The GOP Knows That The Dem's Antitrust Efforts Have A Content Moderation Trojan Horse; Why Don't The Dems?

from the getting-played-like-a-fiddle dept

Last summer, I believe we were among the first to highlight that the various antitrust bills proposed by mainly Democratic elected officials in DC included an incredibly dangerous trojan horse that would aid Republicans in their "playing the victim" desire to force websites to host their disinformation and propaganda. The key issue is that many of the bills included a bar on self-preferencing a large company's own services against competitors. The supporters of these bills claimed it was to prevent, say, an Apple from blocking a competing mapping service while promoting Apple Maps, or Google from blocking a competing shopping service, while pushing Google's local search results.

But the language was so broad, and so poorly thought out, that it would create a massive headache for content moderation more broadly -- because the language could just as easily be used to say that, for example, Amazon couldn't kick Parler off it's service, or Google couldn't refuse to allow Gab's app in its app store. You would have thought that after raising this issue, the Democratic sponsors of these bills would fix the language. They have not. Bizarrely, they've continued to issue more bills in both the House and the Senate with similarly troubling language. Recently, TechFreedom called out this problematic language in two antitrust bills in the Senate that seem to have quite a lot of traction.

Whatever you think of the underlying rationale for these bills, it seems weird that these bills, introduced by Democrats, would satisfy the Republicans' desire to force online propaganda mills onto their platforms.

Every “deplatformed” plaintiff will, of course, frame its claims in broad terms, claiming that the unfair trade practice at issue isn’t the decision to ban them specifically, but rather a more general problem — a lack of clarity in how content is moderated, a systemic bias against conservatives, or some other allegation of inconsistent or arbitrary enforcement — and that these systemic flaws harm competition on the platform overall. This kind of argument would have broad application: it could be used against platforms that sell t-shirts and books, like Amazon, or against app platforms, like the Google, Apple and Amazon app stores, or against website hosts, like Amazon Web Services.

Indeed, as we've covered in the past, Gab did sue Google for being kicked out of the app store, and Parler did sue Amazon for being kicked of that company's cloud platform. These kinds of lawsuits would become standard practice -- and even if the big web services could eventually get such frivolous lawsuits dismissed, it would still be a tremendous waste of time and money, while letting grifters play the victim.

Incredibly, Republicans like Ted Cruz have made it clear this is why they support such bills. In fact, Cruz introduced an amendment to double down on this language and make sure that the bill would prohibit "discriminating on the basis of a political belief." Of course, Cruz knows full well this doesn't actually happen anywhere. The only platform that has ever discriminated based on a political belief is... Parler, whose then CEO once bragged to a reporter how he was banning "leftist trolls" from the platform.

Even more to the point, during the hearings about the bill and his amendment, Cruz flat out said that he was hoping to "unleash the trial lawyers" to sue Google, Facebook, Amazon, Apple and the like for moderating those who violate their policies. While it may sound odd that Cruz -- who as a politician has screamed about how evil trial lawyers are -- would be suddenly in favor of trial lawyers, the truth is that Cruz has no underlying principles on this or any other subject. He's long been called "the ultimate tort reform hypocrite" who supports trial lawyers when convenient, and then rails against them when politically convenient.

So no one should be surprised by Cruz's hypocrisy.

What they should be surprised by is the unwillingness of Democrats to fix their bills. A group of organizations (including our Copia Institute) signed onto another letter by TechFreedom that laid out some simple, common-sense changes that could be made to one of the bills -- the Open App Markets Act -- to fix this potential concern. And, yet, supporters of the bill continue to either ignore this or dismiss it -- even as Ted Cruz and his friends are eagerly rubbing their hands with glee.

This has been an ongoing problem with tech policy for a while now -- where politicians so narrowly focus on one issue that they don't realize how their "solutions" mess up some other policy goal. We get "privacy laws" that kill off competition. And now we have "competition" laws that make fighting disinformation harder.

It's almost as if these politicians don't want to solve actual issues, and just want to claim they did.

Filed Under: antitrust, app markets, competition, content moderation, democrats, discrimination, gop, open app markets, ted cruz

Can We At Least Make Sure Antitrust Isn't Deliberately Designed To Make Everyone Worse Off?

from the a-small-request dept

For decades here on Techdirt I've argued that competition is the biggest driver of innovation, and so I'm very interested in policies designed to drive more competition. Historically this has been antitrust policy, but over the past decade or so it feels like antitrust policy has become less and less about competition, and more and more about punishing companies that politicians dislike. We can debate whether or not consumer welfare is the right standard for antitrust -- I think there are people on both sides of that debate who make valid points -- but I have significant concerns about any antitrust policy that seems deliberately designed to make consumers worse off.

That's why I'm really perplexed by the push recently to push through the “American Innovation and Choice Online Act” from Amy Klobuchar which, for the most part, doesn't seem to be about increasing competition, innovation, or choice. It seems almost entirely punitive in not just punishing the very small number of companies it targets, but rather everyone who uses those platforms.

There's not much I agree with Michael Bloomberg about, but I think his recent opinion piece on the AICOA bill is exactly correct.

