FTC Promises To Play Hardball With Robocall-Enabling VOIP Providers

from the whac-a-mole dept

Every year or so, the FCC unveils a new plan to combat robocalls it claims will finally tackle the annoying menace. Granted, year after year, the problem either gets worse or stays relatively the same. We've already noted that this is generally due to few things: one, a steady erosion by the courts (and lobbyists) of what the FCC can or can't actually do when it comes to various annoyances like automated spam texts or live robocalls.

The other issue is that regulators and policymakers tend to frame the problem as one exclusive to scammers -- when a wide variety of telecoms, marketing, and debt collection companies use all the same dodgy tactics to annoy consumers they often know can't pay anyway. If you hadn't noticed, trying to craft rules that leave huge carve outs for "legitimate" companies while still hamstringing outright scammers generally doesn't work very well. You've also got to craft rules and systems that allow robocalls people want (medical and dental appointment reminders, for example).

Even when only talking about scam robocalls, there's still room for meaningful improvement. The steady adoption of SHAKEN/STIR authentication technology has helped crack down on phone number spoofing. Targeting "gateway providers," who act as a proxy here in the U.S. for robocalls originating overseas, could also help.

Meanwhile the FTC says it's also going to start filing lawsuits against voice over IP (VOIP) companies that fail to cooperate with investigations into illegal robocalls:

"Companies that receive FTC Civil Investigative Demands must promptly produce all required information,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “These demands are not voluntary. Companies that don’t respond fully, or don’t respond at all, will have to answer to a federal district court judge, as these cases demonstrate."

The agency receives upwards of two million consumer complaints about robocalls every nine months. The YouMail Robocall Index indicates that there are still 3.9 billion robocalls placed to U.S. consumers alone every single day, or 5.3 million robocalls per hour. And again, contrary to the narrative generally seeded by regulators, most U.S. robocallers aren't "scammers": they're cable companies, banks, and debt collectors.

And while a lot of the calls are companies calling about overdue bills, many of these calls cross a line into outright harassment. Many of these companies know the customers they're reaching out to can't pay; yet the National Consumer Law Center (NCLC) has repeatedly testified before Congress that these robocallers can sometimes call folks upwards of hundreds of times a day, even after being asked to stop. And they often use many of the same tactics used by outright scammers.

As with everything at the FTC, it's a matter of resources. The agency is tasked with tackling everything from bleach labeling to home heating system repair scams, generally with limited staff and funds. And while the FCC and FTC dole out a ton of fines against robocallers, the vast majority of them are simply never paid or collected. Either because the target company is a scammer that's hard to find, or they're a deep-pocketed corporation that can litigate any penalties for ignoring robocall rules into oblivion.

Again though, you'll notice focus remains on "illegal" robocalls, which is a problem when the courts and lobbyists keep weakening the definition of what constitutes a "legal" robocall and what regulators can do about it. The broader the definition and the more loopholes allowed to make sure large, "legitimate" companies can continue to annoy and harrass people, the easier they are for outright scam robocallers to exploit.

Filed Under: ftc, robocalls, voip

Hypocrisy Rules As Companies Try To Smear New FTC Nomination Alvaro Bedoya

from the rat-fucking-du-jour dept

Throughout the Trump administration, a lot of folks had absolutely no problem with the mindless rubber-stamps appointed to key regulatory positions. Ajit Pai, for example, couldn't have demonstrated regulatory capture any more clearly, rubber-stamping every idiotic whim of telecom monopolies at every conceivable opportunity (often with the help of fabricated data and fraud). Revolving door regulation and unqualified industry lackey appointments hit a fevered pitch not seen at any point in U.S. history, and at every step a long list of organizations and individuals made it abundantly clear they were fine with all of it.

Fast forward to Biden's efforts to replace some of these folks, and a lot of these same organizations and individuals that turned a blind eye to the worst aspects of Trumpism are now fanning their face about perceived conflicts of interest, "partisan politics," and all manner of hypocritical injustices.

See the intentionally gridlocked nomination of new FCC Commissioner Gigi Sohn, for example. Sohn is popular across both sides of the aisle and, whatever you think of her positions and politics, highly competent. Yet her nomination has been stuck in congressional purgatory for months thanks to completely false claims ranging from she wants to "censor conservatives," to laughable claims from revolving door cable lobbyists that her history as an expert on consumer advocacy means she can't regulate telecom fairly. All coming from industry folks who don't actually believe anything they're saying.

