with Aaron Schaffer

Sen. Elizabeth Warren is calling on a federal watchdog to investigate Google for alleged abusive behavior in advertising, potentially adding to the tech giant’s regulatory woes. 

The Massachusetts Democrat, however, isn’t turning to the Justice Department, which already brought a historic antitrust case against the search giant. She wants the Commodity Futures Trading Commission to take on the case, arguing that the largely unregulated world of online advertising could fall under the jurisdiction of the country’s top derivative markets cop. 

Warren specifically wants the regulator to drill into “Project Bernanke,” a secret program that allegedly gave the company’s own ad-buying system an edge over competitors by leveraging data from past bids. The program wasn’t disclosed to publishers, and its existence first became public in court documents filed in a Texas antitrust lawsuit, as the Wall Street Journal reported in April. Texas alleged that the company's use of bidding information effectively amounted to insider trading in digital advertising, according to the Journal. 

“Given the power of a company like Google to unilaterally manipulate the online advertising market, it is critical that the CFTC ensures these new digital commodities are traded fairly and without harmful manipulation,” Warren wrote in a letter addressed to CFTC acting chairman Rostin Behnam shared with The Technology 202. 

The letter reflects the broad political pressure on regulators to take on Silicon Valley. 

Amid concerns the Justice Department and Federal Trade Commission lack adequate resources to take on the tech industry, Warren is setting her sights on the ways that other government watchdogs could play a role in checking the industry’s power. Her letter comes amid growing pressure for the nation’s top financial and commodities cops to step up to new challenges of the digital age. 

Warren argues that online advertising could be considered a commodity, and therefore within the jurisdiction of the agency. She says that the CFTC has evolved to investigate other new commodities, such as cryptocurrencies, and now should do the same with advertising. 

Warren is homing in on ad exchanges. 

They've been compared to stock market exchanges, and facilitate the buying and selling of ads and determine prices based on real-time bidding. 

“The problem is that for more than a decade, Google has controlled the dominant ad exchange, the dominant ad-buying tools, and the dominant ad-selling tools,” she wrote. “The situation has been ripe for manipulation, and there is now strong evidence that Google has taken advantage of its position.”

Warren says this would not conflict with the other ongoing challenges to Google's power. In addition to the Justice Department suit, the company is the target of state attorneys general and European regulators. 

Google has defended its practices in court. 

The company defended its use of the data in court records, calling it “comparable to data maintained by other buying tools," the Journal reported. 

Peter Schottenfels, a Google spokesman, said that Warren's letter is based on a “mischaracterization” of Google's ad system in the Texas case. The company claims it made these changes to “optimize advertiser bids.” 

“Like many other businesses in this highly competitive field, we constantly work to improve our products and compete more effectively,” he said in a statement. "That's the kind of behavior that increases competition and makes ads more effective for businesses large and small." 

Warren has long advocated greater accountability for the tech industry. 

She's known for her outside-the-box ideas about how to rein in the industry's power. In the 2020 Democratic presidential primary, she prominently called for the breakup of Apple, Amazon, Facebook and Google. The senator's threat was largely seen as a turning point in the relationship between Silicon Valley and the Democratic Party. And her ideas have now gone mainstream in Congress, as lawmakers advanced bills last week to dismantle Google and other tech giants' power. (Amazon CEO Jeff Bezos owns The Washington Post.)

Warren today sent a letter to the new FTC chair, Lina Khan, calling for a "broad" and "meticulous" review of Amazon's acquisition of Metro-Goldwyn-Mayer Studios. She urged Khan to use the FTC's "broad authority" to probe the "possible anticompetitive effects this deal will have on streaming services and entertainment products in addition to the broader impacts that this transaction may have on workers, small businesses, and competition overall."

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Antitrust proposals aren’t ready for a House vote, said House Majority Leader Steny Hoyer.

The Maryland Democrat, who sets the schedule for legislation reaching the House floor, signaled it might be some time before the six antitrust bills that a House committee advanced last week would see a full House vote, Bloomberg News’s Emily Wilkins, Anna Edgerton and Rebecca Kern report.

“There was disagreement among the Democrats in the committee, and not every Democrat voted for it and some very senior members opposed it,” Hoyer said. “There’s a lot of discussion to be had before I get to scheduling bills for the floor.”

Meanwhile, a federal judge’s recent dismissal of two major antitrust complaints against Facebook actually could help the bills’ backers, Will Oremus writes, by boosting their argument “that the existing antitrust regime is ill-equipped to reckon with the market power of dominant Internet platforms.”

Amazon has demanded shares in dozens of potential vendors’ companies.

The company has struck dozens of the deals, called warrants, that are worth billions of dollars across various industries, the Journal’s Dana Mattioli reports. Former Amazon employees say the practice was unfair to smaller companies, which had no choice but to give in to the e-commerce giant’s demands for cuts of their companies at low rates. 

Most companies complied with the demands, a former executive said. Since it struck the agreements, Amazon has become a major shareholder in many of the companies. 

Amazon’s warrants usually require the company to meet certain milestones, a spokeswoman said. The spokeswoman declined to comment on specific agreements, the number of warrants that had been exercised or the amount of money the company had made from the agreements. Less than 1 percent of the company’s commercial agreements have warrants, she said.

(Amazon founder Jeff Bezos owns The Washington Post.)

Many U.S. government agencies don’t know what facial recognition systems they use, according to a government watchdog.

Use of the technology is widespread with at least 20 U.S. government agencies using it in recent years, Gerrit De Vynck reports. Facial recognition has been used to identify people suspected of breaking the law during protests after the killing of George Floyd and people who participated in the Jan. 6 Capitol riot. 

Some agencies told the Government Accountability Office that they used their own facial recognition databases, but most said they used databases made by outside companies such as Clearview AI, which claims to have scraped 3 billion face images from the Internet. Many agencies couldn’t say for sure what systems they used, something the GAO said needed to change.

Rant and rave

Facebook launched newsletter service Bulletin. The newsletters' names leave something to be desired, according to BuzzFeed News’s Ryan Mac:

Malcolm Gladwell’s first newsletter was an ode to Waymo, Google’s self-driving car company. The Guardian’s Julia Carrie Wong:

Hill happenings

Inside the industry

U.S. authorities will require companies to report car crashes involving driver-assistance systems.

The move encompasses systems like Tesla Autopilot and the vehicles deployed by Silicon Valley companies, and signals a major change by regulators, Faiz Siddiqui reports. Companies will have to report crashes where the “system was engaged during or immediately before the crash,” the National Highway Traffic Safety Administration said. Tesla did not respond to requests for comment.

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Daybook

  • The House Energy and Commerce Committee holds a hearing on securing U.S. networks today at 10:30 a.m.
  • The Federal Trade Commission holds an open meeting on Thursday at noon.

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