At the heart of the bill is an effort to prevent big tech companies from using a widespread business practice called self-preferencing, which is generally good for both consumers and competition. Think of it this way: An ice-cream parlor makes its own flavors and sells other companies’ flavors, too. Its storefront window carries a large sign advertising its homemade wares. In smaller letters, the sign mentions that Haagen-Dazs and Breyers are available, too. Should Congress force the ice-cream store owners to advertise Haagen-Dazs and Breyers as prominently as their own products?

That’s essentially what this bill would force a handful of the largest tech companies to do. For instance, Google users searching the name of a local business now get, in their search results, the option of clicking a Google-built map. But under the bill’s requirements, the search results would likely have to exclude the Google map. Similarly, Amazon would likely be prevented from promoting its less-expensive generic goods against the biggest brand names.

Lots of businesses offer configurations of products and services in ways that are attractive to customers, often for both price and convenience. Doing this can allow companies to enter — and potentially disrupt — new markets, to the great advantage of customers.

Yet the bill views such standard business conduct as harmful. It would require covered companies — essentially Amazon, Apple, Google, Facebook and TikTok — to prove that any new instance of preferencing would “maintain or enhance the core functionality” of their business. Failure to comply could lead to fines of up to 15% of a company’s total U.S. revenue over the offending period.

Now, I think there's a very legitimate argument that if a dominant company is using its dominant position to preference something in a manner that harms competition and the end user experience, then that can be problematic, and existing antitrust law can take care of that. But this bill seems to assume that any effort to offer your own services is somehow de facto against the law.

And whether or not that harms these companies is besides the point: it will absolutely harm the users and customers of these companies, and why should that be enabled by US competition policy? The goal seems to be "if we force these companies to be worse, maybe it will drive people to competitors," which is a really bizarre way of pushing competition. We should drive competition by encouraging great innovation, not limiting how companies can innovate.

Even if you don't think that the "consumer welfare" standard makes sense for antitrust, I hope most people can at least agree that any such policy should never deliberately be making consumers worse off.

Filed Under: amy klobuchar, antitrust, competition, consumer welfare, innovation, michael bloomberg

States' 3rd Amended Antitrust Complaint Against Google Looks A Lot More Damning

from the pay-attention-to-this-one dept

There are lots of different antitrust actions currently ongoing against Facebook and Google, with varying degrees of quality. From the beginning, the strongest one has been the lawsuit a bunch of states -- led by Texas -- filed against Google. When it was filed, I noted that there were sections that were heavily redacted which had the potential to be pretty damning, but the redactions made it hard to tell. I also found some of the non-redacted bits questionable, as they suggested a complete misunderstanding of some aspects of the technology. Last Friday, Texas filed its third attempt at a complaint and it reveals a lot more about the stuff that was redacted in the earlier filings -- and I'll now say that this is the most serious, and the most damning, of all the antitrust lawsuits out there. How Google responds to the lawsuit will be extremely interesting and worth watching. Given the errors in the original filing, it's possible that there are errors here too, but if what Texas is alleging in this latest version of the lawsuit are accurate, then Google should be in trouble.

The filing is 242 pages long, and much of it gets deep, deep into the weeds about the online advertising market. But there are two key parts that stand out as potentially very important and very damning for Google (and, partly, for Facebook as well). Most of the news coverage has focused on the claim that Sundar Pichai and Mark Zuckerberg signed off on a special deal to combat header bidding -- a form of getting around Google's position in the ad market. When the header bidding claims first came out, I found them questionable, as the early claims suggested that Google was abusing its position to kill off header bidding, which seemed ludicrous to me, because I'm contacted probably half a dozen times a day by ad companies offering their header bidding solutions for me to use. But, the details now revealed suggest Google really did work with Facebook to try to suffocate the header bidding market:

Facebook understood these stakes as well. Internal Facebook communications indicate that Facebook’s March 2017 announcement was intended to signal Facebook’s willingness to support header bidding. Facebook knew that Google would see its participation in header bidding as a major threat. Evidently, Facebook was executing a planned long-term strategy—“18 month ‘header bidding’ strategy to minimize “[the Exchange Bidding] tax”—by threatening to expose the hidden costs Google charges publishers.

Google and Facebook entered into formal negotiations shortly thereafter. Both sides recognized that Facebook’s leverage came from its critical role in supporting header bidding. As a Facebook document from February 2, 2017 memorialized, “What Google wants: To kill header bidding (us baptizing their product will help significantly).” Elsewhere, Facebook employees summarized an earlier meeting between the parties discussing header bidding and Exchange Bidding (“EBDA”), “We discussed the EBDA product they’re building. Both parties (FB and G) were candid about why header bidding exists and that EBDA’s sole reason for existence is to kill it.” In an October 30, 2017 email, senior Facebook executive [REDACTED] discussed the proposed Google-Facebook agreement and explained to another Facebook executive, [REDACTED] , “they want this deal to kill header bidding.” Google put the matter just as bluntly, explaining internally in 2017 that the goal of partnering with Facebook would be to “protect” Google’s “leadership position in 3P [third party] ad buying/selling.” To that end, the endgame with Facebook was to “collaborate when necessary to maintain status quo.” The “status quo,” in this case, was an unlawfully obtained ad server monopoly and an ad exchange charging many multiples over the competition.

