Ctrl + N
News that the Federal Trade Commission plans to review existing mergers of tech companies sparked immediate questions about whether the regulator would scrutinize Facebook's social media empire. But experts are skeptical that the agency's new tech-focused task force will result in tough action -- such as breaking up Facebook and its subsidiaries WhatsApp and Instagram.
For those consumer advocates who think Facebook should be stripped of its largest acquisitions, the announcement of a new agency task force on competition is a far cry from the strong crackdown on Silicon Valley they would like to see. As the technology company is under fire for broad abuses of users’ data, they say the company's strategy of buying up its most promising competitors have left it with no serious challengers and outsized power -- and the FTC still isn't doing nearly enough.
Matthew Stoller, a fellow at the Open Markets Institute, said:
This is just ridiculous. They've held self-examination hearings. They've done investigations. Now they are setting up a task force. Just do something, @FTC. I thought commissioners @JoeSimonsFTC @FTCPhillips might be more than just paper weights. Nope. https://t.co/faOk8ps1cs— Matt Stoller (@matthewstoller) February 26, 2019
The fact that the FTC is creating a task force focused solely on competition in the tech industry — and dedicating a whopping 17 attorneys to it — shows that the agency is hearing calls for it to police tech titans at a time when lawmakers are concerned about Big Tech's outsize power. But there are many reasons why experts say the move will do little more than pay lip service to the issue.
First, any effort to bust up tech companies would likely result in costly and lengthy legal battles that the FTC may be unwilling or unable to take on.
From CNBC's editorial director of technology coverage:
Do they have the stomach for a 8-year court case? That's what it took to get an order to break Microsoft up, with a much clearer monopoly argument...and then it was overturned on appeal anyway.— Matt Rosoff (@MattRosoff) February 26, 2019
Second, consumer advocates pointed out that reviewing current and previous mergers is already the FTC's job -- and that it shouldn't need a new task force to take this kind of action.
“Obviously, we are glad that the FTC is looking more closely at competition in the tech sector, but the creation of the task force is not a substitute for overdue enforcement action,” said Marc Rotenberg, president of the Electronic Privacy Information Center. The group has called on the FTC to use its authority to break off Instagram and WhatsApp from Facebook.
Bruce Hoffman, the director of the FTC’s competition bureau, wouldn’t say in a call with reporters whether it would specifically look into Facebook’s acquisition of Instagram, saying it couldn’t comment on “any pending investigation or specific plans for investigations.” But Hoffman did say that if FTC were to review completed mergers, it would “have the full panoply” of remedies at its disposal, which could include breaking up companies or spinning off companies.
But of course, the agency would have to meet legal standards that would hold up in court — and that would be no easy task.
That's because there are legal questions about how existing competition rules should be applied to the tech giants. The task force is emerging as some congressional Democrats are reviewing existing competition laws — which have traditionally focused on whether monopolies set unfair prices that harm consumers. Some believe the laws may have to be updated to apply to free digital services such as Facebook and Google.
These lawmakers took the new announcement as a sign the FTC is taking their work seriously. Rep. David N. Cicilline (D-R.I.), the House antitrust subcommittee chair, has been a leading voice on tech competition in Congress. He applauded the new task force on Twitter:
This is an important step toward restoring competition online and keeping the Internet open and innovative. Companies like @Facebook will not regulate themselves. Government has to do more to protect consumers! https://t.co/n5TKIxUK74— David Cicilline (@davidcicilline) February 26, 2019
To be sure, the time is ripe for change on antitrust laws -- as there is strong political pressure on both sides of the aisle for the FTC to take a harder look at Silicon Valley companies. Though Facebook took the spotlight yesterday, President Trump has previously said that his administration is also looking at Amazon and Google for antitrust violations. Google's acquisition of advertiser tool DoubleClick and Amazon's acquisition of Whole Foods are two other tech mergers that critics say skated by antitrust regulators with little scrutiny.
