more reasons for cutting off Vine, that should come out. But if the only reason was "ooh, that's a potential competitor to our own service," and if Facebook was seen as the dominant way of distribution or access at the time, it could be a real issue.

Separately, if the name Onavo sounds familiar to you, that might be because earlier this year, Facebook launched what it called a VPN under the brand name Onavo... and there was reasonable anger over it because people realized (as per the above discussion) that Onavo was really a form of analytics spyware that charted what applications you were using and for what. It was so bad that Apple pulled it from its App Store.

The other big thing that comes out in the released documents is all the way at the end, when Facebook is getting ready to roll out a Facebook app update on Android that will snoop on your SMS and call logs and use that information for trying to get you to add more friends and for determining what kinds of content it promotes to you. Facebook clearly recognized that this could be a PR nightmare if it got out, and they were worried that Android would seek permission from users, which would alert them to this kind of snooping:

That is bad. That's Facebook knowing that its latest snooping move will look bad and trying to figure out a way to sneak it through. Later on, the team is relieved when they realize, after testing, that they can roll this out without alerting users with a permission dialog screen:

As reporter Kashmir Hill points out, it's notable that this "phew, we don't really have to alert users to our sketchy plan to get access to their logs" came from Yul Kwon, who was designated as Facebook's "privacy sherpa" and put in charge of making sure that Facebook didn't do anything creepy with user data. From an article that Hill wrote back in 2015:

The face of the new, privacy-conscious Facebook is Yul Kwon, a Yale Law grad who heads the team responsible for ensuring that every new product, feature, proposed study and code change gets scrutinized for privacy problems. His job is to try to make sure that Facebook’s 9,199 employees and the people they partner with don’t set off any privacy dynamite. Facebook employees refer to his group as the XFN team, which stands for “cross-functional,” because its job is to ensure that anyone at Facebook who might spot a problem with a new app — from the PR team to the lawyers to the security guys — has a chance to raise their concerns before that app gets on your phone. “We refer to ourselves as the privacy sherpas,” says Kwon. Instead of helping Facebook employees scale Everest safely, Kwon’s team tries to guide them safely past the potential peril of pissing off users.

And yet, here, he seems to be guiding them past those perils by helping the team hide what's really going on.

This is also doubly notable for Kashmir Hill who has been perhaps the most dogged reporter on the creepy levels to which Facebook's "People You May Know" feature works. Facebook has a history of giving Hill totally conflicting information about how that feature worked, and these documents reveal, at least, the desire to secretly slurp up your call and SMS records in order to find more "people you might know" (shown as PYMK in the documents).

One final note on all of this. I recently pointed out that Silicon Valley really should stop treating fundamental structural issues as political issues, in which they just focus on what's best for the short-term bottom line, and should focus on the larger goals of doing what's right overall. In a long email included in the documents from Mark Zuckerberg, musing thoughtfully on various business model ideas for the platform, one line stands out. Honestly, the entire email (starting on page 49 of the document) is worth reading, because it really does carefully weigh the various options in front of them. But there's also this line:

If you can't read that, it's a discussion of how it's important to enable people to share what they want, and how enabling other apps to help users do that is a good thing, but then he says:

The answer I came to is that we’re trying to enable people to share everything they want, and to do it on Facebook. Sometimes the best way to enable people to share something is to have a developer build a special purpose app or network for that type of content and to make that app social by having Facebook plug into it. However, that may be good for the world but it’s not good for us unless people also share back to Facebook and that content increases the value of our network. So ultimately, I think the purpose of platform – even the read side – is to increase sharing back into Facebook.’

I should note that in Damian Collins' summary of this, he carefully cuts out some of the text of that email to frame it in a manner that makes it look worse, but the "that may be good for the world, but it's not good for us" line really stands out to me. That's exactly the kind of political decision I was talking about in that earlier post. Taking the short term view of "do what's good for us, rather than what's good for the world" may be typical, and even understandable, in business, but it's the root of many, many long term and structural problems for not just Facebook, but tons of other companies as well.

I wish that we could move to a world where companies finally understood that "doing good for the world" leads to a situation in which the long term result is also "good for us," rather than focusing on the "good for us" at the expense of "good for the world."

Filed Under: access, anti-competitive, antitrust, api, business models, damian collins, mark zuckerberg, privacy
Companies: facebook