Big Tech Monopolization Daily Update

Bibliography Pro Essay Con Essay Intro Essay

These cards are all free with online registration.

Facebook isn’t a monopoly, plenty of other ways to network

Tyler Cohen, June 13, 2019, Slate, Breaking Up Facebook Would Be a Big Mistake, https://slate.com/technology/2019/06/facebook-big-tech-antitrust-breakup-mistake.html, This essay is adapted from the recent book Big Business: A Love Letter to an American Anti-Hero, published by St. Martin’s Press.

It is commonly alleged that Facebook has a monopoly on social networking, yet unlike traditional villainous monopolists, Facebook has not raised prices—the service is free—or restricted output. And people do not use Facebook because the company has emptied their lives of alternatives. We can still connect with one another by text, email, telephone calls (yes, they still work), Pinterest, Twitter, LinkedIn, writing a blog and creating an online community (my own favorite), Twitch, Fortnite and other online games and platforms, Snapchat, messaging services (including for instance Apple’s iMessage, and also Facebook’s own WhatsApp, maximized for privacy), and last but not least, knocking on your neighbor’s door.

Marketplace of ideas answers – plenty of alternative options in the idea marketplace

Gerard Scimeca is an attorney and vice president of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization, June 13, 2019, The Hill, https://thehill.com/opinion/technology/448450-applying-anti-trust-law-to-big-tech-will-take-years-to-figure-out

Fine-tuning how to apply anti-trust law against Big Tech will take years. In the meantime, the Justice Department is reviewing a pending merger between two of the largest printing companies in the United States, Quad Graphics and LSC Communications. The antitrust division is asking whether the creation of a single company capable of printing 1 million editions of weekly magazine will mean publishers will be at the mercy of only one printer. The reality is more complicated; print is in real trouble. Many publications exist only online now. With fewer daily newspapers, there are fewer vehicles for printed advertising. Many of us have shelved printed books and use e-readers. The stream of ads that bombard our devices, based on algorithms created by Facebook and similar companies, have taken the place of full-page ads in newspapers and magazines. In response, a lot of print companies have been forced to close their doors or agree to be acquired by larger firms over the last 10 years. As the trend toward electronic publishing continues, consolidations are the only way the print sector can purge its overcapacity and streamline its operations. And why are the companies doing this? To offer customers more options and more choices. Integrating the capabilities of existing companies leads to more efficiency. That often means more reliable and competitively priced services for customers. Consolidations also make it easier to adopt new technologies for production and distribution. In essence, it is customers that are benefitting from the industry’s quest to survive. ADVERTISING inRead invented by Teads But even with the mergers and downsizing in the print sector, there are still hundreds of mid-size and large printing companies. As the industry rearranges itself in the era of digitization, a lot of these companies band together to get pieces of large print jobs. Publishers of books, catalogues, as well as the government, have learned to allot sections of these jobs to various printers. Accordingly, the idea that the Quad-LSC merger will leave only one large print company in place is simply inaccurate. If anything, the merger might be essential to the industry’s ongoing reinvention. Large, mid-sized and smaller printers all have a stake in this. And so do the newspaper and magazine publishers who sincerely want it to be economically feasible to preserve print. The juxtaposition between the government’s growing resolve to curb the power and control of online giants and its scrutiny of the Quad-LSC merger is stark. In the case of Facebook, Google, Amazon and the others, customers have become the product.There are real questions about whether consumers have actual choices or are simply steered into fulfilling their algorithmic profile. In printing, customers can readily save money by joining the march to online platforms, or they can work with printing companies on a mutually agreeable way to keep the presses rolling. Antitrust law is not a servant to theoretical concepts of competition that go back a century or more. It serves the interest of consumers. Today, we are in the midst of an information revolution — we are figuring out how content is consumed. Quad, by merging with LSC, is trying to give customers choices and prices that reflect today’s market realities. That is the essence of competition. Printers are competing with technological platforms that many see as hegemons. Government lawyers should not stand in their way.

Antitrust law doesn’t penalize bigness

On the other hand, this is an age of suspicion of power, and the big tech companies are indeed large, highly profitable, and world-spanning. They have overturned how we communicate, and there is a resulting sense, not always backed by hard analysis, that the status quo simply cannot be left alone. But American antitrust law doesn’t penalize bigness or social influence per se. There may well be features of the major tech companies you don’t like, such as their privacy implications or how they have shifted the balance of power in politics, but that is not a sound legal basis for dismantling them. If you wish to address consumer privacy issues on online platforms or foreign interference in elections, push for legislation that does so, but don’t prescribe a remedy for one illness to one that is completely unrelated.