The same gamesmanship is also imperiling the nomination of Alvaro Bedoya to the FTC. Bedoya is a professor and founding Director of Georgetown Law’s Center on Privacy & Technology and is widely respected. Whatever one thinks of Bedoya's politics and positions, there's no real doubt that he's competent and qualified for the role. But companies that don't really want competent, objective regulators have been working overtime to smear Bedoya in the same way they're working to smear Sohn. Usually through proxy groups and think tanks they funnel money, and then flimsy arguments, to.

For example the "American Consumer Institute Center for Citizen Research" is not really a consumer group. It's one of countless 501(c)(3) nonprofits corporations covertly fund, and use to create the illusion of broad support (or opposition) for/to things big companies want. For example the American Consumer Institute was paid by telecom to scuttle FCC oversight of telecom monopolies, yet pretended to just be an objective organization giving an honest, objective opinion.

The group is also popping up in the attacks against Bedoya, attempting to frame him as some kind of radical. Usually, because he's (gasp) levied accurate criticisms at the actually radical modern Trump GOP:

"If confirmed, Bedoya would bring a record of hyper-partisan, extremist advocacy to the FTC and would steer the agency in a direction of over-reaching and harmful regulatory policies....He has amplified Twitter posts calling Governors Abbott and DeSantis “death-eaters”and urging Republican Senators to resign. Additionally, Bedoya has shared numerous social media posts calling President Trump and individuals in the Trump administration “racist and white supremacist."

Believing that Donald Trump is racist and terrible is not a disqualifying character flaw. And, of course, groups like the American Consumer Institute don't really care about "hyper-partisanship," "extreme advocacy," or anybody being called out for racism. They're trying to squash Bedoya's nomination because the companies they're aligned with don't want the FTC or FCC ramping up consumer protection and antitrust reform. If they can't scuttle the nominations, they hope to delay both the FCC and FTC from having working voting majorities for as long as possible.

It's not serious policy opinion, it's the kind of bad faith, theatrical proxy, rat fuckery that's been the norm in DC for more than 20 years. Despite this, the press still can't really help itself and will also quote and amplify groups like this as if they're actually objective, well-intentioned observers, and not, say, rat fucking propagandists for hire.

Filed Under: alvaro bedoya, ftc, nominations
Companies: american consumer institute

New 'TLDR' Bill Requires Companies Provide Synopsis Of Overlong, Predatory Terms Of Service

from the good-luck-with-that dept

This week saw the introduction of the The Terms-of-service Labeling, Design and Readability Act, or "TLDR Act," for short. The bill, which, for now, has bipartisan support, would require the FTC to create rules mandating that websites must offer a truncated version of obnoxiously long and predatory terms of service (TOS) nobody actually reads. The "summary statement" websites would be obligated to provide would not only lay out the legal requirements in terms normal humans could understand, it would also require a website disclose any major data breaches that have occurred in the last three years.

A breakdown (pdf) of the bill also states it will require websites to disclose what data is collected upon a user's visit, and what kind of control a user has over that data. Any violation of the new law would be declared to be within the realm of "unfair and deceptive" under the FTC Act, giving the agency the authority to act on it. Rep. Lori Trahan had this to say about the need for such a law:

"For far too long, blanket terms of service agreements have forced consumers to either ‘agree’ to all of a company’s conditions or lose access to a website or app entirely. No negotiation, no alternative, and no real choice,” said Congresswoman Trahan, a member of the House Subcommittee on Consumer Protection and Commerce. “To further slant the decision in their favor, many companies design unnecessarily long and complicated contracts, knowing that users don’t have the bandwidth to read lengthy legal documents when they’re simply trying to message a loved one or make a quick purchase."

Yes, most TOS are overlong and that length is often used to obscure bad behavior or quietly erode consumer rights (see: binding arbitration). But many TOS are also overlong because U.S. law and compliance are complicated as hell. The idea that you can always simplify everything a company needs to get across to a user to comply with the law and reasonably cover your ass in a sentence or too is probably a little simplistic. At the same time, I'm not sure the American consumer, many with the attention span of a goldfish, would even read the truncated version of a TOS anyway.

While "more transparency" is certainly good, it also only goes so far if you're not willing to tackle the deeper problem(s). For example the FCC is pondering a transparency label on broadband connections outlining all the sneaky ways you're getting ripped off by your internet service provider. And while knowing the precise parameters how you're getting ripped off is nice, users in monopolized markets can't switch ISPs anyway because the FCC generally isn't willing or able to combat monopolization and limited competition. So transparency only accomplishes so much.

