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Politicians such as Sen. Elizabeth Warren (D-Mass.) have made the case that breaking up Big Tech will benefit smaller start-ups. But some of the very venture capitalists and entrepreneurs they say stand to benefit are wary of the antitrust frenzy in Washington.
“Anytime someone from Washington claims to be here to help the rest of us, you’re going to find a lot of skepticism from me,” said Bob Ackerman, founder and managing director of the venture capital firm AllegisCyber Capital. Politicians “don’t understand tech, don’t understand the environment and don’t understand the ecosystem,” he added.
Roger Dickey, a serial entrepreneur and the founder and chief executive of the early-stage start-up Untitled Labs, said antitrust action aimed at tech titans such as Google and Facebook could be a “slippery slope.” It could lead to broader regulation that impacts the entire industry — and eventually even antitrust scrutiny of smaller tech companies, said Dickey, who previously founded Gigster and the Facebook game Mafia Wars.
“If you break up all the big guys, eventually you’re going to be the biggest one left,” Dickey said. “Then the government can come after you too.”
Venture capitalists and entrepreneurs' criticism underscores how deeply intertwined the industry’s upstarts are with tech behemoths — as well as a fear that politicians eager to go on a trustbusting spree don’t understand that.
Those in the tech industry who are cheering the latest antitrust scrutiny say venture capitalists and entrepreneurs are hesitant about jumping on the bandwagon because their end goal is getting bought out by the big guys. Luther Lowe, the vice president of policy at Yelp who has advocated for greater antitrust action, says venture capitalists are focused on building “shiny objects” to capture the attention of Google, Apple, Facebook and Amazon for a quick sale.
“These guys are all in on the take,” Lowe said. “They don’t want to alienate these guys that could be potential acquirers.”
There's also concern policymakers' focus on reining in Big Tech's power could result in broader regulation — which could ultimately introduce new barriers for launching start-ups. Dickey noted that if you wanted to start a restaurant in San Francisco, you would have to obtain licenses and go through lengthy process to deal with local laws. But none of that exists when you start a website or an app.
“A lot of entrepreneurs have been blissfully unaware of regulation as a threat,” he told me.
But that's changing, according to Ackerman, who says the environment in Washington is impacting the calculations venture capitalists make when weighing investment decisions.
“For the very first time it introduces the concept of political risk into anything we’re building,” Ackerman said. “Historically the regulatory environment hasn’t affected us at all, because Silicon Valley has been a 'no go' in Washington.”
To be sure, venture capitalists and entrepreneurs do recognize there are serious competition issues in Silicon Valley. And they admit there's a general hesitancy in the industry to invest in companies that compete directly with the tech giants today. Many refer to “kill zones” surrounding the big companies. If a small start-up wades into these areas, they're at risk of being squashed, imitated or acquired by a bigger giant. Venture capitalists won't touch them with a ten-foot pole.
But while venture capitalists like Ackerman are concerned about these competition problems, they're not sure 20th century antitrust laws and politicians who have displayed broad ignorance of the industry in hearings last year will be the ones to fix it.
“Don’t try to regulate things that you don’t understand,” Ackerman said.
Yet Warren says the dependency of the start-ups on the large tech companies and kill zone fears are exactly why her plan to break up Big Tech is needed. When I asked her how she would avoid unintended consequences on innovation as she tries to break up Big Tech in an interview earlier this year, she told me the current system is an unintended consequence.
“The giants are destroying competition in one area after another,” she said. “It's the job of law to enforce the rules to stop them. That's how competition will flourish in this marketplace. The country had to do this 120 years ago. We need to do it again.”