Small companies don’t have the resources to provide needed protections

Advocates of splitting up the big tech companies have a utopian vision of what will replace them. Whether you like it or not, we now live in a world where every possible idea (and video) will be put out there in some fashion or another. Don’t confuse your discomfort with reality with your assessment of big tech companies as individual agents. We’re probably better off having major, well-capitalized companies as guardians and gatekeepers of online channels, however imperfect their records, as the relevant alternatives would probably be less able to fend off abuse of their platforms and thus we would all fare worse. Imagine, for instance, that instead of the current Facebook we had seven smaller companies all performing comparable social networking services, perhaps with some form of interconnectability or data portability. The negative sides of social media, which are indeed real, probably would be worse and harder to control. It is unlikely that such a setting would result in greater consumer privacy and protection. Instead, we would have more weakly capitalized entities, with less talent on staff and weaker A.I. technologies to take down objectionable material. Probably some of those companies would be more tolerant of irresponsible user behavior as a competitive lure. Fake accounts would proliferate, and social networking sites such as 4chan—often a cesspool of racism and rhetoric that goes beyond the merely offensive—would comprise a larger and more central part of the market. As for privacy, these smaller Facebook replacements would be more susceptible to hacks, foreign surveillance and infiltration, and external manipulation—the real dangers to our privacy and well-being. A more modest plan to split up Facebook might just hive off WhatsApp and Instagram, the company’s two most successful acquisitions, leaving “Facebook the page/service” more or less intact. But that won’t work, either. For one thing, it wouldn’t address most of the actual current criticisms of Facebook, which typically revolve around the Facebook page. If we had maintained an independent Instagram, current social media dilemmas wouldn’t be any less acute. Facebook has actually upgraded those services and kept them uncluttered, with the revenue-earning burden placed mainly on the Facebook page itself.

Financial power doesn’t mean big tech will control the government

Another claim you hear is that the big tech companies must be taken down a notch because otherwise they will control our government. But the evidence does not support that assumption. Over the longer haul, farming, big pharma, and banking lobbies, or for that matter Boeing, have had a much better record getting their way with the federal government. The tech companies are spending more and more on lobbying as time passes, but for them and their revenue models the D.C. scene remains a sideshow. The tech companies also have been losing plenty of political battles. In general, they did not favor the election of Donald Trump, nor have they pushed for an immigration crackdown—quite the contrary—or the current spate of trade wars. To see the limits of Amazon’s influence, even at the level of local government, consider the company’s withdrawal from its planned Long Island City location in Queens, New York. If the company really is pulling all of the strings, why did it find the hostile political environment so troubling? Why didn’t it just stick around and bulldoze the opposition into submission?

Big tech fights monopolies

Finally, the next time you are tempted to levy a charge of monopoly against Google or Facebook, keep in mind that both companies are significant anti-monopoly engines in their own right. They allow small and midsize businesses to engage in targeted advertising, and therefore to offer niche products that compete against the goods and services of larger companies. Before Facebook and Google, smaller companies had much more limited advertising prospects as they often found it too expensive to advertise on television or radio. Slate has relationships with various online retailers. If you buy something through our links, Slate may earn an affiliate commission. We update links when possible, but note that deals can expire and all prices are subject to change. All prices were up to date at the time of publication

Big Tech important to AI development

Steve Lavrouck, 1-12, 19, https://www.gurufocus.com/news/893314/calls-to-break-up-big-tech-are-growing, Calls to Break Up Big Tech Are Growing

Not everyone agrees there is actually a problem. In a recent interview with CNBC, billionaire investor Stanley Druckenmiller (Trades, Portfolio) lambasted politicians for their attacks on big tech, saying: “We are attacking our companies that are the leaders in this stuff [artificial intelligence]. But man, it’s great. We are supporting our steel industry, our coal industry, our aluminum industry. Way to think about the future, President Trump, just genius”.

No way to break up big tech

Steve Lavrouck, 1-12, 19, https://www.gurufocus.com/news/893314/calls-to-break-up-big-tech-are-growing, Calls to Break Up Big Tech Are Growing

Maybe. There are a number of problems with leveraging the existing regulatory framework against the tech giants. For one thing, it is hard to define what a breakup would even look like. Spinning Whatsapp and Instagram off of Facebook is one thing, but how does one split up Facebook itself? Its difficult to see how one could take apart the core platform without killing the product Unlike telecoms or industrial companies, which can be neatly divided by geographic area, technology companies integrate the software of acquired companies into their own tech stacks. As a result, “breaking up” the tech giants may not be as straightforward as some think. An additional problem for would-be trust busters is the sheer size and power of these companies. The enormous sums of money wielded by people like Jeff Bezos and Mark Zuckerburg make reeling them in a tall order.

