The Technology 202: Here are seven takeaways from the House’s sweeping report concluding Silicon Valley is too powerful
October 7, 2020 | technology | No Comments
(Amazon chief executive Jeff Bezos owns The Washington Post).
The report could provide a regulatory blueprint for lawmakers who have significantly ramped up rhetoric criticizing the tech giants in recent years, but have yet to actually pass any laws that would significantly check the industry’s power. The report’s authors, all Democrats, hope it will be a turning point for how Washington approaches corporate consolidation.
“ … Congress must revive its tradition of robust oversight over the antitrust laws and increased market concentration in our economy,” the report said.
Here are our top seven takeaways after sifting through the nearly 450-page report:
1. It proposes some most sweeping revisions to antitrust law in decades.
The report proposes changing existing laws in ways that could have far-reaching effects throughout the entire economy. The report recommends:
- New limits on companies operating in adjacent lines of business, which could impact how tech companies operate their marketplaces
- Nondiscrimination requirements that would prevent large tech companies from giving their own products and services a boost over rivals
- Requirements for interoperability and data portability, which would make it easier for consumers to switch from one company’s services to those of another
- A shift in how antitrust enforcers review mergers (The report’s authors recommend regulators assume a tech giant’s acquisition is anticompetitive until the company proves otherwise)
- A move to strengthen provisions in decades-old antitrust laws and updating them for the digital age
- Stronger legal enforcement by overriding problematic precedents in antitrust case law
- More private enforcement of antitrust law, through eliminating legal hurdles such as forced arbitration clauses
2. It’s also a scathing indictment of top antitrust enforcers.
The report says it’s not clear whether the Justice Department or the Federal Trade Commission are equipped to tackle anticompetitive mergers in the tech sector. It accuses the agencies of “significant missteps and repeat enforcement failures.”
This is significant because federal regulators have given their blessing to many of the tech giants’ purchases that lawmakers are now concerned about, such as Facebook’s acquisition of Instagram. They also question more recent deals, such as DOJ’s decision to green light the Google acquisition of Looker, a data analytics company. The report recommends expanding budgets for these agencies, as well as giving them broader powers and responsibilities, such as requiring the FTC to regularly collect data about how digital markets are operating.
3. Republicans aren’t happy with all the recommendations in the report.
The House antitrust investigation began as a rare bipartisan effort and continued even through a contentious 16 months in Washington. But partisan rifts were on full display yesterday as House Republicans released their own reports in response to the panel’s offering.
Rep. Ken Buck (R-Co.) led some Republicans in releasing a report entitled “The Third Way: Antitrust Enforcement in Big Tech” that agrees with some of the Democratic staff report’s recommendations, such as providing enforcers with more resources. However, it calls others “nonstarters,” such as a proposal to eliminate arbitration clauses and thus open up the companies to more lawsuits.
Meanwhile, other Republicans criticized the authors for not including their claims tech companies wield a political bias against conservatives, a charge the companies have denied and is supported by little evidence. Rep. Jim Jordan (Ohio), the committee’s top Republican, wrote a letter to Democrats that said ignoring that topic “ultimately discredits the draft report’s findings.”
Yet Democrats remain optimistic that while lawmakers don’t agree on every aspect of the report, they may find common ground in drafting legislation.
“I think signing onto the report as a whole, verses co-sponsoring legislation that takes on different pieces of the report, might be two different things,” Rep. Pramila Jayapal (D-Wash.) told Tony. “I think it’s unfortunate this turned into at least for one member in particular always being about the political bias of these tech companies.”
“But I don’t think that means many of the recommendations of the report wouldn’t be bipartisan as we move forward,” she added.
4. Investigators shared fresh evidence that could increase scrutiny of Facebook’s acquisition of Instagram.
Investigators paid special attention to Facebook’s purchase of Instagram and WhatsApp, and they presented a new memo yesterday adding to a body of evidence that could fuel calls to break up the company. They produced a 2018 memo, prepared for Facebook head Mark Zuckerberg, which appears to show Facebook had grown more concerned with competition from the photo-sharing subsidiary than outside services.
A former senior Instagram employee told lawmakers the memo guided Facebook’s strategy, which sought to ensure that Instagram could never become bigger and more popular than the tech giant’s original social-networking app, according to the report. To investigators, it also proved the Instagram purchase essentially “tipped the social networking market toward a monopoly, and now considers competition within its own family of products to be more considerable than competition from any other firm.”