Tim Wu, the author of “The Curse of Bigness: Antitrust in the New Gilded Age,” who has built the case for a breakup of Facebook and Instagram, said he's hopeful the task force could result in change in Silicon Valley:
I'm hoping the new @FTC tech platform task force finds the courage to re-consider some of the anti-competitive tech mergers of the last 10 years; tech is in need of a genuine shakeup— Tim Wu (@superwuster) February 26, 2019
It's too early too tell if Silicon Valley companies should be shaking in their boots, said David Vladeck, a former director of the FTC’s Bureau of Consumer Protection. The task force is an unprecedented initiative, he said, and it shows the agency is serious about taking a closer look at the tech industry. Even if the FTC doesn't go so far to break up existing tech mergers, retrospective analysis could give the agency insights that may be useful when reviewing future deals.
"This will give the agency a better sense of where companies like Facebook and the next Instagram stand," he said.
|You are reading The Technology 202, our guide to the intersection of technology and politics.|
|Not a regular subscriber?|
BITS: A federal appeals court upheld AT&T and Time Warner's merger, The Washington Post's Brian Fung reported. The court said the Justice Department, which opposed the merger, did not prove its claim that a lower court failed to apply “fundamental principles of economics” when it examined the potential effects of the merger on consumers. “While we respect the important role that the U.S. Department of Justice plays in the merger review process, we trust that today’s unanimous decision from the D.C. Circuit will end this litigation,” AT&T said in a statement, according to my colleague.
The decision by a three-judge panel also represents a setback for Makan Delrahim, the top antitrust chief at the Justice Department. It's the second time Delrahim has lost in court in an attempt to block the merger. “But while the decision could mean the end of the AT&T-Time Warner battle, it probably will not settle a growing debate in Washington about the adequacy of America’s antitrust laws and whether regulators have been too meek overall in challenging mergers,” Brian wrote.
NIBBLES: A congressional hearing on online privacy marked the start of what Democrats on Capitol Hill vow to be a campaign to hold Silicon Valley companies accountable, The Post's Tony Romm reported. Democrats advocated for enacting federal privacy legislation and scrutinizing tech firms during a House Energy and Commerce subcommittee on consumer protection and commerce hearing. “Without a comprehensive federal privacy law,” Rep. Jan Schakowsky (D-Ill.), the subcommittee's chair, said, “the burden has fallen completely on consumers to protect themselves, and this has to end.”
Democratic lawmakers also plan to examine how social media platforms police abusive content and explore tech giants' effects on competition. Rep. Adam B. Schiff (D-Calif.), chairman of the House Intelligence Committee, said his panel intends to take a look at social media sites. “The argument that these are immature industries, and need to be given free rein — I don’t think that applies there now among the most capital-intensive, successful businesses on the planet,” Schiff told Tony in a recent interview. “Vigorous oversight is now the new normal.”
BYTES: Major tech firms such as Facebook and Apple are opposing efforts in several foreign countries to require companies to hand over data that authorities may be unable to access, the Wall Street Journal's Robert McMillan and Dustin Volz reported. Governments that seek to get ahold of data in investigations or to prevent threats may be unable to do so when devices or products are encrypted. Britain in 2016 passed legislation that can require tech companies to turn in data to law enforcement. India is also mulling rules that would give authorities access to some WhatsApp data, the Journal reported.
Australia has also passed a law that critics say could result in weakening encryption. “On Thursday, a coalition of civil society groups, trade associations and nine tech companies, including Facebook Inc., which owns WhatsApp, Apple, Google, Twitter Inc. and Microsoft Corp. filed comments with the Australian government warning that the law, passed in December, could create back doors into technology products,” the Journal reported.