Applying antitrust law will undermine the stocks of the Big 5

Matt Eagan, 6-12, 19, https://www.cnn.com/2019/06/12/investing/tech-stocks-facebook-antitrust-goldman-sachs/index.html,

Antitrust lawsuits against Facebook and others could blow up your portfolio, Goldman Sachs says However, that guidance changes if the federal government pulls the trigger on litigation. Goldman Sachs studied the consequences of three of the most well-known examples of antitrust lawsuits: IBM (IBM), AT&T and Microsoft. In each case, the firm found that stock valuations deteriorated during years-long periods of litigation — and sales growth decelerated even after the cases were decided. “Similarities among historical outcomes suggest that investors should reduce exposure to any stock that becomes subject to an antitrust lawsuit,” Goldman Sachs wrote…. Like AT&T, Microsoft’s once-lofty valuation shrank to more pedestrian levels during the time of the lawsuit. And Goldman Sachs found that Microsoft’s valuation continued to rapidly decline — even slipping below that of the S&P 500 — until 2011 when the settlement with the government expired. The history lesson suggests that even companies that survive antitrust lawsuits do not do so unscathed.

Google innovates and helps consumers

James Pethoukis, Jne 6, 2019, http://www.aei.org/publication/why-washingtons-war-on-big-tech-will-fizzle/, Why Washington’s war on Big Tech will fizzle

Take Google, for instance. One recent research survey found consumers would need to be paid nearly $20,000 to give up using free search. And it’s hard to slam a company as being bad for innovation when it spent more than $21 billion last year on R&D and billions more on “next big thing” moonshot bets that may never pay off. Or as an equity analyst at D.A. Davidson recently wrote about Amazon, “At its core, Amazon lowers prices to the consumer. Therefore, we believe it is difficult to prove it operates an unhealthy monopoly and thus it is hard to envision the company losing an antitrust case.”

China can’t beat the US in innovation

Center for Strategic and International Studies, June 10, 2019, https://chinapower.csis.org/china-innovation-global-leader/ Is China Leading in Global Innovation?