As negotiations proceeded, Google began to accept that Facebook’s price for abandoning header bidding would require Google to share some of the auction advantages it had previously taken for itself. In an August 9, 2018, internal Google presentation, one slide averred that if Google could not “avoid competing with FAN” in the trade for third-party inventory, then it would instead collaborate with Facebook to “build a moat.” Google thus preferred to share a slice of its monopoly profits with a potential entrant rather than risk reducing its monopoly power.

The prospect of cooperating rather than competing with Google was enticing for Facebook too. As internal Facebook documents reveal, Facebook believed that partnering with Google was “relatively cheap compared to build/buy and compete in zero-sum ad tech game.” Facebook identified “build/buy ad tech” as the company’s second-best option but noted that entering the market would have required “huge [engineering] and services investment, and patience for sales cycle.” Compared to the time and expense of building a new technology and competing on the merits, entering an unlawful deal with Google not to do those things was an attractive option.

Facebook’s Chief Operating Officer [REDACTED] was explicit that “[t]his is a big deal strategically” in an email thread that included Facebook CEO [REDACTED] When the economic terms had taken their form, the team sent an email addressed directly to CEO [REDACTED]: “We’re nearly ready to sign and need your approval to move forward.” Facebook CEO [REDACTED] wanted to meet with COO [REDACTED] and his other executives before making a decision.

The ultimate outcome of these negotiations was a September 2018 Google-Facebook agreement signed by Philipp Schindler, Senior Vice-President and head of Google advertising sales and operations, and Ms. [REDACTED] Facebook’s Chief Operating Officer and member of Facebook’s Board of Directors, who herself was one-time head of Google advertising. Google CEO Sundar Pichai also personally signed off on the terms of the deal.

Two quick asides before getting into the meat of this: First, I have no clue why the obvious names of Mark Zuckerberg and Sheryl Sandberg are redacted here. They are the CEO and COO of Facebook and there's no mystery in that. It seems like a really bizarre choice to redact them when their titles are named, and even Sandberg's former job is mentioned. Second, (and maybe this explains the redactions?), it sure feels like a similar suit about this very same deal may now be on the horizon for Facebook.

As for the substance, again it will be interesting to see Google's response on this, but from this description, it sure looks like pretty garden variety anti-competitive behavior that involved two giants in the marketplace working together to limit the impact of a system that would chip away at the market they mostly controlled. If this is what happened and this is what the deal was about, then this lawsuit looks entirely legit.

The second really interesting bit in the case is the part I would argue is even more damning against Google, and if it's shown to be true, I hope that Google is significantly fined and banned from this practice. Politico's antitrust reporter Leah Nylen did a wonderful job breaking down the claims about how Google's "Project Bernanke" supposedly worked and if this is what Google did, it sure sounds like straight up deceptive practices, bordering on fraud -- and Google should probably need to pay out a lot of money to publishers who had Google ads on their site at the time.

At issue are the different types of auctions, and Google is accused of misrepresenting what kind of auction it was running. As the lawsuit explains:

By way of background, “first-price” and “second-price” auctions are common types of auctions used in various industries and contexts. Generally speaking, in a first-price auction, the buyer pays the amount of their own winning bid; and as the name implies, the buyer in a secondprice auction pays the amount of the second-highest bid (sometimes with a negligible additional amount, e.g., one penny). A “third-price” auction, therefore, is one in which the buyer pays the amount of the third-highest bid. As addressed below, Google’s secret Bernanke program surreptitiously switched Google’s AdX exchange from a second-price auction to a third-price auction on billions of impressions per month.

This may sound a bit confusing, but as Nylen points out, in a first price auction -- the kind most people usually think of as an auction -- the highest bidder ("the first price") is what is paid. As Nylen says: "So, if Henry bids $19, Alice bids $18 and Scott bids $9 — Henry wins and pays $19." A second price-auction or a Vickrey auction means that in the above scenario the winner pays the second highest bid -- i.e., Henry wins, but pays $18. This is the way that eBay auctions work, and some argue it provides a more efficient solution for getting bidders to bid the real value they put on the item up for bid.

From here, it's not that difficult to figure out what a "third-price" auction means -- in the above scenario it would mean that Henry wins, but only pays $9. It's hard to see a situation in which that actually makes sense, but here the complaint accuses Google's "Bernanke program" of effectively shifting between 2nd and 3rd party auctions within the same auctions and collecting all of the remaining cash. In the above example, the way this would work is that Henry bids $19, Alice bids $18, and Scott bids $9 in order to, let's just say, put an ad on Techdirt. Again, according to the complaint, Bernanke would effectively ignore the 2nd bid on the publisher side, telling us that the second bid was actually Scott's $9 bid, and therefore claiming to us (or any publisher) that the "clearing" price was $9 -- and it would then take its 20% fee of $1.80. But for the advertiser, Google would still show them the actual top three bids, telling them that $18 was the clearing price. So now, rather than Techdirt (the publisher) get the $14.40 we should be getting, we'd be getting just the $7.20, and Google would walk away with $10.80 (rather than the $3.60 it claimed it would take).

