FTC's Misses Opportunity To Understand Social Media; Instead Goes For Weird Fishing Expedition Against Odd Grouping Of Companies

from the this-could-have-been-helpful dept

On Monday, the FTC announced that it was issuing what's known as 6(b) orders to nine social media and video streaming companies, demanding a fairly massive amount of information regarding their data collection and usage policies, as well as their advertising practices. To me, this is a huge missed opportunity. If the FTC is truly trying to gain a better understanding of data collection, privacy, and advertising practices, perhaps to better inform Congress on how to, say, pass a truly comprehensive (and useful?!?) privacy legislation, then there are ways to do that. But this... is not that. This looks like a weird fishing expedition for a ton of unrelated information, from an odd selection of nine companies, many of whom are in a very different business than the others. It leaves me quite perplexed.

First, let's look at the odd selection of companies. The letters are going to:

• Amazon (apparently including Twitch)
• Bytedance (TikTok)
• Discord
• Facebook
• Reddit
• Snap
• Twitter
• WhatsApp (owned by Facebook)
• YouTube

For the smaller companies on the list, such as Reddit and Discord, the FTC demanding they file a ton of paperwork in a very short time frame is going to mean a tremendous waste of time.

The second concern is the broad nature of the requests. The "sample order" is massive. There are 53 separate requests, many with multiple sub-parts. They're not just asking for specific information, but rather going on what appears to be an incredibly broad fishing expedition for information about a wide variety of practices at all of these companies -- including broad demands for future strategies and plans. For example, beyond just information on the number of users, it demands all documents relating to "business strategies or plans," "research and development efforts," "strategies or plans to reduce costs, improve products or services..." It also seems to be demanding all "presentations to management committees, executive committees, and boards of directors."

That feels like a fishing expedition, rather than an attempt to actually understand data collection and usage practices.

There are categories of information included here that I think it would be useful for the FTC to understand. But there's just so much information requested that it seems likely to bury the useful information.

The one FTC Commissioner who dissented from this effort, Noah Joshua Phillips, raises important questions in his dissent:

Effective 6(b) orders look carefully at business practices in which companies engage in a manner designed to elicit information, understand it, and then present it to the public in way that is usable and can form a basis for sound public policy.

The first step is to select a group of recipients that will permit such examination, usually a group of firms engaged in conduct that can be compared. But the logic behind the choice of recipients here is not clear at all. The 6(b) orders target nine entities: Facebook, WhatsApp, Snap, Twitter, YouTube, ByteDance, Twitch, Reddit, and Discord. These are different companies, some of which have strikingly different business models. And the orders omit other companies engaged in business practices similar to recipients, for example, Apple, Gab, GroupMe, LinkedIn, Parler, Rumble, and Tumblr, not to mention other firms the data practices of which have drawn significant government concern, like WeChat. The only plausible benefit to drawing the lines the Commission has is targeting a number of high profile companies and, by limiting the number to nine, avoiding the review process required under the Paperwork Reduction Act, which is not triggered if fewer than ten entities are subject to requests.

Phillips calls out the same broad demands I raised above regarding business plans, R&D and presentations, noting:

Such a request would be suited to an antitrust investigation. But as part of an inquiry ostensibly aimed at consumer privacy practices, it amounts to invasive government overreach. And that is just one of the order’s 50-plus specifications.

And, finally, he highlights how this effort is just demanding way too much information to be of use for a comprehensive policy recommendation:

The biggest problem is that today’s 6(b) orders simply cover too many topics to make them likely to result in the production of comparable, usable information—yet another feature proper oversight and public comment could have flagged. Rather than a carefully calibrated set of specifications designed to elicit information that the agency could digest and analyze as a basis for informing itself, Congress, stakeholders, and the public, these 6(b) orders instead are sprawling and scattershot. Their over 50 specifications, most with numerous and detailed subparts, address topics including, but not limited to: advertising (reach, revenue, costs, and number and type); consumer data (collection, use, storage, disclosure, and deletion); as noted above, all strategic, financial, and research plans; algorithms and data analytics; user engagement and content moderation; demographic information; relationships with other services; and children and teens (policies, practices, and procedures).