Competing but not Leading in Innovation In other aspects of innovation, China is progressing but still lags advanced economies. Improvements in primary and secondary education and increased funding for startups have helped promote Chinese innovation, but issues with tertiary education, business environment, and work culture persist. Government initiatives, backed by significant funding, have enabled China to attain near-universal primary and secondary enrollment and literacy rates. Disparities continue to exist in China’s poorer regions, but noteworthy improvements in education have boosted its capacity to innovate. SHARE At the tertiary level, however, China falls short.2 In 2017, only 51 percent of college-age Chinese were enrolled in institutions of higher education. Although this represents a steep jump from 5.5 percent in 1997, it is well below the 77 percent average of high-income countries, and even below the 52 percent average of upper-middle income countries. The quality of higher education in China also trails that of other countries, with only three Chinese universities listed in the top 100 of the 2019 Times Higher Education World University Rankings. To meet growing demand for skilled workers, China has prioritized tertiary vocational education. The Ministry of Education spent nearly $30 billion on tertiary vocational schools in 2017, a 10.2 percent increase from the previous year. In February 2019, Beijing unveiled two new national education plans designed to boost access to and the quality of vocation centers across the country.3 SHARE China’s business environment exhibits both strengths and weaknesses. Startups in urban hubs are attracting more venture capital than ever before, but problems with business regulations and workplace culture inhibit innovation. These factors have contributed to China’s lackluster performance in the GII’s Market Sophistication pillar, where China sits at 25th globally, just behind Latvia and ahead of Azerbaijan. Urban hubs like Beijing, Shanghai, and Hangzhou have begun to challenge Silicon Valley’s dominance in fostering startups. These three cities were responsible for more than 30 percent of global growth in venture capital investment during 2010-2012 and 2015-2017. They are also home to 75 percent of China’s “unicorns,” or startups with a value of at least $1 billion dollars. Nevertheless, Chinese companies face considerable hurdles that make it difficult to operate and innovate. Although government measures have helped reduce red tape, which has decreased the average time to start a business from 22.9 days in 2017 to 8.6 days in 2018, the World Bank rated China 46th out of 190 economies in ease of doing business. Contributing factors include legal roadblocks and problems with the credit system. SHARE Workplace culture presents additional challenges for China. The 2018 Global Competitiveness Index (GCI) ranked China 77th out of 140 economies in terms of workforce diversity. As a softer driver of innovation and entrepreneurship, workplace diversity can position firms to creatively solve problems and capture new markets. The Chinese technology industry is also notorious for encouraging a “996” culture – working from 9 am to 9 pm 6 days per week. Some prominent CEOs, including Richard Liu of JD.com and Jack Ma of Alibaba, have gone so far as to defend the practice. E-commerce platform Youzan even demands employees abide by 996. While overworking is a problem that China shares with countries like the United States and Japan, there is growing evidence that sustained overworking is both counter-productive and detrimental to employee health. China’s Enduring Weaknesses in Innovation One of the most significant hindrances to Chinese innovation is a lack of institutionalization – the rules, processes, and organizations that help foster healthy public-private collaboration, economic growth, and innovation. While China has taken steps to strengthen its institutions, the GII places them 70th globally.4 Weak institutions have left China susceptible to widespread corruption, which has contributed to economic inefficiency and loss. In recent years, the Chinese government has taken several steps to reduce corruption. The most visible push is the national anti-corruption campaign spearheaded by President Xi Jinping. The campaign, which has resulted in hundreds of arrests, has helped reduce corruption in the allocation of government R&D subsidies. SHARE Beijing has also established local bankruptcy courts, which are modeled on US courts and staffed by insolvency professionals. These specialized courts were set up primarily to stop local politicians from propping up inefficient state-owned enterprises (SOEs). Between 2014 and 2017, the number of specialized bankruptcy courts increased to 97, leading to a more than six-fold increase in bankruptcy cases and increased closure of underperforming SOEs. Bankruptcy Cases Year Number of Cases Accepted 2017 9,542 2016 5,665 2015 3,568 2014 2,031 2013 1,919 2012 1,521 Source: Li and Ponticelli, “Going Bankrupt in China” Notwithstanding such efforts, corruption remains a challenge for China. In the 2018 Corruption Perceptions Index (CPI), China and Serbia shared a middling score of 87th out of 180 countries. China maintained an average position of 84th in the CPI between 2013 and 2018. This is well below robust democracies like Denmark, New Zealand, and Finland, which took the top three spots in 2018. Compared with other BRICS members, China is just behind South Africa (73rd) and India (78th) but ahead of Brazil (105th) and Russia (138th). LEARN MORE “How does corruption hinder China’s development?” High levels of corruption in China are linked to the weak rule of law. Economies supported by a strong rule of law are more stable and better capable of protecting key elements of innovation, such as IP rights. The United States and the European Union have long called for China to strengthen the rule of law, especially regarding IP protections. In January 2019, China’s Supreme People’s Court began hearing IP appeals cases, a move aimed at protecting foreign and domestic innovation. Similar measures could help better protect innovators, but China will need to undertake fundamental reforms to match the strong rule of law in leading nations. The World Bank’s 2018 Worldwide Governance Indicators (WGI), which scores countries based on scale between 0 (worst) and 100 (best), gave China a percentile rank of 45. This was far below the OECD average of 87, but on par with other BRICS economies, which averaged 43. SHARE The challenges that China faces regarding corruption and the rule of law likely require systemic institutional reforms. Legal adjustments in areas like bankruptcy and IP can help enhance innovation, but if these are not matched with a more comprehensive push from Beijing, China may never ascend to the heights of the elite innovating nations. ChinaPower

US fails at AI now anyhow

Kori Shake, Back to Basics, How to Make Right What Trump Gets Wrong, https://www.foreignaffairs.com/articles/2019-04-16/back-basics?fa_package=1124201, KORI SCHAKE is Deputy Director General of the International Institute for Strategic Studies and the author of Safe Passage: The Transition From British to American Hegemony. She served on the National Security Council and in the U.S. State Department in the George W. Bush administration.

And although the U.S. technology sector is the most advanced in the world, there are signs that the U.S. government may have trouble harnessing it. Silicon Valley’s supranational self-image and global business interests make it skeptical of cooperating with the government—late last year, Google withdrew its bid for a $10 billion cloud-computing contract with the Pentagon, citing ethical concerns. Washington’s lack of technical expertise, meanwhile, could lead it to regulate Silicon Valley in unproductive ways.