That's all a bit confusing, but this graphic in the complaint makes it clearer:

Now, those numbers are pretty stark, and the amounts would be quite different if you had 3 bids that were all pretty close, but the complaint notes that Google's own internal data showed that Bernanke lowered publishers' revenue by 40%.

Google examined some of the effects of its secret Bernanke program, finding that it drops any given publisher’s revenue by upwards of 40 percent. Stating the obvious, one Google employee observed: “Bernanke is powerful.” Publishers had no idea Google was dropping second highest bids and impacting their revenues in this way.

That certainly looks like a combination of deceptive practices and something close to fraudulently taking money that was supposed to go to publishers. At the very least, this revelation is absolutely going to lead to some publishers filing a separate civil suit against Google demanding their cut, and possibly having it turn into a class action lawsuit. Hell, I'd bet advertisers are going to file a similar suit noting that they overpaid for ads as well.

Given some of the other information in the complaint, there are some hints as to how Google got to this point. The description above sounds pretty damn evil, but there's a kind of dumb and dangerous internal logic. Google realized that it was starting to lose ad auctions to 3rd party systems quite a lot, and the original point of Bernanke was apparently not to steal money from publishers, but to have Google start winning more auctions. So, the initial idea behind Bernanke seems to have been to inflate bids to try to win more auctions -- and in those cases you can see a kind of logic to dropping certain bids from the auction as they were "artificially" inflated in order to win more auctions. Though... that's still pretty sketchy.

Again assuming this is accurate, this is, to put it mildly, fucked up. It's just out and out greed by the ad team, and it completely fucked the advertising market for tons of news organizations that relied on such things. I mean, as described in the complaint, this is so evil it's almost stupid. Google would have been much better off simply admitting that it was taking a much larger cut of the ad revenue than cooking up this ridiculous scheme.

So, yeah, I'll be reading the answer to this amended complaint carefully to see if there's some alternative explanation, but based on what's in this complaint, this is not just the strongest antitrust claim against Google, but one that Google should very much lose. There are lots of claims out there of bad behavior by various tech companies, and much of it is misrepresented or misleading. But if this is accurate, it's incredibly damning and Google should be in serious trouble for it.

Filed Under: ads, antitrust, deceptive practices, price fixing, project bernanke, texas

Josh Hawley Was The Democrats' Partner In Trying To Regulate Big Tech; Then The Public Realized He Was A Fascist

from the there-goes-that-plan dept

Karl recently wrote about how Congress' antitrust efforts are flailing (even with the plan to hold a hearing on Senators Klobuchar & Grassley's antitrust bill) and one reason why the efforts have stumbled may be Senator Josh Hawley's decision to really show off his fascist side.

We've been pointing out the serious problems with Hawley and his policy ideas since long before January 6th of 2021. Even though it was fairly clear from early on that his hypocritical posturing and populism were little more than a cynical attempt to get the Trumpian base to back his massive ego and ambition for a potential Presidential run, a bunch of Democrats were happy to cynically embrace Hawley because he was "anti-big tech" and willing to hate all the same people that some Democratic Senators hated as well. Of course, January 6th and Hawley's now infamous raised fist appear to have resulted in Democrats realizing that even if he hates Mark Zuckerberg too, that doesn't mean he's worth working with.

Now the Washington Post has noted that since January 6th, Democrats suddenly were no longer willing to partner with Hawley on bills that regulate "big tech," which is a bit of a problem, since he was their Republican co-sponsor on a variety of "bipartisan" legislation.

By this time last Congress in January 2020, Hawley had partnered with Democrats to lead at least eight letters on tech issues, including with Sens. Richard Blumenthal (D-Conn.), Ed Markey (D-Mass.), Mazie Hirono (D-Hawaii) and Dick Durbin (D-Ill.), then the Senate minority whip, according to a review by The Technology 202. The topics spanned from data privacy to kids’ online safety to potential risks posed by tech firms with links to China.

But a year into this Congress, during which his top issues have only gained prominence, Hawley hasn’t led any bipartisan letters on tech policy issues that his office has publicly released, according to a review. All of the new tech bills he’s introduced this past year have been either a solo or Republican-only effort. And of those four bills he co-led early last Congress, only one has been reintroduced — without him on it.

The article claims that this means that Hawley's "once-glowing prominence in the debate has faded," though I question that premise. He's still out there bashing tech in stupid, nonsensical ways. He's just doing it on Fox News and to an increasingly ignorant base who still thinks that he can magically ignore the 1st Amendment and force Twitter to allow idiots to spew nonsense. The fact that he can't actually advance any legislation is kind of meaningless here. Possibly (and this is good) it slows some of the legislation down, but Hawley has never been interested in actually passing legislation in the first place. It was always about getting his name in lights among the right people. And he got his headlines from Democrats who were willing to look the other way on Hawley's populist/fascist tendencies when it was politically convenient for them. And now Hawley doesn't need them any more to get the kind of headlines he needs.

The real thing for me is looking at just how cynical Democrats were to join up with Hawley on this prior to last January 6th. It was no secret -- certainly not in and around the Senate -- about Hawley's populist/fascist views, and his willingness to stomp all over principles or rights to feed his ambition. But they were willing to do so because it helped them out. It's good that they're apparently no longer willing to team up with Hawley to give him any kind of legislative "win" on this topic, but it remains ridiculous that they were ever willing to do so in the past -- back before Hawley was so commonly and publicly associated with the insurrection.