BITS: YouTube announced yesterday that it will ban white-supremacist content and conspiracy videos alleging, for instance, that the Holocaust did not happen. The new policy draws a hard line at banning videos “alleging that a group is superior in order to justify discrimination, segregation, or exclusion,” as my colleague Elizabeth Dwoskin reports
YouTube said the policy overhaul will result in the removal of thousands of channels and tens of thousands of videos. The Google-owned company is the latest social media giant to draw a finer line against white-supremacist content under public pressure. Facebook announced in March that it would widen its ban against white-supremacist content to include white nationalism and white separatism. However, the social media platform still allows other types of conspiracy content.
Conspicuously absent from the pack is Twitter, which has refused to ban white-supremacist and white-nationalist content from its platform. The company is debating banning the content and has launched an in-house research project to evaluate how white supremacists and nationalists use the site, Motherboard reports.
As Kevin Roose of the New York Times pointed out, YouTube's ability to enforce its rules is lacking:
New: YouTube is removing thousands of videos from white supremacists and tightening its hate speech policies.— Kevin Roose (@kevinroose) June 5, 2019
At the same time, it is under fire for allowing a popular right-wing creator to harass @gaywonk.
Making rules is easier than enforcing them! https://t.co/PCtM5eGnjn
YouTube overhauled its policies as it was embroiled in controversy over its content moderation practices. YouTube announced yesterday it would demonetize a channel run by Steven Crowder, a conservative commentator and comdedian who Vox reporter Carlos Maza says harassed him with racist and homophobic taunts on the platform for years. The company appeared to base its decision on T-shirts with homophobic language that Crowder sells, according to The Daily Beast's Kelly Weill. It was a partial reversal for YouTube after it faced widespread criticism for saying the videos Maza reported did not violate its policies and would not be taken down.
NIBBLES: Sen. Edward J. Markey (D-Mass.) is putting the spotlight on China's efforts to export surveillance technology. He wrote a letter to Secretary of State Mike Pompeo asking the department to examine what could be done to prevent the China from potentially exploiting its telecommunications industry to further repressive government action in other countries
“The spread of sophisticated and authoritarian mass surveillance within China in itself is problematic, but its export to other governments poses a worldwide threat of repression,” Markey said in his letter. “Beijing is actively exporting methods of control that any authoritarian can implement, eroding freedom in every recipient country and undermining an international order built on open societies.”
A Chinese state-run defense manufacturer created a highly networked domestic surveillance system that is being used to track and detain ethnic minorities in the country, according to a New York Times report cited by Markey. Markey also questioned witnesses at a Senate Foreign Relations Committee hearing yesterday about the dangers of the Chinese technology.
The use of surveillance technology to suppress Uighurs and other groups in China was raised as an issue of concern by both experts and lawmakers at a House Oversight and Reform Committee hearing last month on facial-recognition technology.
BYTES: Russia's campaign to manipulate Twitter ahead of the 2016 election "was larger, more coordinated and more effective than previously known," according to a report from Politico's Tim Starks, Laurens Cerulus and Mark Scott. The infamous Russian troll farm not only had more sway than previously known -- but it might have even generated income from some of its phony accounts, the cybersecurity firm Symantec found.
Their research examined a large data set that Twitter released in October 2018 on about 3,900 suspended accounts and 10 million tweets. It found that the average time between account creation and first tweet was 177 days and the most retweeted account picked up 6 million retweets, and less than 2,000 of those came from other accounts linked to the Internet Research Agency.
The long lag between the creation of an account and the initial tweet points indicates the Russians focused on preparation, and the high number of retweets shows many accounts not associated with the IRA helped blast the Kremlin's message.
The Politico team notes these findings underscore the clock is running on efforts to secure the 2020 election. It also highlights how difficult it is for lawmakers to understand how the platforms are policing content. "Our response to bad content on social media is generally to say it should be taken down. That's because that's something we as politicians who are not technical experts understand," Rep. Tom Malinowski (D-N.J.), former assistant secretary of State for Democracy, Human Rights and Labor, told Politico.
"What we've had a harder time grasping is the virality machine that's built into the social networks through the algorithms that determine what news we see on a daily basis," he said.
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