This new evidence adds to private communications that House lawmakers unveiled at a hearing earlier this summer, which showed Facebook executives discussing a “land grab” to buy competitors before they could pose significant threats. The investigators ultimately concluded the company had “acquired its competitive threats to maintain and expand its dominance.”
“Acquisitions are part of every industry, and just one way we innovate new technologies to deliver more value to people,” Facebook spokesman Chris Sgro said in a statement. “Instagram and WhatsApp have reached new heights of success because Facebook has invested billions in those businesses.”
5. The report dedicated the most pages to Google, which it accused of becoming “an ecosystem of interlocking monopolies.”
The findings could inform ongoing investigations of the tech giant, as DOJ is expected to file an antitrust lawsuit against the search giant in a matter of days. Google’s parent company produced more than 1 million documents in response to the committee’s requests, which the lawmakers used to home in on the ways Google gives its own products a boost — even when they were inferior to competitors.
They specifically focused on documents that revealed Google, which owns the Android operating system, required smartphone makers to pre-install its own app, which investigators say gave the company an advantage as more Internet traffic shifted away from computers and to phones. Now Congress is concerned Google will make similar inroads as voice-activated devices become more popular.
“Americans simply don’t want Congress to break Google’s products or harm the free services they use every day,” Google spokeswoman Julie Tarallo McAlister said in a statement. “The goal of antitrust law is to protect consumers, not help commercial rivals.”
6. Investigators criticized Amazon for displaying “a lack of candor” throughout the 16-month probe.
Lawmakers sought to scrutinize Amazon’s relationship with third-party sellers, which the company publicly calls “partners” but also competes with as a merchant of many products itself. Through requests for executive communications and extensive interviews with these competing businesses, the committee concluded the company has “an inherent conflict of interests.”
“This conflict incentivizes Amazon to exploit its access to competing sellers’ data and information, among other anticompetitive conduct,” the lawmakers concluded.
The finding stands in stark contrast to Amazon remarks to the subcommittee at an early hearing in the investigation, when an Amazon executive told Congress the company doesn’t “use individual seller data directly to compete.” Months later, media reports contradicted that and revealed the company had used rivals’ data to develop competing products.
The committee cited a letter where members from both party on the committee accused the company of being “misleading, and possibly criminally false or perjurious.” The subcommittee staff said it views the company’s claims “with a degree of skepticism” in instances where it conflicted with other information they gathered.
Amazon responded with an unsigned blog post, calling House investigators’ proposed antitrust overhaul “flawed” and “fringe” in nature and scope. The company also defended its business practices, arguing its relationship with third-party sellers is “mutually beneficial.”
“All large organizations attract the attention of regulators, and we welcome that scrutiny. But large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong,” the blog said.
7. The committee accused Apple of “gatekeeper power” as it sees tensions mount with developers.
The investigation primarily focused on the App Store, which has recently been a source of conflict as developers criticize its policies as well as the fees it takes from companies that offer subscriptions. Epic Games, the maker of Fortnite, recently mounted a lawsuit against Apple over these policies.
The report included evidence showing the iPhone maker at times had copied features from popular services. For instance, Phillip Shoemaker, a former App Store review director, told House investigators about an instance in which Apple rejected an app for wireless charging even though it did not violate company guidelines — then later “appropriated the rejected app’s feature for its own offerings,” the report says.
“Apple has struggled with using the App Store as a weapon against competitors,” Shoemaker has written, according to the report.
Apple spokesman Fred Sainz said the company “vehemently” disagrees with the report’s conclusions.
“The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem,” he said. “Competition drives innovation, and innovation has always defined us at Apple.”
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Facebook will remove all QAnon affiliated groups and pages.
The ban is an escalation of the platform’s previous decision to restrict content associated with the conspiracy theory that violated Facebook’s policies against inciting violence and hate speech, Craig Timberg and Isaac Stanley-Becker report.
The ban will not touch on individual posts or pages.
The QAnon conspiracy theory forwards baseless accusations that Democratic officials and celebrities engage in crimes including eating children, and that President Trump is a savior battling them. Several Republicans running for Congress are adherents of the theory, which has also been a key driver in misinformation about the coronavirus.
Facebook launched a more limited sweep of 3,000 QAnon-related pages in August that violated its policies around violence and hate speech. But the content quickly resurfaced in new ways.
“We aim to combat this more effectively with this update that strengthens and expands our enforcement against the conspiracy theory movement,” the company said in its blog post.
