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Democrats at a Capitol Hill hearing yesterday pressed officials from the Federal Trade Commission and Justice Department to more forcefully police large technology companies. But the government’s top tech enforcers pointed the finger right back at lawmakers.
Testifying at a House antitrust hearing, FTC Chairman Joseph Simons pushed back on criticism that the agency’s recent $5 billion settlement with Facebook over privacy issues didn’t go far enough to protect consumers. He said the more than 100-year-old agency was not created to tackle modern privacy challenges, and in the absence of a federal data privacy law, it has far less authority than other global regulators.
“If you want us to do more on the privacy front, then we need help from you,” Simons told lawmakers. “We've done as much as we can do with the tools we have.”
The exchange highlighted the extent to which federal regulators feel hamstrung by outdated antitrust and privacy laws they believe don't give them the tools they need to adequately police the rising power of Big Tech. But they probably shouldn't expect Congress to act anytime soon given the House impeachment probe and the looming 2020 election, despite the charged rhetoric. Bipartisan momentum seems to have stalled on privacy and antitrust changes are still a long way off.
House lawmakers are undertaking a bipartisan review of competition in Silicon Valley, and they're also considering whether Congress should act to further empower regulators. Rep. David Cicilline, the Rhode Island Democrat leading the panel’s investigation, has said his committee is planning to make recommendations in the first part of 2020.
“While ultimately it is the responsibility of the antitrust enforcement agency to enforce the law, Congress has an obligation to assess whether existing antitrust laws and competition polices — and the will to enforce those laws and policies — are adequate to address the competition issues facing our country,” Rep. Jerry Nadler (D-N.Y.), the Judiciary Committee chair, said.
Nadler suggested that lawmakers could step in by providing regulators with more funding as he raised concerns about budget cuts in recent years despite the increasing complexity of antitrust cases. He slammed the agencies' "lax merger enforcement" and raised concerns that big platforms are thwarting smaller startups.
“Despite mounting evidence of illegal monopolization activities by some of the dominant platforms and numerous cases brought by international law enforcers, U.S. enforcers appear to be paralyzed,” Nadler said. “It has been decades since the [Justice] and the [FTC] has brought a significant monopolization case in the tech sector. This is not just a criticism of the current administration."
There are signs the tide could be turning, and Nadler said he was encouraged by recent reports agencies have opened antitrust probes into large technology companies such as Facebook, Google, Apple and Amazon. State attorneys general are also stepping up their oversight, launching their own investigations into Facebook and Google.
Cicilline raised concerns that despite this increased scrutiny, Google is continuing to make major acquisitions, such as its recently announced the $2.1 billion purchase of Fitbit. Citing criticism of the proposed deal from privacy advocates, the Rhode Island Democrat asked regulators whether there should be a moratorium on mergers at the dominant platforms while the agencies are conducting antitrust reviews.
Makan Delrahim, the top Justice Department official on antitrust issues who testified at the hearing, said there are other more appropriate solutions. He told reporters DOJ would need congressional approval to enact such a policy, according to The Hill.
BITS, NIBBLES AND BYTES
BITS: Amazon willingly turns a blind eye to fake products in the name of profit, former executives and outside consultants tell my colleague Jay Greene. The growing counterfeit problem on the site could draw scrutiny from lawmakers looking into the company's potentially anti-competitive practices.
Amazon stepped up efforts to curb its efforts to address counterfeits two years ago, Jay reports. But when product selection stagnated, the company aggressively added merchants regardless of if they were authorized to sell the brands, the former executive told Jay.
“Because they are allowing so much onto the site, they can’t handle the manual follow up these things require,” the former executive said. “It tells me, they just don’t want to find it. They want the selection.” Amazon spokeswoman Cecilia Fan disputed the executive's account and said the company goes beyond its “legal obligations” to detect fraud. Amazon spends nearly half a billion dollars on fraud detection a year and uses automated technology to detect counterfeits.
While companies can ask for Amazon to take down counterfeits, the onus is on retail brands to invest the manpower to find fakes. That's why some retail groups are pushing for changes to liability laws that would hold Amazon responsible for counterfeits.
Amazon CEO Jeff Bezos owns The Washington Post.
NIBBLES: Facebook CEO Mark Zuckerberg took a swipe yesterday at the content moderation practices of social media rivals, my colleague Tony Romm reports. Zuckerberg called for regulation that would require social media companies to publish transparency reports about the harmful content they take down.
“As a society we don’t know how much of this harmful content is out there and which companies are making progress,” he said. Zuckerberg added that the increase in content removals from previous quarters doesn't mean there is more harmful content on the platform. “What it says is we’re working harder to identify this and take action on it.”
That includes ongoing removals of videos of the March shooting of a mosque in Christchurch, New Zealand. Facebook reports that it had removed 4.5 million pieces of content related to the attack between March 15, the day it occurred, and September 30, nearly all of which it spotted before users reported it. Facebook also highlighted improvements in its use of artificial intelligence in removing hate speech, stating that it detects 80 percent of hate speech before users report it.
BYTES: Google will offer checking accounts beginning next year — joining rivals Facebook and Apple in the financial services arena even as regulators scrutinize tech companies for potentially anti-competitive behavior, my colleagues Greg Bensinger and Renae Merle report. The accounts will potentially give Google even greater insight into users' income, spending habits and other financial data.
The program, named Cache, will be run through a partnership with Citigroup and Stanford University's credit union, Greg and Renae report. Tech companies including Square have taken less traditional routes by applying for banking licenses directly but have been met with sharp resistance from the banking industry.
Federal regulators and lawmakers have also expressed concern with Big Tech's push into the sector. Rep. Chuy García (D-Ill.) plans to introduce legislation that would limit revenue tech companies can make off financial services, Zachary Warmbrodt at Politico reports.
“There ought to be very strict scrutiny,” Sen. Mark R. Warner (D-Va.), who sits on the Senate panel overseeing banking, told CNBC yesterday in response to the Google news.
— News from the public sector:
— News from the private sector:
— News about tech workforce and culture:
— Tech news generating buzz around the Web:
- Tyler Diers joined TechNet as Midwest Executive Director, according to a news release.
- Oculus CTO John Carmack is stepping down, Variety reports.
— Coming up:
- The House Committee on Small Business will host a hearing at 1 p.m. today on the impact of Big Tech's impact on small businesses
- On Wednesday the Senate Commerce Committee will host a hearing on the deployment of autonomous vehicles at 10 a.m.
- The House Financial Services Committee will host a hearing on the role of big data in financial services on November 21 at 9:30 a.m.
Your middle school favorite is back as a smartphone: columnist Geoffrey Fowler gets a look at Motorola's new Android-powered Razr flip phone. The bad news? It costs twice as much as an iPhone.