Filed Under: antitrust, big tech, bipartisanship, josh hawley

FTC's Second Antitrust Attempt Against Facebook Gets Past The First Hurdle

from the slightly-better dept

As you'll recall, at the end of 2020, the FTC filed an antitrust case against Facebook. Last summer, the district court dismissed the case, noting that the complaint was "legally insufficient," and didn't really back up its central claims. Based on that, the FTC went back to the drawing board and filed an amended complaint last August. As we noted, the amended complaint was better than the first one -- which was heavy on narrative, but little on support to back it up. The amended complaint had more in it, though we still felt that the market definition was odd, and some of the complaint seemed to undermine other parts of it.

Either way, Facebook again asked the court to dismiss it, but this time, they're letting the case move forward. Basically, the court says that on a second pass, the FTC has actually provided at least some support of the central arguments in the complaint:

Eagerly accepting such invitation, the FTC has filed an Amended Complaint containing significant additions and revisions aimed at addressing the shortcomings identified in the Court’s prior Opinion. The core theory of the lawsuit remains essentially unchanged. The Commission continues to allege that Facebook has long had a monopoly in the market for PSN services and that it has unlawfully maintained that monopoly via two types of actions: first, by acquiring competitors and potential competitors — most notably, Instagram and WhatsApp — that it believed were well situated to eat into its monopoly; and second, by implementing and enforcing policies that prevented interoperability between Facebook and other apps that it viewed as nascent threats. The facts alleged this time around to fortify those theories, however, are far more robust and detailed than before, particularly in regard to the contours of Defendant’s alleged monopoly.

The court more or less says that Facebook may still prevail in the end -- noting that the FTC will "face a tall task down the road in proving its allegations," but, at this stage of the game, the allegations are enough to allow the case to move on to the next stage.

The court does reject one part of the FTC's case -- that Facebook's interoperability policies were anti-competitive:

The Court will not, however, allow the allegations surrounding Facebook’s interoperability policies (also known as the Platform policies) to move forward; they founder for the same fundamental reasons as explained before: Facebook abandoned the policies in 2018, and its last alleged enforcement was even further in the past.

Given the beefed up filing, this isn't a huge surprise. I still think that the FTC's case here remains surprisingly weak. I honestly expected something a lot more damning than the weird market definition and the allegations -- many of which are presented in ways that could easily be removing important context (such as reasons for actions that were not anti-competitive, but for the benefit of users).

Either way, the case is about to get a lot more expensive for Facebook, and even if the odds are that it would still prevail in the end, it might try to settle the case to avoid having to go through the process. That said, with Lina Khan leading the FTC, I'm guessing the FTC is willing to press this case forward as far as possible, even if it means an eventual loss in court...

Filed Under: antitrust, competition, discovery, ftc, market definition, motion to dismiss
Companies: facebook, meta

Big Tech 'Antitrust Reform' Agenda Sags, Revealing Mostly Empty Rhetoric

from the big-plans-go-nowhere dept

Much of last year was dominated by talk about how there was a "new, bipartisan coalition" of folks interested in "reining in big tech" via "antitrust reform." The GOP in particular, which has, for forty years, largely embraced and encouraged monopolization and consolidation at every turn (see telecom as a shining example) was repeatedly portrayed as "very serious about antitrust reform this time." At least as it applied to "big tech." There are countless U.S. business sectors where monopolies and anticompetitive behaviors are rampant that Congress simply couldn't give any less of a shit about, whether it's banking, health care, telecom, airline travel, or energy.

For years, experts pointed out that U.S. antitrust reform had grown toothless and frail, our competition laws needed updating in the Amazon era, and "are consumers happy?" (the traditional consumer welfare standard) doesn't actually measure all aspects of potential harm in complex markets. You can look to U.S. sectors like telecom to see the work that needed doing. Good news! We were, the Congress, the press, and the punditry insisted, entering a bold new era of "antitrust reform" with "bipartisan support." At least in terms of "big tech." Why only big tech? Who knows! Stop asking questions.

Guess what? None of the rhetoric over the last two years amounted to absolutely anything. Yeah, we did see some limited, narrow, chopped up proposals for scattered reform of select tech companies, but as we noted at the time many of those had serious problems or (again) weirdly ignored other business sectors like telecom or banking. Despite all the talk about how Congress was "serious this time" about antitrust reform, it turns out that they weren't, actually, and time is running out to get anything done ahead of the midterms:

"I think the timeline, to be sure we get them done as soon as possible, but certainly before the summer break, is critical," Rep. David Cicilline (D-R.I.), chair of the House Judiciary antitrust subcommittee, told Axios. "We're at an important inflection point." "There is a lot of urgency to get something done in this Congress. By the summer, people's focus will turn to the midterms," he said."