Recipients of 6(b) orders typically negotiate to limit their productions, to tailor them in light of their specific business models and business practices. Perhaps the Commission will push back on attempts to do so, devoting additional lawyers to litigating the orders and having a federal judge oversee them, rather than OIRA. Or negotiation may reduce the burdens. But if that happens, each recipient will be responding to a different set of negotiated specifications. That certain of the companies in question have very different business models makes this even more likely. The end result of that is, say, the agency learning a lot about one recipient’s advertising practices, but not as much about its algorithms. For another recipient, the agency might receive information about privacy practices but very little about its plans to expand. Each of the nine recipients will produce differing, if any, amounts of information to each of the 50-plus specifications.

I actually think it would be a good thing for the FTC to better understand how these companies work and their practices. I think it could be useful for them to gain such an understanding, and then make recommendations on a comprehensive federal privacy law. But I don't see how this fishing expedition does any of that. Instead, it just asks for basically everything and the kitchen sink from a somewhat random selection of companies, some of whom will have difficulty producing all of this information.

Filed Under: data, data collection, data protection, fishing expedition, ftc, privacy, social media, video streaming
Companies: amazon, bytedance, discord, facebook, reddit, snap, tiktok, twitch, twitter, whatsapp, youtube

Mixer Shuts Down, Showing Again Why You Don't Need To Freak Out By Copycat Competitors

from the getting-twitchy dept

In all sorts of intellectual property conversations, one common refrain is something like "If you let people copy others, those copycats will be just as successful without having to work to develop a product." This ire is most commonly aimed at big companies that see something successful and simply come up with their own version of it. And, to be generous, there certainly does seem to be something less than fair about that. But then you take a step back and watch just how often these copycat startups fall flat on their faces and you have to wonder why anyone worries about this stuff at all. Does nobody remember Google Plus?

Other companies have shown that it often builds more trust to not care about copycats any further than poking fun at them. Again, this is because the innovator almost always has a massive leg up on the copycat competitor, rather than the other way around. The most recent example of this is Microsoft's Mixer platform, which was supposed to be a streaming service geared towards video gaming, with Twitch being the competition it was trying to "copy" off of. Well, even with the corporate power and war chest of Microsoft behind it, the platform failed and has since been offloaded to Facebook Gaming.

The shutdown starts today, with a transition plan laid out by Microsoft for Mixer streamers. Mixer Partners will be granted partner status with Facebook Gaming, and the platform will honor and “match all existing Partner agreements as closely as possible,” according to the blog detailing the change.

Several big-name streamers, such as Ninja and Shroud, moved from Twitch exclusively to Mixer this year. On Twitter, popular streamer King Gothalion announced he would be moving to Facebook; earlier this year, he signed a deal to stream exclusively on Mixer.

Even with some pretty big streaming names on the service, Mixer failed. Why? Well, because Twitch had already built up an audience and trust within the public for its product. Microsoft didn't do enough to make Mixer stand apart from Twitch. Instead, the strategy appeared to roughly be just throwing money at some high profile streamers and expect audiences to flock to the platform because of it. That didn't work, however.

Those streamers will now be free to move on to either Facebook Gaming or back to Twitch, where most of them began. Where the majority decide to go will be quite telling, but I imagine Facebook will throw money at this the same way Microsoft did. And if Facebook doesn't do enough to make Gaming stand out and special compared with Twitch, it'll likely fail in exactly the same way. What we've seen from Facebook Gaming thus far, however, does have some more intriguing social and DIY elements.

But the real lesson here is that building a copycat startup isn't some get rich quick scheme. Or, it is, but it rarely works. So if you create a great platform, build a great community, and deliver great content... you probably are wasting time if you're worrying about copycats.

Filed Under: big companies, competition, copycats, mixer, startups, streamers, video streaming
Companies: microsoft, mixer, twitch

After Losing 10,000 Viewers Per Day, ESPN Finally Buckles To Offering Standalone Streaming Video Service

from the swimming-upstream dept

For years now, ESPN has been the perfect personification of the cable and broadcast industry's denial regarding cord cutting. Long propped up by a system that forces consumers to buy massive bundles of largely-unwatched channels, ESPN has struggled with the rise of streaming alternatives and sleeker, "skinny" channel bundles. The sports network, which has lost 7 million viewers in just a few years, has been trying to argue that these losses (which caused Disney stock to lose $22 billion in value in just two days at one point) are simply part of some kind of overblown, mass hallucination.

