Groundbreaking legislation is advancing in Congress that would curb the market power of tech giants Facebook, Google, Amazon and Apple and could force them to untie their dominant platforms from their other lines of business. Hostility toward Big Tech has grown in recent years with the belief that its size and swagger have stifled competition, limited consumer choice and raised prices.
The bipartisan legislation targets the companies’ structure and points toward breaking them up, a dramatic step for Congress to take against a powerful industry whose products are woven into everyday life. Its backers say it would help ensure lower prices and more choices for consumers, and a fairer playing field for smaller businesses to compete.
In two days of heavy, often wonky, debate, the House Judiciary Committee approved the legislative package and sent it to the full U.S. House, where a vote will be the next step in what promises to be a strenuous slog through Congress.
The measures seek to rein in the tech giants in five ways:
BREAKING THEM UP
The legislation would bar the four companies from owning a dominant platform at the same time they own another line of business if having both creates a conflict of interest.
That means they could be forced to sell off businesses in which their market dominance enables them to favor their own services or squash competitors. Because the tech giants often operate both as a platform and as a competitor on the platform, industry critics say, there’s a built-in conflict.
This is “the big enchilada” of the legislative package, is how a friendly Republican lawmaker put it. A Democrat, Rep. Zoe Lofgren, whose California district sits in Silicon Valley, opposed the bill. “It would take a grenade and just roll it into the tech economy and blow it up,” she said.
The measure doesn’t name the four companies. But they fit into a new legal category it creates called “covered platforms” that fall under the new restrictions: online platforms with 50 million or more monthly active users, annual sales or market value of over $600 billion, and a role as a “critical trading partner.”
Some critics of the industry have pointed to Facebook’s popular messaging services Instagram and WhatsApp as strong candidates to be divested.
Lawmakers propose enabling users on dominant platforms to communicate directly with those on rival services. It could make it easier for different companies to use products together, with the aim of helping startups and smaller companies.
People would also be able to carry their personal data — photos, videos and all — from one service to another.
“Americans deserve to have more ownership over their personal information, with the ability to seamlessly transfer their data between platforms of their choice,” says Rep. Burgess Owens, the Utah Republican who is a chief sponsor of the measure.
NO MORE FAVORITISM
The legislation would prohibit the tech giants from favoring their own products and services over competitors on their platforms.
An example: Some independent merchants who sell products on Amazon.com have complained to lawmakers about the e-commerce giant’s practices, such as contract provisions and policies said to prevent sellers from offering their products at lower prices or on better terms on any other online platform, including their own websites. Under the legislation, could Amazon be forced to spin off its private-label products that compete with vendors on the platform?
The Seattle company has said that sellers set their own prices for the products they offer on its platform. “Amazon takes pride in the fact that we offer low prices across the broadest selection, and like any store we reserve the right not to highlight offers to customers that are not priced competitively.”
HARD TO MERGE
Lawmakers want to make it tougher for giant tech companies to snap up competitors in mergers, which they have completed by the hundreds in recent years, waved through by antitrust enforcers in both Republican and Democratic administrations.
Acquisitions that would eliminate competitors or potential competitors, or expand or entrench the market power of online platforms could be expected to be blocked by regulators.
The burden would shift from the government to the companies to show that a particular merger wouldn’t harm competition.
DIALED UP ENFORCEMENT
Lastly, the legislation would give the Federal Trade Commission more money, and states more power, to enforce the antitrust laws against companies.
It would increase FTC filing fees for any proposed tech mergers worth over $500 million and cut the fees for those below that level. Many state attorneys general have pursued antitrust cases against Big Tech companies, and many states joined with the U.S. Justice Department and the FTC in their landmark antitrust lawsuits against Google and Facebook, respectively, last year.
New FTC memo will transform the way big tech operates
Federal Trade Commission (FTC) Chair Lina Khan recently publicized her policy priorities and vision in a memo that was sent out to staff members on Wednesday.
Supervised by five commissioners who vote on enforcement actions and policy statements, Khan set in stone the main priorities of the agency in the recent FTC memo: fixing power imbalances, reducing harm on the consumers, and targeting “rampant consolidation.”
Khan laid out the main focus of the agency, as well as how it can adjust its strategic approach to overcome issues born by “next-generation technologies, innovations, and nascent industries across sectors.”
FTC’s new list of priorities indicates that tech giants, even though none of them were named, will be under extreme scrutiny going forward.
The five principles outlined in the FTC memo are the following:
- Conduct a “holistic approach to identifying harms.” Khan noted that the agency should acknowledge that employees, private corporations, as well as consumers, can be equally harmed by antitrust and consumer protection violations. The famous antitrust lawsuits have previously emphasized strictly on consumer harm, as it was mainly concerned with how to price a product to ensure fairness. However, Khan argued in her memo that a more productive approach could be utilized to better assess harm by tech giants, which often offer free of charge platforms in exchange to high levels of engagement.
- Keep an eye on “targeting root causes rather than looking at one-off effects.” Khan explained that the FTC workers should examine how business models or conflicts of interest go against the law.
- Incorporate more “analytical tools and skillsets” for an overall assessment of business methods.