Here too, websites, apps, and services use overlong TOS to obfuscate all manner of behaviors U.S. regulators either don't have the resources to police (the FTC has 8% of the staff dedicated to privacy issues as the UK, despite the UK having one-fifth the consumers to protect) or are apathetic to because of revolving door corruption (see: telecom, banking, adtech, etc.). Expecting the FTC to do a whole lot more stuff without notably expanding funding seems a bit short sighted. And this is all assuming the bill is actually well written and doesn't cause new, unforeseen problems via sloppy language.

So while well intentioned, this feels like a bit of a band aid on problems policymakers can't or won't tackle head on. Like limited competition. Or the complete and total lack of anything even vaguely resembling accountability in telecom, adtech, or the data broker space. Or privacy reform. Or antitrust reform. All of these problems lead to bad behaviors companies are hiding in their TOS, and making those bad behaviors clearer to the end user is only part of a process. Knowing you're getting screwed or spied on is only helpful if you have the recourse to do something about it, and regulators willing to stand up for you when push comes to shove.

Filed Under: congress, ftc, terms of service, tldr, tldr act

America's Struggling Satellite TV Companies Once Again Propose A Terrible MegaMerger

from the when-in-doubt,-repeat-your-mistakes dept

For decades, like clockwork, somebody at Dish or DirecTV will try and float the idea that the two satellite TV companies should merge. Usually they'll do this by seeding the idea at trusted news outlets that additional consolidation is just what the U.S. media sector needs. Granted regulators have always balked at the idea of a Dish and DirecTV merger, given that it would only reduce competition in the pay TV space, leading to more layoffs, more price hikes, and even worse customer service (cable TV customer service is among the worst in any industry anywhere thanks to this "growth for growth's sake" mindset).

Like clockwork, somebody involved in the deal-making has leaked word of yet another attempt to merge the two companies to the New York Post:

"DirecTV and Dish Network are in fresh talks to merge after years of on-again, off-again wrangling and multiple clampdowns from federal antitrust officials, The Post has learned."

Both companies have been losing TV subscribers hand over fist to streaming competitors, so the argument being seeded in the press is that the merger makes sense now because both companies are flailing, and streaming competitors now exist:

"Now, however, insiders are optimistic a Dish-DirecTV deal could pass regulatory muster as concerns about the market power of the struggling companies have waned, sources said. Some executives likewise argue that a merger could give a surprise boost to the US’s troubled rollout of 5G wireless services."

The problem, of course, is that every time the telecom and cable industry proposes a deal like this, absolutely none of the promised synergies ever actually arrive, and the end result is almost uniformly more problems, more layoffs, and more price hikes. We just got done watching a megagermer clusterfuck for the ages in the $200 billion AT&T Time Warner and DirecTV mergers, which promised American consumers the sun, Earth, and sky. Instead we saw 50,000 layoffs, record TV defections, higher prices, and absolute chaos, forcing AT&T to recently spin off DirecTV.

Dish and DirecTV policy nerds are going to try and justify the deal this time by claiming it's the only way to get Dish's promised 5G network off the ground. That network, if you recall, was a half-baked Trump-era "fix" to the problems already created by the T-Mobile Sprint merger. Based on recent events that network doesn't appear destined to succeed any way you slice it. But with Dish hemorrhaging both pay TV and wireless subscribers already, it's short of cash. DirecTV's fortunes aren't looking so hot in the TikTok era either.

So instead of letting terrible companies just die at the hands of the market and shifting trends, we turn to regulators to approve terrible deals under the Charlie Brown and Lucy football type promise that this time the deal will solve everybody's problems. But it won't. A deal like this will just reduce competition, raise rates, and result in tens of thousands of additional layoffs. As such it's unlikely the Biden FCC or DOJ approves it, but given this country's severe allergy to learning from history or experience when it comes to megadeals, you can never quite be sure.

Filed Under: competition, ftc, mergers, pay tv, tv
Companies: directv, dish

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

FTC To Crack Down On Companies That Make Cancelling Services A Pain In The Ass

from the a-bit-overdue dept

Making it annoying to cancel a subscription has long been a proud American pastime. AOL was notorious for making it extremely difficult. Broadband and cable providers routinely make it a pain in the ass to cancel phone, broadband, or cable. And everyone from the Wall Street Journal to SiriusXM enjoy making signing up easy, but cancelling something that requires a phone call and time on hold. In COVID times, with support staffs often short handed, it's a practice that's become more annoying than ever.