Facebook’s decision to strengthen its policy drew cautious optimism.
“It’s really important that they pushed beyond that to see that this conspiracy was being pushed in other places,” said Vanita Gupta, president of the Leadership Conference on Civil & Human Rights.
“Ultimately the real test will be whether Facebook actually takes measures to enforce these new policies — we’ve seen in myriad other contexts, including with respect to right-wing militias like the Boogaloos, that Facebook has repeatedly failed to consistently enforce its existing policies,” said Sen. Mark R. Warner (D-Va.).
The Labor Department is probing Microsoft’s commitment to increase its number of Black employees.
Th federal agency is probing if the diversity commitment constitutes unlawful discrimination, Microsoft announced in a blog post. The probe follows an executive order from the White House cracking down on diversity training and racial sensitivity programs by federal offices and contractors. Microsoft, which is a federal contractor, announced in June that it would invest more than $100 million in internal diversity and inclusion programs and work to double its number of Black managers and leaders by 2025.
Dev Stahlkopf, corporate vice president and general counsel, at Microsoft said that the company “emphatically” believes its diversity programs fall within the law.
“We also have affirmative obligations as a company that serves the federal government to continue to increase the diversity of our workforce, and we take those obligations very seriously,” said Stahlkopf. “We have decades of experience and know full well how to appropriately create opportunities for people without taking away opportunities from others.”
The investigation could open the door to similar probes at other tech companies that do government business. The Department of Labor did not immediately respond to a request for comment.
The Supreme Court will today hear arguments in the years-long copyright dispute between Oracle and Google.
The court will decide on a 2010 lawsuit from Oracle against Google alleging that the rival stole code it owns to build the Android operating system. Google, which claims that the code was technical and not a unique property, initially won a California court ruling after Oracle sued it for $9 billion in 2010. But an appeals court overruled the decision, leading the case to ultimately appearing in front of the highest court in the land.
Google has received the support of a number of think tanks and trade groups including Electronic Frontier Foundation, Center for Democracy & Technology, the Internet Association, the National Consumers League and others. Many of the groups receive some form of funding from Google, but several declined to disclose that in their briefs. (Disclosure is not legally required). Seven writers of briefs supporting Oracle also received funding from the company.
The groups denied that financial ties with the companies influenced their support.
With only eight justices sitting on the bench, a tie would uphold the appeals court ruling.
Facebook removed a post from President Trump calling the coronavirus “far less lethal” than the flu.
Twitter hid the same post under a notice warning about coronavirus misinformation, Rachel Lerman reports.
“Flu season is coming up! Many people every year, sometimes over 100,000, and despite the Vaccine, die from the Flu. Are we going to close down our Country? No, we have learned to live with it, just like we are learning to live with Covid, in most populations far less lethal!!!” Trump’s tweet and now-deleted Facebook post read. (Experts say Trump’s claims are not accurate given recent government data on flu deaths.)
Social media companies have taken stricter approaches to misinformation and dangerous content around the coronavirus than other kinds of political misinformation, but Trump’s posts on the subject have occupied a grayer space.
Both companies left up a post by Trump Monday telling Americans “Don’t be afraid of Covid,” sparking criticism that the platforms were facilitating the president’s attempts to undermine the deadly virus.
Trump took to Twitter to lambast the platforms’ responses to his Tuesday posts, calling for the repeal of a law that grants companies immunity from liability for content posted by users.
He later urged Republicans to confirm Nathan Simington, his nominee for Federal Communications Commission. Simington, a senior adviser in the National Telecommunications and Information Administration, helped craft Trump’s executive order to dismantle the tech legal shield, Section 230 of the Communications Decency Act.
The Trump administration will further tighten restrictions on visas for skilled workers.
The move is one that tech companies have fiercely opposed, Nick Miroff reports. New guidelines have not yet been published, leaving hundreds of thousands of visa holders in the dark. The new rules, which will go into effect in 60 days, are likely to trigger a flood of legal action.
Many tech leaders spoke out about Trump’s efforts to limit the number of H-1B visas in June.
“Last week, the U.S. District Court for the Northern District of California ruled against the administration’s order attempting to end categories of visas and now, this week, the administration is flouting the court’s ruling by issuing different rules to try to obtain the result it wants,” Linda Moore, president and CEO of tech trade group TechNet said in a statement. “Changing the requirements around H-1B and other work visas will only hurt American companies that depend on high-skilled workers who fill critical positions while we work to grow our domestic STEM pipeline.
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