- Enjoy “forward-looking” and work on stepping up quickly when harm is done, this includes focusing on “next-generation technologies, innovations, and nascent industries across sectors.”
- Democratize the FTC through ensuring it’s “in tune with the real problems that Americans are facing in their daily lives.”
“Research documents how gatekeepers and dominant middlemen across the economy have been able to use their critical market position to hike fees, dictate terms, and protect and extend their market power,” Khan wrote in the memo, adding that “deeply asymmetric relationships between the controlling firm and dependent entities can be ripe for abuse.”
The FTC chairwoman also included non-compete agreements in her memo, which she says have the ability to restrict workers from which jobs they can take on, as well as impose restrictions on consumer’s right-to-repair. Apple has been criticized in the past for the limit it imposed regarding the number of times users can repair Apple devices they purchased.
Earlier this year, the FTC vocalized its intentions to fighting these restrictions.
“Consumers, workers, franchisees, and other market participants are at a significant disadvantage when they are unable to negotiate freely over terms and conditions,” Khan wrote in the memo.
Facebook’s Oversight Board demands answers on celebrity rules
Facebook’s oversight board said on Tuesday that it will set in motion an urgent examination process to inspect whether the social networking platform is mitigating posts for famous personages, leading to a direct content rules breach, according to Wall Street inquiry.
Facebook’s oversight board is an independent group assigned by the platform to observe its moderation policies concerning politicians, athletes, celebrities, and other high-profile users.
The board revealed that it has already initiated an examination plan that demands Facebook executives to submit any data related to the Cross-Check Program, or popularly referred to as” XCheck.” It demanded proof of clarity to determine whether these allegations are true, and from there, it would work accordingly based on the findings.
“In light of recent developments, we are looking into the degree to which Facebook has been fully forthcoming in its responses in relation to cross-check, including the practice of whitelisting,” the board wrote in a statement.
Whitelisting is a cybersecurity strategy where users only act on their personal computers following exclusive administrator permission.
Initially, the XCheck program was initiated to take measures against all kinds of distinguished and famed accounts, which later exponentially grew to involve millions of accounts.
Presumably, Facebook’s program was established to prohibit “PR fires,” or any type of unwanted press caused by removing photos, posts, and other types of content on the platform. In this case, these high-profile users are immune to any outcome disclosed by XCheck, or any moderating process for that matter. It aims to deliver additional premium control over the platform’s posts.
Thus, by being excluded from the program’s functionality, millions of celebrities are safeguarded from any future regulation on their profile, meaning Facebook is perpetually and intentionally misleading its oversight board on its rules.
“Mark Zuckerberg has publicly said Facebook allows its more than three billion users to speak on equal footing with the elites of politics, culture, and journalism, and that its standards of behavior apply to everyone, no matter their status or frame. In private, the company has built a system that has exempted high-profile users from some or all of its rules,” according to the Wall Street Journal’s report.
At the moment, Facebook’s oversight board will monitor the social networking’s conduct by investigating its cross-check program and will eventually release the findings to the public.
The board’s decision will entirely be based on the tech giant’s transparency regarding its freedom of speech and human rights policies, be it supportive or opposing to its program’s own guidelines.
While Facebook has publicly vowed to follow the board’s demands on its users’ regulations, it also has the right not to submit itself to extensive recommendations as it is not compelled legally to abide by its rules.
U.S. Democrats push for tough data privacy regulations
The U.S. Congress surely returned to work with full force after a summer recess, asa group of Senate Democrats are now pushing the Federal Trade Commission (FTC) to construct new regulations around data privacy protection.
Democratic Senator Richard Blumenthal led the initiative after garnering eight signatures from his colleagues on a letter that was forwarded to agency Chair Lina Khan on Monday.
The letter’s details revolve around new rules that should be implemented to strengthen cybersecurity, which in return will improve civil rights and give back the consumer what’s rightfully theirs; their privacy.
The letter pointed the finger at Big Tech for having “unchecked access to private personal information” that they use to “create in-depth profiles about nearly all Americans and to protect their market position against competition from startups.”
The senators explained in the letter that previous attempts to hold big tech firms guilty for violating existing data privacy rules were not enough.
“We believe that a national standard for data privacy and security is urgently needed to protect consumers, reinforce civil rights, and safeguard our nation’s cybersecurity,” the senators wrote.
The news comes after U.S. President Joe Biden nominated vocal critic of privacy and facial recognition, Alvaro Bedoya, to acquire the job of the third Democratic FTC commissioner. Bedoya’s past experiences at Georgetown Law is highlighted in his research that delves into the aftermath of technologies like facial recognition on minority groups.
The professor at Georgetown Law’s Center for Privacy and Technology also created a number of surveys aimed at investigating tech’s capability for racial bias. In the past, Bedoya has also served as chief counsel to the Senate Judiciary Subcommittee on Privacy, Technology and the Law under Chairman Senator. A confirmation hearing for Bedoya is yet to be scheduled. However, if it goes according to plan, Bedoya will be able to support the FTC’s mission in coming up with regulations when it comes to data privacy.
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