In an about face from decades of regulatory apathy, Lina Khan's FTC has announced that the agency is going to start cracking down on companies that trick users into signing up for services, or making it an annoying headache to cancel:

According to the full FTC announcement and the company's new enforcement policy statement, the FTC is going to start cracking down harder on companies whose sign-up process fails to provide clear, up-front information, fails to obtain consumers’ informed consent, or fails to make cancellation easy (a lot of companies are horridly designing new website or app cancellation buttons and menus as you read this):

"Marketers should provide cancellation mechanisms that are at least as easy to use as the method the consumer used to buy the product or service in the first place."

It's hard to overstate how feckless regulatory enforcement has historically been on this front. Especially in sectors like telecom. Remember when journalist Ryan Block recorded his eight minute phone call trying to cancel Comcast service? And remember, despite significant public and press outrage, Comcast faced absolutely no accountability courtesy of limited competition and regulatory capture? In countless industries (even those that are more competitive) that's effectively the norm.

The FTC voted 3-1 to approve the new policy statement, the one dissent (pdf) coming from Donald Trump appointee Christine S. Wilson on what she claimed was procedural grounds. Of course saying you're going to crack down on this, and actually cracking down on the absolute parade of companies that engage in these kinds of behaviors is something else entirely. Especially for an agency with limited staff and resources. Still, in this age it's refreshing to see regulators simply do their job when it comes to simple proposals with broad bipartisan public support.

Filed Under: canceling, ftc, subscription fraud

FTC Study Highlights How 'Big Telecom' Privacy Practices Are Even Worse Than 'Big Tech'

from the stating-the-obvious dept

I've noted for a few times that the very obvious dysfunction in "big tech" has proven to be the gift that keeps on giving for "big telecom." While tech giants like Google, Amazon, and Facebook get the entirety of (often very justified) attention for dodgy business practices and terrible judgement, telecom has basically been forgotten in the DC Policy conversation. While lawsuits and Congressional posturing all focus on expanding oversight of "big tech," "big telecom" and "big media" have been able to lobotomize most of the oversight of its own businesses, despite engaging in all the same (and sometimes worse) dubious business practices.

An FTC report on privacy reiterated that forgetting about telecom and media was a mistake. The FTC's latest report on privacy noted largely what most people knew: telecom and cable companies collect an absolute ocean of data on U.S. consumers, then "sell" access to that data to third parties (they usually just call it something else) without being clear about it. They then provide users with opt out and transparency tools that are intentionally cumbersome, if they work at all. This data then bounces around the internet creating potential harm and abuse among countless parties, whether stalkers, law enforcement, people pretending to be law enforcement, or other corporations.

The FTC found that many ISP and cable companies "privacy policies" are utterly theatrical in nature. As in they're designed to be so cumbersome as to deter people from using them (which companies then use as evidence that consumers "don't care about privacy"). Other times the "opt out" tools don't work at all, and in some cases they result in even more user data being collected. None of this is made particularly clear to the end user:

"...rapid consolidation has allowed ISPs to access and control a much larger and broader cache of consumer data than ever before, without having to explain fully their purposes for such collection and use, much less whether such collection and use is good for consumers."

The FTC correctly noted that as network operators, ISPs and cable companies have access to way more data than even tech giants, app makers, or advertising companies. This includes DNS data, browsing data, clickstream data (how long you spend on each site down to the second), behavioral ad information, location data, race and ethnicity data, data on which TV programs you watch, and more. The report is quick to bring up the repeated location data scandals that have plagued the wireless industry, as well as the "zombie cookie" scandals at Verizon (and briefly AT&T) that involved embedding tracker headers in each user data packet to track them around the internet (again without informing them or letting them opt out):

"Unlike traditional ad networks whose tracking consumers can block through browser or mobile device settings, consumers cannot use these tools to stop tracking by these ISPs, which use ‘supercookie’ technology to persistently track users,” the FTC report said.

ISPs and cable companies will usually tell the press, lawmakers, and regulators they don't "sell" access to this data, but they still technically do. They simply call the practice something else.

