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Fear of retaliation could prevent smaller companies from speaking out against Big Tech as Washington ramps up its scrutiny of competition and power in Silicon Valley.
Many smaller tech companies and app developers have a classic “frenemy” relationship with the large tech platforms — often competing with their services while at the same time relying on the giants to reach consumers' eyeballs. That reliance could make it particularly difficult for some companies to go public with competition concerns against tech giants like Google.
"Google can make or break any company in the digital media sector," said Jason Kint, the chief executive of the online publishing group Digital Content Next. (The Washington Post is a member of Digital Content Next). "They are the number one source of distribution and monetization more than any company on the web. What benefit is there in crossing them?"
The relationship-driven business culture in Silicon Valley could also make it harder for companies to voice competition concerns, one venture capitalist says.
“At the end of the day, Silicon Valley is a very small community, particularly at the top,” said Robert Ackerman, the managing director and founder of the venture capital firm AllegisCyber Capital. “People go out of their way to avoid certain types of conflict in fear of blowback and ending up on a pseudo enemies list.”
That could create a challenge for House lawmakers eager to investigate whether Facebook, Apple, Amazon and Google are using their size and dominance to unfairly hamper emerging competitors. The top lawmaker leading the House investigation into competition in the tech industry says he’s already running into this issue — and it underscores why it’s time for Washington to step in and examine the consequences of concentrated power in the industry. (Amazon founder and CEO Jeff Bezos owns The Washington Post.)
Rep. David Cicilline, the Rhode Island Democrat leading the House lawmakers’ antitrust probe, said last week that smaller companies’ reliance on the larger platforms “makes them concerned about raising their voice, raising concerns about the monopoly power of these platforms,” according to Reuters.
“If you look at the size of some of the large platforms, their ability to exclude people from the platform can result in closing the business,” Cicilline told reporters.
“That’s sort of the most dangerous consequence of this kind of concentration, is the ability to exclude rivals, put them out of business, diminish innovation, diminish entrepreneurship, diminish choices for consumers,” he said.
This fear of backlash doesn't just apply to small companies, Kint says. He notes that Google for example is a major funder of media trade groups, think tanks and academics.
"It’s dangerous to bite the hand that feeds you," Kint told me. "Honestly, it’s really the best symptom of the problem."
Fear of backlash from the tech giants might not be the only factor preventing smaller tech outfits from engaging with Washington. Some venture capitalists said the companies’ silence could instead reflect a general skepticism of working with lawmakers.
“If anything, people worry more about government actions causing more harm than good,” said Venky Ganesan, a partner at the venture capital firm Menlo Ventures. “To paraphrase [President] Reagan, for most Silicon Valley companies, the 10 most dangerous words in the English language are ‘I am from the government and I’m here to help.’ ”
To be sure, there have been a handful of companies that have come forward with their complaints about the tech giants' power. Google has particularly been in the crosshairs, as last week the chief strategy officer at the music lyric company Genius wrote an op-ed in The Washington Post describing Google's power as a threat to the open Internet. The review website Yelp has also emerged as a prominent critic of Google on antitrust issues.
But other, smaller firms may be more willing to take a more secretive approach to working with regulators than blasting the companies publicly. Federal regulators such as the Justice Department and the Federal Trade Commission are divvying up tech oversight and considering opening investigations into some companies, including Google. Any potential investigation could be a more confidential avenue for the companies to share their concerns with Washington than testifying in front of House lawmakers.
“People now can form a line around the block at the Department of Justice and speak under the veil of confidentiality,” Luther Lowe, Yelp's senior vice president of public policy who supports greater antitrust scrutiny of Google, told me.
Google chief executive Sundar Pichai has said he's not surprised by the antitrust scrutiny here at home after the company has gone through recent investigations in Europe. He said in a recent CNN interview it's "perfectly fine" for companies to face increased scrutiny when they get big enough. He did note there are some benefits for companies to being big because they're able to make long-term investments in new techologies like quantum computing without fear of short-term returns.
"Scrutiny is right, and we will participate constructively in these discussions," he said.
BITS: Former Facebook chief security officer Alex Stamos wants to disabuse lawmakers of the notion that artificial intelligence is a quick fix to counterterrorism as he testifies in front of Congress today.