Failure to enforce antitrust law contributes to widening inequality

Hacker & Pierson, July/August 2009, JACOB S. HACKER is Director of the Institution for Social and Policy Studies and Stanley B. Resor Professor of Political Science at Yale University, Foreign Affairs, The Republican Devolution, https://www.foreignaffairs.com/articles/2019-06-11/republican-devolution?fa_package=1124383

PAUL PIERSON is Co-Director of the Successful Societies Program at the Canadian Institute for Advanced Research and John Gross Professor of Political Science at the University of California, Berkeley

Even with the best leadership, the last few decades would have presented big challenges. Like many wealthy countries, the United States has undergone a disruptive transition from an industrial manufacturing economy to a postindustrial knowledge economy. Along with the decline of unions, the deregulation of finance, and the federal government’s retreat from antitrust enforcement, that transition has tilted opportunity and wealth toward those at the very top of the economic pyramid. It has also concentrated growth in cities and sucked it out of rural areas and small towns. Yet even as yawning inequality has made structural reform more pressing, many white Americans have seen the United States’ inevitable march toward a majority-minority society as an even greater threat.

Economic inequality undermines democracy

All these trends have fed on one another. As inequality has grown, it has empowered economic elites and given their political allies an incentive to substitute antisystem resentment for real efforts to provide economic opportunity. Democrats certainly deserve some of the blame here: both the Clinton and the Obama administrations did little to address the dislocations caused by trade or the growing geographic divergence in economic outcomes. But the biggest barrier to serious action has been the Republican Party. In the absence of an effective response, places left behind by the knowledge economy have proved fertile terrain for fear-mongering by right-wing media and, increasingly, Republican campaigns. And as the GOP has alienated the racial and ethnic minorities that make up a growing share of the electorate, it has found itself drawn to countermajoritarian strategies—gerrymandering, restricting voting, and encouraging aggressive interventions by activist judges—that undermine not just effective governance but also representative democracy itself.

Splitting makes protecting safety more difficult

First Post, June 11, 2019, https://www.firstpost.com/tech/news-analysis/breaking-off-from-facebook-would-make-instagram-less-safer-says-its-head-adam-mosseri-6790821.html, BREAKING OFF FROM FACEBOOK WOULD MAKE INSTAGRAM LESS SAFER SAYS ITS HEAD ADAM MOSSERI

Instagram boss Adam Mosseri thinks that’s a bad idea. Speaking at the Code Conference, Mosseri said that breaking off Instagram from Facebook would mean more bad content on the platform as it would cut off Instagram from some of the content policing that happens thanks to Facebook’s integration. While agreeing that splitting Instagram from Facebook would make his life easier, Mosseri said it would still be a terrible idea. Breaking off from Facebook would make Instagram less safer says its head Adam Mosseri Representational Image. “If you’re trying to solve election integrity, if you’re trying to approach content issues like hate speech, and you split us off, it would just make it exponentially more difficult — particularly for us at Instagram — to keep us safe,” said Mosseri. He went on to justify it by saying that more people at Facebook work on integrity issues than at Instagram. And breaking Instagram could mean losing access to that talent pool, thereby making Instagram vulnerable. Calls for the breakup of Facebook are picking steam for a while now, as according to Warren and Hughes, Facebook holds enormous power with its billion-plus user base and needs to be kept in check. According to Warren, that can be done by breaking up Facebook. Hughes, on the other hand, believes Facebook’s acquisition of Instagram and WhatsApp should be nullified so that there is a lot more competition in the social media space. Facebook COO Sheryl Sandberg spoke on the matter last month. According to Sandberg, breaking up big tech firms in the US would not solve the ‘underlying issues’ facing this sector. “While people are concerned with the size and power of tech companies, there’s also a concern in the United States with the size and power of Chinese companies, and the realisation that those companies are not going to be broken up,” she said. Facebook CEO Mark Zuckerberg also responded to the calls for break up of Facebook saying the exact same lines Mosseri did. Zuckerberg argued that breaking up the social network will only make policing harmful content, such as hate speech and violence, more difficult for the company. “The amount of our budget that goes toward our safety systems is greater than Twitter’s whole revenue this year,” Zuckerberg said. “We’re able to do things that I think are just not possible for other folks to do.”

Breaking up Alphabet/Google would increase investment

Market Watch, June 11, 2019, https://www.marketwatch.com/story/why-a-google-breakup-would-be-good-for-alphabet-investors-2019-06-11?mod=hp_investing, If the government breaks up Google, would it be worth more?