Like a network security, auditing, or marketing company will get access to "anonymized" (a worthless term) user datasets as part of a broader contract for "security consultation," "marketing and brand awareness," or "strategic consultation." That company will get a bit more money for whatever their broader contract is, while also often being allowed to sell that data out the back door. It's not technically "selling access to your data" because they've actively just called it something else, knowing that U.S. regulators are too feckless and understaffed to dig through a tangled web of intentional complication.

Of course the FTC's report on the terrible privacy practices of the telecom industry is just a report. Actually doing something about the problem is another issue entirely. And every time we've tried to do something about the problem, lobbyists scuttle it in pretty short order (like those FCC broadband privacy rules killed by a heavily-lobbied Congress before they could even take effect, or even a basic federal privacy law). And, more recently, with telecom and media giant lobbying encouragement, the entirety of DC is so fixated exclusively on the problems with tech giants, telecom and media reform has effectively been forgotten entirely.

Filed Under: big tech, competition, consolidation, ftc, privacy, telcos
Companies: at&t, comcast, verizon

FTC Decides Maybe It's Time To Start Asking Why McDonalds Ice Cream Machines Are Broken All The Damn Time

from the let-the-ice-cream-flow! dept

In unsurprising news, the McDonald's McFlurry machine is down. In actual surprising news, the FTC is looking into it. (Paywall ahead, but here's another option.)

The FTC reached out to McDonald's franchisees this summer seeking information on what, exactly, is going on with the broken ice cream machine problem, according to a letter it sent, viewed by The Wall Street Journal, and people familiar with the matter. The FTC declined to comment.

Well, it's a start. The notoriously unreliable machines are pretty much the only option for McDonalds franchise owners, who are tied into lengthy service contracts that include immediate termination of warranties should any McDonalds employees have the gall to repair their own machines. And knowing what is in need of fixing is deliberately obscured by the manufacturer, Taylor Commercial Foodservice, which weaponizes obscure error codes and overall inscrutability to ensure a steady stream of service call revenue.

There's another solution out there, but it doesn't have the approval of the McDonalds corporation. And, since it could severely diminish one of Taylor's revenue streams, attempts have been made by the company to remove the competitor from the equation.

Two years ago, a company called Kytch Inc. developed a device that attaches to Taylor's ice cream machines and sends franchise owners messages alerting them to possible breakdowns and other problems that demand attention. It also makes sense of Taylor's nonsensical codes, allowing owners to actually take care of the issues, rather than just tell customers the machine is down yet again and wait for a Taylor rep to arrive.

Taylor was so opposed to Kytch helping people repair the machines they had purchased that they spent months trying to trick Kytch into sending one so the company could, allegedly, reverse engineer it. That's the accusation Kytch is making in court, where it has just secured a small win that compels Taylor to stop doing whatever it's doing with the Kytch device it obtained and return the device to its maker.

In a recent legal victory, a judge awarded a temporary restraining order against Taylor after Kytch had alleged in a complaint that the McFlurry machine manufacturer had gotten its hands on a Kytch Solution Devices with the express intention of learning its trade secrets. The complaint also alleged that Taylor had told McDonald’s and its franchisees to stop using Kytch machines on the grounds that they were dangerous, and that the company had begun development on its own version of the Kytch system at the same time.

Now, all of this has dovetailed into the involvement of the FTC: the years of flaky performance by Taylor ice cream machines, the mostly unheeded complaints of McDonalds franchise owners, the apparent attempt to strongarm Kytch out of the repair business. But, at this point, the FTC is really only investigating the possibility of opening an investigation. This is a "preliminary investigation" which mainly involves asking for some input from Taylor machine owners and, if there's enough alleged to move forward, the FTC will presumably do that. But it's a start. And there will be at least one party listening to the complaints of franchise owners: the federal government.

Filed Under: ftc, mcflurry, ownership, repairs, right to repair
Companies: kytch, mcdonald's, taylor commercial foodservice

FTC Tries Tries Again With An Antitrust Case Against Facebook

from the but-the-evidence-of-a-monopoly? dept

As you'll recall, back in December, the FTC filed an antitrust case against Facebook, arguing that Facebook abused a dominant market position to acquire Instagram and WhatsApp for anticompetitive reasons, and that it puts in place anti-competitive polices that harm other companies that it is unable to acquire. At the end of June, the court dismissed the case, saying that the FTC never actually showed any evidence that Facebook is a monopoly -- which is a key part of any antitrust case. However, the judge gave the FTC a chance to amend. Yesterday (the deadline to file the amended complaint), the FTC took another shot at it and filed its amended complaint.