The FBI is “very curious to see how the Australian (encryption) law, now that it is passed, will be implemented and what will be the impact,” said Amy Hess, who oversees the bureau's cyber division. https://t.co/8Tm5UH0IA7— Dustin Volz (@dnvolz) February 26, 2019
— Twitter suspended far-right activist Jacob Wohl for creating fake accounts to allegedly seek to manipulate the 2020 presidential election, my colleagues Tony and Brian reported. In a story published by USA Today on Tuesday, Wohl said he intended to create “enormous left-wing online properties” and use them “to steer the left-wing votes in the primaries to what we feel are weaker candidates compared with Trump.”
— Some investors and supporters are getting tired of Tesla chief executive Elon Musk's tweeting habits, which have drawn scrutiny from regulators, The Post's Renae Merle and Drew Harwell reported. “He’s hurting the shareholders, his company — and for what? Twitter isn’t that important!” Ross Gerber, whose investment firm Gerber Kawasaki owns about $10 million in Tesla shares, told my colleagues. “That’s the part that’s starting to bother me. It’s like, enough of this crap.”
A federal judge has ordered Musk to prove that he didn't break a settlement agreement with the Securities and Exchange Commission. The SEC “has accused Musk of not seeking preapproval of any potentially market-moving tweets about the car company as he promised,” Renae and Drew reported.
— Facebook banned British anti-Muslim activist Tommy Robinson from its platform, The Post's Hamza Shaban reported. Aside from deleting the Facebook profile and page of Robinson, the company also took down his Instagram account. “Tommy Robinson’s Facebook Page has repeatedly broken these standards, posting material that uses dehumanizing language and calls for violence targeted at Muslims. He has also behaved in ways that violate our policies around organized hate,” Facebook said in a blog post, according to my colleague. Robinson, a founder of the English Defense League, had millions of online followers.
— More technology news from the private sector:
— Democratic presidential candidate Sen. Amy Klobuchar (D-Minn.) will raise money in San Francisco next month, Recode’s Theodore Schleifer reported. “The names on the host committee are not narrowly in the tech industry, but it’s fair to expect some tech names to drop by the event being held at Spruce, the high-end restaurant in San Francisco’s Presidio Heights neighborhood, on March 19,” Recode reported.
— The Democratic Party chairs of four early-primary states want presidential hopefuls to commit not to use online disinformation tactics against their opponents, Politico's Natasha Korecki reported. The effort by the chairs of the Democratic Party in Iowa, New Hampshire, Nevada and South Carolina seeks to establish rules on disinformation and cybersecurity that campaigns would have to respect. “I think after what happened in 2016 and what we saw of the foreign state actors play in the race, we want to make sure our process is as fair and transparent as possible,” Troy Price, chairman of the Iowa Democratic Party, told Politico.
Under such potential agreement, candidates would have to refrain from using hacked material, spreading disinformation or resorting to fake accounts on social media platforms. “If we know the campaigns aren’t doing it, it’s going to be much easier to find it and make it go away. If this becomes widespread, it will become truly impossible to root out what’s coming from foreign powers,” Simon Rosenberg, who led the Democratic Congressional Campaign Committee's efforts against disinformation during the 2018 midterm election, told Korecki.
— Federal Communications Commission Chairman Ajit Pai told phone companies to step up the fight against unwanted robo-calls or face regulation, CNBC's Matthew J. Belvedere reported. “Recently I told the industry, 'Look, we need to adopt call authentication, essentially a digital fingerprint, for every single phone call this year. We need to have it now or otherwise it's going to be regulatory intervention,” Pai said in an interview on CNBC.
— More technology news from the public sector:
— News about tech workforce and culture:
— Tech news generating buzz around the Web:
— Today in funding news:
- Senate Commerce Committee hearing on “policy principles for a federal data privacy framework.”
- The Cato Institute holds a conference titled “Who’s afraid of Big Tech?” on Friday.
- The Center for Strategic and International Studies holds an event on “digital governance and the pursuit of technological leadership” on March 4.
Cohen testimony: 5 things to expect.
Pharma CEOs admit U.S. has “some of the highest prices” for prescriptions in the world:
“Thinking Out Loud” vs. “Let's Get It On”: Does Ed Sheeran’s song sound too similar?