Last year, ESPN exec John Skipper even went so far as to suggest that these departing customers weren't worth keeping anyway:

"People trading down to lighter cable packages. That impact hasn't leaked into ad revenue, nor has it leaked into ratings. The people who’ve traded down have tended to not be sports fans, and have tended to be older and less affluent. We still see people coming into pay TV. It remains the widest spread household service in the country after heat and electricity."

In other words, there's "nothing to see here" -- outside of the total collapse of our entire legacy business model. At one point late last year, ESPN even went so far as to make a giant (unwarranted) stink about Nielsen data showing the cable channel had lost 621,000 homes in a single month. Things still aren't looking particularly good for the company, with Disney's earnings indicating that ESPN is fairly consistently losing about 10,000 viewers per day. That's not surprising when you see surveys indicating that 56% of subscribers would drop ESPN in a heartbeat if it meant saving the $8 per user the channel is estimated to cost consumers.

Despite these numbers, Skipper and other ESPN executives have spent the last few years insisting that offering a standalone streaming app (you know, evolving for the market you're doing business in) wasn't financially viable:

"We could sell ESPN, as a standalone product, but we don't believe it to be a good business," Skipper said. "We're in 90 million homes," he added, "so no, we do not have a contemplation now that we would launch as a standalone."

That was then, this is now. And ESPN executives appear to have been overruled by Disney higher ups. Speaking on the company's recent earnings call, Disney CEO Bob Iger said that ESPN would now be conducting an about-face, and would launch a standalone streaming video service sometime in the next year or so:

"Iger affirmed that ESPN will launch a branded standalone streaming service later this year, in partnership with BAMTech, the digital technology firm in which Disney bought a $1 billion stake last year. He also talked up the prospects for ESPN to offset the industry-wide trend of declining subscriber rates via from traditional MVPDs through gains from the handful of upstart streaming channel packages that are in the works."

Necessary evolution -- how novel! Granted, ESPN's still on the hot seat. I've heard from several industry insiders familiar with ESPN's contracts with cable companies that language currently prevents cableco's from breaking ESPN out of the core channel lineup (something ESPN sued Verizon for in 2015, because of course) unless ESPN offers its own streaming service standalone. In other words ESPN's in for a rocky stretch either way.

Either the company launches a streaming video service that encourages cable companies to kick ESPN from the core bundle, further eroding ESPN's traditional cable customer totals, or they refuse to offer such a service and these users leave anyway. But when you're facing a major dismantling and reconfiguring of a legacy industry due to disruption, it's better to be out in front of it and ready to meet evolving user demand, than stumbling around blindly in denial.

Filed Under: ott, over the top, sports, video streaming
Companies: espn

The Cable Industry Wants Netflix Investigated... For Throttling Itself

from the blowhards-and-fisticuffs dept

"ACA has said all along that this Federal Communications Commission's approach to Net Neutrality is horribly one-sided and unfair because it leaves consumers unprotected from the actions of edge providers that block and throttle lawful traffic. The FCC's disclosure rules also fall short by covering ISPs but allowing edge providers to affect consumers' Internet experience in the same ways that ISPs' actions can. And now we see further evidence of these shortcomings in Netflix's confession that it has been engaging in covert video throttling to select groups of consumers."

"ACA is disappointed, but not surprised, that Netflix used its immunity from the FCC's Net Neutrality rules to engage in this practice. Netflix has the ability and incentive to engage in this anti-consumer behavior notwithstanding its impact on the virtual cycle that promotes the broadband deployment sustaining Netflix's business model. In light of this revelation, ACA calls on the FCC to initiate a Notice of Inquiry into the practices of edge providers and how these companies can threaten the openness of the Internet. Under Section 706, the FCC has the authority to conduct such an inquiry and issue regulations, should it be deemed necessary."

Filed Under: competition, net neutrality, throttling, transparency, video streaming
Companies: american cable association, at&t, comcast, netflix, t-mobile