The new complaint is longer (and actually mentions TikTok, which the original didn't!). But is it any stronger? Well, at least the complaint has a more coherent narrative to it, after the original really phoned it in. The complaint tells the story of how Facebook effectively missed the smartphone revolution, and that threatened to enable competitors to gain a stronger foothold in social media with a mobile-first approach. The thing that strikes me, however, is how the "evidence" here actually seems to argue against antitrust violations -- as it shows just how fragile Facebook's position was not that long ago, and how easily someone else might have overtaken Facebook. The fact that Facebook was aware of these competitive threats isn't an admission of antitrust behavior, but rather just the fact that the senior executive suite at Facebook has read Clay Christensen and understands the nature of the Innovator's Dilemma and how disruptive innovation works.

That said, there is more evidence in this complaint that Facebook deliberately sought to undermine competition at a variety of different points. And if the FTC can convince the court that (1) the market definition it has is correct, and (2) that Facebook has monopolistic power in that market, perhaps it can move the case forward. But, again, the complaint focuses heavily on the Instagram and WhatsApp acquisitions, both of which happened many years ago -- at a time when Facebook was nowhere near as big or powerful as it is today. And, importantly, there aren't really examples of them doing the same thing recently. Indeed, we keep seeing new entrants showing up in the social media market -- including Snap, TikTok, and Clubhouse. Those all undermine the argument that Facebook can stop competitors.

But, honestly, parts of the complaint seem to contradict itself. For example, it says that Facebook was a monopoly since 2011 (which it needs to say to cover the Instagram acquisition period):

Facebook holds monopoly power in the provision of personal social networking in the United States and has held such power continuously since at least 2011. Multiple sources of evidence demonstrate that Facebook has monopoly power with respect to U.S. personal social networking services. First, Facebook has maintained a dominant share of the relevant market for U.S. personal social networking from 2011 until the present day. Second, direct evidence indicates that Facebook has monopoly power with respect to U.S. personal social networking services. Further, Facebook’s monopoly power is durable due to significant entry barriers, including direct network effects and high switching costs.

But, in the very same complaint, it says:

By late 2011, Mr. Zuckerberg and other executives realized that Facebook Blue offered a relatively poor experience for mobile users, and that this made Facebook’s monopoly position more vulnerable than it had ever been. In addition, Facebook struggled to translate its social advertising model onto mobile devices. The transition to mobile required Facebook to transform the manner in which its advertisements were displayed: as Mr. Zuckerberg described it, [REDACTED]

Given these mounting consecutive failures, Facebook justifiably feared that its personal social networking monopoly, and its enormous advertising profits, would be threatened by a mobile-first competitor emerging and gaining traction by connecting users in innovative ways and exploiting mobile phones’ photo or messaging capabilities.

So... it's a monopoly, but that monopoly is so fragile that a bunch of new mobile apps from tiny startups threatened to undermine the entire thing? That... doesn't sound like a dominant position, let alone a "monopoly" one.

The market definition section is equally... strange. It insists that "mobile messaging services" are distinct, and not considered to be in the same market as Facebook and its "personal social networking." Um, but Whatsapp is... a mobile messaging service, and a big part of the complaint is about Facebook buying Whatsapp. So, it's hard to see how that makes much sense.

Also, the attempts to distinguish Facebook from other companies -- like Twitter, LinkedIn, Reddit, Pinterest, and more only seem to serve to highlight... just how much competition Facebook really has:

Personal social networking is distinct from, and not reasonably interchangeable with, specialized social networking services that are designed for, and are utilized by users primarily for, sharing a narrow and highly specialized category of content with a narrow and highly specialized set of users for a narrow and distinct set of purposes. As a result, users employ these services primarily to maintain or communicate with a distinct or narrow set of connections—like engaging in professional networking—and not to connect with friends and family and share the experiences of their personal daily lives. Examples include networks that focus on professional (e.g., LinkedIn) or interest-based (e.g., Strava) connections. Other examples of services that users view as appropriate for limited sharing with a narrow set of connections include some online dating services and Nextdoor, a service which focuses on facilitating sharing only among users that reside in close physical proximity to one another.