American consumers and economists alike recognize that monopolization and mindless consolidation are harmful and want antitrust reform applied across industries. But here's the obvious problem: Congress isn't interested in antitrust reform, because the nation's biggest campaign contributors ("big tech" or otherwise) don't want antitrust reform. They want feckless, hamstrung oversight incapable of telling them what to do, whether it's "please don't pollute that town's drinking water," "please stop ripping off your broadband subscribers," "please stop acquiring and killing potential competitors," or ""hey, maybe you could do the basics to keep your energy customers from freezing to death."

It's called corruption and regulatory capture. Yes, a scattered number of folks in Congress care about this stuff, but the vast majority do not. A majority care about making money, exclusively. Human, market, planetary, or consumer impact is a burdensome afterthought. Most of the "big tech" critics in Congress were just riding on the public anger over the bad behavior of companies like Facebook, looking to score cheap political brownie points. They were never actually serious. History and voting records should have made it fairly evident.

The GOP's support for antitrust reform was particularly hollow. Reality: the party got mad because some Silicon Valley execs began belatedly and sloppily policing race-baiting propaganda on the internet, a cornerstone of party power in the face of shifting demographics (see: the assault on Section 230). They also wanted to shovel some ad revenue money over to their friends at AT&T and News Corporation. The Fiction: the GOP is "being censored" and is very, very serious about pushing for "antitrust reform" and reining in out of control corporations who are stifling free speech and innovation simply because they're mean.

It was all bullshit, sensible people should have seen it was bullshit, and yet for two straight years we were subject to endless stories from major outlets and pundits pushing the fiction. Namely, "the GOP is serious about antitrust reform this time" and there is now a "very serious bipartisan push for antitrust reform." But they were never serious about antitrust reform. And calling it bipartisan was always generous. The majority of Congress adores monopolization and mindless consolidation because their campaign contributors adore monopolization and mindless consolidation. Despite endless rhetoric about "big tech," every time a real vote for antitrust reform appears the GOP (and a good chunk of the DNC) will run for the hills. Over and over again. You can set your watch to it.

It's a chicken and the egg scenario. You can't reform U.S. antitrust (or regulatory oversight, or a broken court system that panders to the biggest companies) until you tackle corruption. But the very nature of corruption and regulatory capture ensures you can't implement antitrust reform. There will be no real antitrust reform (or any reform relating to unchecked corporate power, really) until the United States finds creative ways to break the cycle and truly tackle (or at least mitigate) corruption. This reality is fairly obvious, yet huge segments of the U.S. population (including much of the press) weirdly either downplay or ignore it. But the circular firing squad is evident everywhere, from consumer and voting rights reform to climate change.

That's not to say there can't be reform with an eye on competition and health markets, just that it's not coming from this corrupt dumpster fire of a Congress. The FTC can certainly still act, albeit within the confines of intentionally constrained authority and intentionally limited staffing and budgets. Some of the antitrust lawsuits against Google are also particularly meaty, given there's what should be some fairly bulletproof antitrust violations (like paying wireless companies and hardware vendors not to compete in the app store space for the last decade). But both routes have limitations and are rife with wrist slaps and pathetic fines that may not fix the underlying rot.

But it's embarrassing how many grown adults took Congress' pledge of being interested in "antitrust reform" seriously. It was unserious grandstanding by unserious and corrupt people peppered with the rare, and occasional sincerity. Which is why after two straight years of endless banging on the drum of "big tech antitrust reform" we've got bupkis and dandruff to show for it. The United States Congress is a corrupt mess, bribed into perpetual apathy on this subject. For whatever reason much of the press and punditry simply adores pretending otherwise.

Filed Under: antitrust, congress, reform, regulatory capture

Josh Hawley Thinks We Should Break Up Twitter Because He Doesn't Like The Company's Editorial Choices

from the you-fascist-karen dept

As I just made clear, I'm no fan of Twitter's new "private media" policy, which I think comes from a well-meaning place, but will lead to widespread abuse by malicious actors seeking to hide evidence of bad behavior (indeed, there's evidence this is already happening). But that's no excuse for Senator Josh Hawley (supporter of the January 6th insurrection, and who seems to think his job as Senator from the confused state of Missouri is to product manage internet services). Hawley reacted to this new policy by saying that it's a reason to break up Twitter. He says "we oughta break them up" at the end of a very bizarre interview with Fox News host Pete Hegseth.

We'll get to the other nonsense from Hegseth and Hawley in a moment, but let's start by focusing on the "we oughta break them up" line. First off, he's clearly saying that the company needs to be broken up in response to the company's editorial decisions. That's... just a blatant violation of the 1st Amendment. Hell, just imagine how he (or Hegseth!) would respond to a Democratic Senator saying Fox should be "broken up" because of the company's editorial bias. I imagine both Hawley and Hegseth would go nuts about such unconstitutional overreach. But here, Hawley suggests breaking up Twitter in response to its editorial choices, and Hegseth seems happy to support that position.

That's because neither of them have any principles. They're fine with ignoring the Constitution if it allows them to attack their perceived ideological enemies.

Second, under what possible theory would you "break Twitter up" here. Twitter is relatively small as a social media player. Reports from about a month ago show Twitter as the 15th largest social media service globally. Even in just the US, it appears that Twitter comes in at least 7th place and possibly lower, depending on WhatsApp and TikTok's growth.