“There’s a lot of overstatement in Silicon Valley and D.C. over the capability to use machine learning,” Stamos tells The Technology 202 in an interview. “Machine learning has some significant limitations. It can’t be told to do something, it must be trained.” And in some cases, it “fails spectacularly.”
The technology's limitations were recently highlighted in the aftermath of the Christchurch, New Zealand, shooting, when companies struggled to remove a flood of graphic videos of the attack. The companies' response to the shooting videos is expected to be high on the agenda as the House Homeland Security Committee grapples with the role of AI in countering terrorism.
In his research, Stamos has found that AI can be up to 1,000 times more successful in moderating some content than others — but that relies on a number of factors including the content it has been trained on. Stamos says failing AI was just one of “three or four” issues, including a toxic Internet ecosystem friendly to white supremacist content, that allowed for the content to proliferate.
But just because artificial intelligence isn't a panacea for detecting terrorist content, it doesn’t mean tech companies are helpless. In his testimony, Stamos will advocate for the creation of a coordinating body similar to that used by global financial services to monitor risk that could handle counterterrorism alongside election security and fraud.
NIBBLES: A Vermont law requiring companies that compile and sell individual data to register with the state isn’t living up to lawmakers’ promises, my colleague Douglas MacMillan found in an investigation. Of the mere dozens of firms that have complied since the law went into effect in January, few offered the basic details required by the law, such as how the data is being used.
Amerilist, a data broker that sold The Washington Post a list of 5,000 people’s information, didn’t register until it was contacted by Douglas about the law. Ravi Backerdan, chief executive of Amerilist, told Douglas that registering “may have fallen under the radar.” So far, the Vermont attorney general hasn’t leveraged any fines against noncompliant firms.
Advocates and privacy experts warn that the shadowy, unregulated world of data brokers can lead to exploitation and harassment. But others in the industry warn that laws such as Vermont’s could inhibit important business features such as fraud protection.
Privacy legislation in other states has received significant pushback and gutting. A success in Vermont could turn the tables. Douglas writes:
“Earlier this month, a group of 40 state attorneys general recommended the creation of a clearinghouse for all data brokers in the country. In public comments to the FTC, the state officials said a registry could help prevent the 'loss of privacy that occurs when consumers are subject to increasingly extensive monitoring without increased public awareness or oversight.'”
Microsoft founder Bill Gates called for greater government oversight of the tech industry in a speech in Washington yesterday, citing concerns ranging from privacy to the influence of Big Tech on the democratic process.
“Technology has become so central that governments have to think: What does that mean about elections? What does that mean about bullying? What does it mean about wiretapping authorities that let you find out what's going on financially or drug-money laundering, things like that?" Gates said. "So, yes, the government needs to get involved.”
Gates did not go as far as to call for antitrust action, but did acknowledge the role government played in shaping Microsoft's business. The 2001 antitrust trial has been widely cited as a factor that held Microsoft back in the shift to mobile phones, and Gates said yesterday the company would have developed a mobile operating system if it weren't for the probe. The antirust activity also accelerated his retirement from the company, he said.
The role of government in technology has changed significantly since the days when Gates bragged about not having an office in Washington, he said. “The fact that now this is the way people consume media has really brought it into a realm where we need to shape it so that the benefits need to outweigh the negatives,” he said.
— News from the private sector:
— News from the public sector:
— A new report from Deloitte and the National Venture Capital Association found venture capital firms are starting to make some progress on addressing the gender and racial gaps in the profession. The number of venture capital firms with diversity and inclusion programs nearly doubled from 2016, and 26 percent of firms now have formal programs for hiring diverse employees as compared to 10 percent in 2016. Women remain underrepresented, but now make up 14 percent of investment partners, verses 11 percent in 2016. The report found that the industry has a ways to go when it comes to hiring more minorities. Smaller firms in general hire more Black and hispanic investment professionals than larger firms, so mid-size and larger firms have proportionally smaller diversity and inclusion figures and a bigger gap to close, according to the report.
— Tech news generating buzz around the Web:
The House Homeland Security Committee will host a hearing on Artificial Intelligence and Counterterrorism at 10 a.m.
The Senate Commerce subcommittee on communications, technology, innovations and the internet will host a hearing examining the use of persuasive technology on internet platforms, focusing on optimizing for engagement at 10.am.
The House Homeland Security Committee will bring in representatives from Facebook, Google, and Twitter to discuss their company's efforts to address terror content and misinformation on Wednesday at 10 a.m.