Personal social networking is distinct from, and not reasonably interchangeable with, online services that focus on the broadcast or discovery of content based on users’ interests rather than their personal connections. Prominent examples are Twitter, Reddit, and Pinterest. These services do not focus on connecting friends and family: Twitter focuses on enabling users to stay informed about topics that interest them, while Reddit facilitates conversations centered around topics of interest to the participants. As a result, users employ these services primarily to stay informed about and discuss events relevant to their interests (e.g., Twitter), or engage in conversations with communities of mostly anonymous people who share a particular interest (e.g., Reddit), rather than to connect with friends, family, and other personal connections. Therefore, such services are not reasonable substitutes for personal social networking services. In a similar vein, Pinterest allows users to browse content by conducting searches based on their interests, and allows connections based on such interests, but does not focus on connecting users with friends and family and therefore is not an adequate substitute for personal social networking services that do so.

The attempt (in this complaint and absent from the last one) to deal with TikTok seems particularly... weak.

TikTok is a prominent example of a content broadcasting and consumption service that is not an acceptable substitute for personal social networking services. TikTok users primarily view, create, and share video content to an audience that the poster does not personally know, rather than connect and personally engage with friends and family. The purpose for which users employ TikTok, and the predominant form of interaction on the platform, is not driven by users’ desire to interact with networks of friends and family.

I mean, this just feels totally arbitrary. They're not establishing the actual competitive market here. They're basically defining the market as "exactly what Facebook does, and only if someone else does all Facebook does." But that's not how competition works. Competition often looks like just one feature of an existing provider, and then leverages that to grow bigger and to expand. And the FTC complaint just doesn't deal with that at all. Indeed, if you look at the way Facebook has been responding to TikTok, the idea that it's not competitive is simply laughable. I can't imagine that Facebook execs are breathing easy about TikTok's success now that the FTC insists that it's a totally different market.

I still think it's possible that there could be a compelling antitrust argument against Facebook. But this one still feels phoned in. It feels like it's taken a popular narrative, and just assumed it's obvious if they put enough words around it, but without actually showing that it's true.

Filed Under: antitrust, competition, ftc, market definition, social media
Companies: facebook

Facebook Acting Badly: Shuts Down Researchers Accounts Over Claims Of Privacy Violations That Don't Stand Up To Scrutiny

from the oh-stop-it dept

Last year we wrote about Facebook threatening NYU researchers who had set up a browser extension that would allow users to voluntarily collect information about ads and ad targeting on Facebook -- information that Facebook does not publicly reveal -- and provide it to the researchers' "Ad Observatory" project. As we noted at the time, Facebook's threats were definitely going too far, though you could see how it came about, as it could be argued that there were technical similarities to what the NYU researchers were doing, and what an academic from Cambridge did many years ago that turned into... the Cambridge Analytica scandal, which resulted (in part) in a massive fine from the FTC for privacy violations.

But, as we explained then, the NYU Ad Observer story is clearly distinguishable from the Cambridge Analytica story. The Ad Observatory involves people installing an extension on their own computer in their own browser, and choosing to share that information. That's not something Facebook should have any right to block.

Unfortunately, this week, Facebook took things up a notch and shut down the accounts of everyone associated with the project, effectively cutting off all their access to Facebook's Ad Library and other tools they were using in their research. Facebook's own explanation for this is... to claim that it was compromising people's privacy, though that appears to be bullshit (as we'll get to in a moment). Here's part of what Facebook said:

We told the researchers a year ago, in summer of 2020, that their Ad Observatory extension would violate our Terms even before they launched the tool. In October, we sent them a formal letter notifying them of the violation of our Terms of Service and granted them 45 days to comply with our request to stop scraping data from our website. The deadline ended on November 30, long after Election Day. We continued to engage with the researchers on addressing our privacy concerns and offered them ways to obtain data that did not violate our Terms. 

Earlier this year, we invited researchers, including the ones from NYU, to safely access US 2020 Elections ad targeting data through FORT’s Researcher Platform. This offered the Ad Observatory researchers a more comprehensive data set than the one they created by scraping data on Facebook. The researchers had the opportunity to use the data set, which is designed to be privacy-protective, instead of relying on scraping, but they declined.

We made it clear in a series of posts earlier this year that we take unauthorized data scraping seriously, and when we find instances of scraping we investigate and take action to protect our platform. While the Ad Observatory project may be well-intentioned, the ongoing and continued violations of protections against scraping cannot be ignored and should be remediated. 