So the company, in no way, qualifies for any sort of antitrust treatment no matter how you look at it. The only possible reason to suggest that we should "break up" Twitter is because you disagree with their policies, which is a blatantly authoritarian position. Which, well, fits when we're talking about Josh Hawley.

As for Hegseth, his little bit of pandering is ridiculous as well. After mispronouncing both the first and last name of Twitter's new CEO, Parag Agrawal, he blames Agrawal for the new policy (that surely was planned much earlier). He then goes on a rant about how this policy is "meant to protect" antifa and Black Lives Matter protestors, but insists that it won't be used to protect conservatives.

Of course, as we showed in our original post, nearly all of the examples of enforcement so far have gone the other way. The policy has been used to takedown images and videos of Trumpists and white nationalists who didn't like being called out by others. But, never expect a Fox News host to let facts get in the way of winding up the ignorant base. Hegseth also fails to mention the fact that the policy doesn't apply to public figures or newsworthy events -- and names multiple public figures and newsworthy situations that he insists will be "censored" under the policy. Basically, pure disinformation.

He then says:

It gives the social media platform even more control, which is scary. More control over what can be shown. And more proof that they are, indeed, a publisher, and not simply (eyeroll) an unbiased platform.

Except basically all of that is bullshit. Twitter has always had control over what it does and does not allow on its platform. That's how terms of service work. It's no different from the fact that Fox News and Hegseth would never have me on Fox News to explain to his face why he's an ignorant, pandering fool. Because that's their editorial discretion. That's the right of Fox News, just as it's the right of Twitter. Hell, Twitter allows WAY MORE speech on its platform that its executives disagree with than Fox News ever has and ever will.

And to then trot out the bogus and meaningless "publisher" / "platform" distinction (and throwing in a gratuitous and meaningless "unbiased") makes no sense. A publisher has 1st Amendment rights to choose what to host and what not to. And Twitter was never an "unbiased platform." That's just something that people made up to attack the company.

Hegseth then claims that Twitter will now use this to censor content "they don't want you to see." Which is... not at all how this works. He then brings on Hawley, who rambles on bizarrely and disconnected from reality. He insists that this won't be used to "protect the privacy of conservatives," which is nonsense. Again, all of the examples we've seen of content being taken down are examples of it being Hawley's fans and supporters who are abusing this new policy to hide their own bad behavior. Hawley then flat out lies about how Twitter operates, claiming that Twitter "tracks us around the web" builds a "dossier" on us and "sells our information." Twitter... doesn't actually do that? None of these companies "sell our information." They sell advertising, which is targeted based on our information but that's very different. And while you could say that Google and Facebook "track us," Twitter really doesn't except in the most limited of ways.

This is just random rage from Hawley in which he throws in a bunch of catchy sayings that don't actually apply to Twitter, because it riles up his ignorant base (the only kind of people who would ever support Hawley, apparently) and then calls for the company to be broken up. It's cynical, hypocritical and disgusting -- or basically a Josh Hawley specialty.

Filed Under: 1st amendment, antitrust, content moderation, editorial choices, fox news, free speech, josh hawley, pete hegseth
Companies: fox, twitter

The Latest Version Of Congress's Anti-Algorithm Bill Is Based On Two Separate Debunked Myths & A Misunderstanding Of How Things Work

from the regulating-on-myths dept

It's kind of crazy how many regulatory proposals we see appear to be based on myths and moral panics. The latest, just introduced is the House version of the Filter Bubble Transparency Act, which is the companion bill to the Senate bill of the same name. Both bills are "bipartisan," which makes it worse, not better. The Senate version was introduced by Senator John Thune, and co-sponsored by a bevy of anti-tech grandstanding Senators: Richard Blumenthal, Jerry Moran, Marsha Blackburn, Brian Schatz, and Mark Warner. The House version was introduced by Ken Buck, and co-sponsored by David Cicilline, Lori Trahan, and Burgess Owens.

While some of the reporting on this suggests that the bill "targets" algorithms, it only does so in the stupidest, most ridiculous ways. The bill is poorly drafted, poorly thought out, and exposes an incredible amount of ignorance about how any of this works. It doesn't target all algorithms -- and explicitly exempts search based on direct keywords, or algorithms that try to "protect the children." Instead, it has a weird attack on what it calls "opaque algorithms." The definition itself is a bit opaque:

The term "opaque algorithm" means an algorithmic ranking system that determines the order or manner that information is furnished to a user on a covered internet platform based, in whole or part, on user-specific data that was no expressly provided by the user to the platform for such purpose.

The fact that it then immediately includes an exemption for "age-appropriate content filters" only hints at some of the problems with this bill -- which starts with the fact that there are all sorts of reasons why algorithms recommending things to you based on more information than you provide directly might be kinda useful. For example, a straightforward reading of this bill would mean that no site can automatically determine you're visiting with a mobile device and format the page accordingly. After all, that's an algorithmic system that uses information not expressly provided by the user in order to present information to you ranked in a different way (for example, moving ads to a different spot). What's more, "inferences about the user's connected device" are explicitly excluded from being used even if they are based on data expressly provided by the user — so even allowing a user to set a preference for their device type, and serve optimized pages based on that preference, would appear to still count as an "opaque algorithm" under the bill's definitions. You could argue that a mobile-optimized page is not necessarily a "ranking" system, except the bill defines "algorithmic ranking system" as "a computational process ... used to determine the order or manner that a set of information is provided to a user." At the very least, there are enough arguments either way that someone will sue over it.