Collecting data via scraping is an industry-wide problem that jeopardizes people’s privacy, and we’ve been clear about our public position on this as recently as April. The researchers knowingly violated our Terms against scraping — which we went to great lengths to explain to them over the past year. Today’s action doesn’t change our commitment to providing more transparency around ads on Facebook or our ongoing collaborations with academia. We’ll continue to provide ways for responsible researchers to conduct studies that are in the public interest while protecting the security of our platform and the privacy of people who use it. 

This is... nonsense. I challenge the idea that "data scraping" is a problem, first of all. I mean, that's what the entire search engine business is built on. It's all data scraping. The problem is when private information is somehow exposed. But that's different. And here we're talking about individuals installing an extension in their own browsers, to collect information that is sent to their own computers. That's not Facebook's data to control. Once it's in my browser, it's mine to make use of. Facebook's argument here makes no sense.

And, indeed, a few others have stepped in to point out the same thing. For one, Mozilla, makers of the Firefox browser, called bullshit on the claims pretty directly:

Facebook claims the accounts were shut down due to privacy problems with the Ad Observer.  In our view, those claims simply do not hold water. We know this, because before encouraging users to contribute data to the Ad Observer, which we’ve done repeatedly, we reviewed the code ourselves. And in this blog post, we want to explain why we believe people can contribute to this important research without sacrificing their privacy.  

Anytime you give your data to another party, whether Facebook or Mozilla or researchers at New York University, it is important that you know whether that party is trustworthy, what data will be collected, and what will be done with that data. Those are critical things to consider before you potentially grant access to your data. And those are also key factors for Mozilla when we consider recommending an extension. 

Before Mozilla decided to recommend Ad Observer, we reviewed it twice, conducting both a code review and examining the consent flow to ensure users will understand exactly what they are installing. In both cases the team responsible for this add-on responded quickly to our feedback, made changes to their code, and demonstrated a commitment to the privacy of their users. We also conducted an in-depth design review of Ad Observer, the results of which can be found here. 

We decided to recommend Ad Observer because our reviews assured us that it respects user privacy and supports transparency. It collects ads, targeting parameters and metadata associated with the ads. It does not collect personal posts or information about your friends. And it does not compile a user profile on its servers. The extension also allows you to see what data has been collected by visiting the “My Archive” tab. It gives you the choice to opt in to sharing additional demographic information to aid research into how specific groups are being targeted, but even that is off by default.

You don’t have to take our word for it. Ad Observer is open source, so anybody can see the code and  confirm it is designed properly and doing what it purports to do.

And then, the FTC's Bureau of Consumer Protection weighed in with a letter to Mark Zuckerberg also calling bullshit on the idea that the Ad Observatory extension might somehow violate Facebook's various consent decrees with the FTC regarding privacy protection.

I write concerning Facebook’s recent insinuation that its actions against an academic research project conducted by NYU’s Ad Observatory were required by the company’s consent decree with the Federal Trade Commission. As the company has since acknowledged, this is inaccurate. The FTC is committed to protecting the privacy of people, and efforts to shield targeted advertising practices from scrutiny run counter to that mission.

While I appreciate that Facebook has now corrected the record, I am disappointed by how your company has conducted itself in this matter. Only last week, Facebook’s General Counsel, Jennifer Newstead, committed the company to “timely, transparent communication to BCP staff about significant developments.” Yet the FTC received no notice that Facebook would be publicly invoking our consent decree to justify terminating academic research earlier this week.

Had you honored your commitment to contact us in advance, we would have pointed out that the consent decree does not bar Facebook from creating exceptions for good-faith research in the public interest. Indeed, the FTC supports efforts to shed light on opaque business practices, especially around surveillance-based advertising. While it is not our role to resolve individual disputes between Facebook and third parties, we hope that the company is not invoking privacy – much less the FTC consent order – as a pretext to advance other aims.

I do think that some of the pressures that people put on Facebook about "protecting" privacy do more harm than good and lead to situations that backfire and actually give Facebook more control and less transparency. But this case seems to be Facebook cynically using this as an excuse to shut down academic research they were uncomfortable with and punish the researchers.

There are two simple answers here: give the academic researchers access to the data they need to do this research (Facebook's claims of making the data accessible leave out that not everything the researchers are asking for is actually in those data sets) and don't block people from installing things on their own computer. That's not Facebook's job.

Filed Under: ad observatory, data, excuses, ftc, privacy, scraping, transparency
Companies: cambridge analytica, facebook, mozilla, nyu