Similarly, lots of media websites offer you a certain number of free articles before you hit their register or paywall -- and again, that's based on information not expressly provided by the user -- meaning that such a practice might be in trouble (which will be fun to watch when media orgs who use those kinds of paywall tricks but are cheering this on as an "anti-big-tech" measure discover what they're really supporting).

The point here is that lots of algorithm/ranking systems that work based on information not expressly provided by the user are actually doing important things that would be missed if they suddenly couldn't be done any more.

And, even if the bill were clarified in a bill-of-attainder fashion to make it clear it only applies to social media news feeds, it still won't do much good. Both Facebook and Twitter already let you set up a chronological feed if you want it. But, more to the point, the very rationale behind this bill makes no sense and is not based in reality.

Cicilline's quote about the bill demonstrates just how ignorant he is of how all of this stuff actually works:

"Facebook and other dominant platforms manipulate their users through opaque algorithms that prioritize growth and profit over everything else. And due to these platforms’ monopoly power and dominance, users are stuck with few alternatives to this exploitative business model, whether it is in their social media feed, on paid advertisements, or in their search results."

Except... as already noted, you can already turn off the algorithmic feed in Facebook, and as the Facebook Papers just showed, when Facebook experimented with turning off the algorithmic rankings in its newsfeed it actually made the company more money, not less.

Also, the name of the bill is based on the idea of "filter bubbles" and many of the co-sponsors of the bill claim that these websites are purposefully driving people deeper into these "filter bubbles." However, as we again just recently discussed, new research shows that social media tends to expose people to a wider set of ideas and viewpoints, rather than more narrowly constraining them. In fact, they're much more likely to face a "filter bubble" in their local community than by being exposed to the wider world through the internet and social media.

So, in the end, we have a well-hyped bill based on the (false) idea of filter bubbles and the (false) idea of algorithms only serving corporate profit, which would require websites to give users a chance to turn off an algorithm -- which they already allow, and which would effectively kill off other useful tools like mobile optimization. It seems like the only purpose this legislation actually serves to accomplish is to let these politicians stand up in front of the news media and claim they're "taking on big tech!" and smile disingenuously.

Filed Under: algorithms, antitrust, big tech, david cicilline, filter bubble transparency act, filter bubbles, john thune, ken buck, opaque algorithms, ranking, richard blumenthal

The Corruption Is In Congress: When Your New Bill Exempts The Biggest Employers In Your State, Perhaps There's A Problem

from the look-at-that dept

Karl wrote a bit about how the new antitrust bill from Amy Klobuchar and Tom Cotton pretends that the only industry that has competition issues is the internet industry -- despite evidence suggesting other industries are much worse off -- and briefly mentioned the fact that their bill conveniently excludes Walmart and Target. But the setup of the bill and those particular exclusions are so nefariously done, and so obviously corrupt, that they deserve a second post to call it out.

First off, when the House version of this bill came out, we highlighted that the $600 billion threshold seemed curiously specific, since it seemed specifically drawn just above a ton of politically powerful companies -- including Walmart, Disney, AT&T, Verizon, Visa, Mastercard, JP Morgan Chase, Disney, Bank of America and others. But notably the House version of the bill would put down the $600 billion line as a marker, and if those companies reached that threshold, then they too would be subject to the same rules, and prevented (or, significantly hindered) from buying other companies.

And that's where the Senate version is so nefarious. Under the terms of the Klobuchar/Cotton bill, it only applies to companies who are over the $600 billion line on the day the bill is signed. In other words, while the House version would eventually impact Walmart (largest employer in Tom Cotton's state) and Target (largest employer in Klobuchar's state), Klobuchar and Cotton conveniently changed the rules in the bill so that they would not impact the biggest companies in their home states.

There is no way to look at that other than as corrupt.

And, as Pat Hedger points out, Walmart has been growing like crazy over the last five years or so (which seems odd, considering we keep hearing that Amazon has "monopolized" commerce and is driving out all the competition):

So, as I type this Walmart is valued at a little over $400 billion. That might seem far off from $600 billion, but as recently as 2016 Walmart was valued below $200 billion. $600 billion in the next few years is not at all out of the question. And if this bill passes, it won't matter for Walmart.

Target is somewhat smaller, but also has been growing like crazy:

So both of those companies -- which compete fairly directly with Amazon -- have been growing like gangbusters, and their own Senators are introducing a bill that will block Amazon from acquiring companies, but has a built-in exemption that keeps both of these competitors from being limited in the same way Amazon is being limited.

Is there honestly any way to view this setup other than out and out corruption by Klobuchar and Cotton? Protecting the largest employer in each of their states by shackling the major competitor to each, and making sure their own companies are exempted from the law no matter how large they grow?

Filed Under: acquisitions, amy klobuchar, antitrust, arkansas, corruption, favoritism, mergers, minnesota, soft corruption, tom cotton
Companies: amazon, target, walmart