Alphabet Inc. investors have been sweating a potential antitrust investigation into the Google parent, but one analyst suggests that regulatory scrutiny — meaning a potential breakup of the company — could be reason to cheer. Needham’s Laura Martin said Tuesday that a breakup of Alphabet GOOG, -0.15% GOOGL, -0.16% could carry about 50% upside for shareholders, in part because investors are generally willing to pay more for pure-play companies, when they can be more selective about how much exposure they get to a particular trend. Time Alphabet Inc. Cl A Jul 18 Sep 18 Nov 18 Jan 19 Mar 19 May 19 US:GOOGL$900$1,000$1,100$1,200$1,300$1,400 Martin also thinks that any companies formed after a breakup of Alphabet, which has long declined to provide financial metrics for businesses like YouTube, would be more forthcoming with their disclosures because they would be smaller entities. Management at the hypothetical new companies wouldn’t be able to hide behind search-ad financials, she wrote, and executives might not engage in as many expensive “moonshot” projects with “questionable” returns on investment. See also: The YouTube and Instagram secret that Google and Facebook don’t want you to know She estimates there’s a 50% chance that the Justice Department determines that a breakup of Alphabet is “the best remedy” and a 50% chance that Alphabet is deemed to be anticompetitive. To Martin, this implies a 25% chance that the company could get split up three years from now. X See Also What Is a Death Cross? The Justice Department is more focused on antitrust issues than privacy concerns, according to Martin, which lessens the “economic risks associated with regulatory outcomes.” The department also conducts investigations in a closed and silent manner, she said, meaning that if Alphabet was to disclose an investigation, investors might not hear anything further for at least two years.

Facebook doesn’t monopolize most industries

Jessica Burstnsky,6-10, 19 https://www.cnbc.com/2019/06/10/former-facebook-attorney-chris-kelly-defends-social-network-on-privacy.html, CNBC, Facebook has unfairly become the ‘boogeyman on privacy,’ says ex-general counsel

Kelly has been against breaking up tech networks in the past, telling “Squawk Box” last month that it’s “not clear that Facebook has a monopoly in any relevant market.” “While it leads social networking, it’s not overhauling marketing, telecommunications, messaging or online advertising, which are all defined antitrust markets,” he added at the time.

Google makes it difficult for start-ups to get funding

Allison Schiff, 6-10, 19, https://adexchanger.com/platforms/should-google-be-broken-up-and-four-other-burning-questions-as-the-doj-begins-its-antitrust-investigation/, Should Google Be Broken Up? And Four Other Burning Questions As The DOJ Begins Its Antitrust Investigation

But while there’s an ongoing debate as to whether privacy and data collection/use are antitrust issues, the law does explicitly extend beyond consumer harm to protect against company-on-company anti-competitive action. Google in recent years has had “a suppressing effect on companies in the mar tech/ad tech space,” said Centro CEO Shawn Riegsecker. “Many investors are afraid of Google’s hegemony and are unwilling to invest in companies they see attempting to compete anywhere near the Google ecosystem.” AppNexus founder and former CEO Brian O’Kelley has firsthand experience of what it feels like to get roiled by Google, like when Google closed YouTube to third-party ad tech, he said. “There are a lot of folks they’ve stepped on throughout the years,” said O’Kelley, who just a few weeks ago called for the breakup of Google while testifying before Congress.

The only way to apply antitrust law to big tech is to write new law

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

If federal regulators are serious about prosecuting Big Tech icons for antitrust practices, they’ll probably have to redefine what constitutes a monopoly in the industry. That is one of many steep obstacles in the way of officials at the Justice Department and Federal Trade Commission as they consider reshaping Facebook Inc. FB, +1.39% , Alphabet Inc.’s Google GOOGL, +0.39% GOOG, +0.41% Amazon.com Inc. AMZN, +0.05% and Apple Inc. AAPL, +0.63% through potential probes. Previously: Feds target four of the biggest tech companies in U.S. “The likelihood of a Microsoft- or AT&T-like Sherman Act proceeding is highly remote,” Andrew Jay Schwartzman, an attorney with Georgetown’s Institute for Public Representation told MarketWatch in a phone interview, alluding to the Sherman Anti-Trust Act (1890), the first federal law that outlawed monopolistic business practices.

Economy answers – Breaking up companies doesn’t hurt the companies or the economy

Ken Stephens, 6-10, 19, https://www.marketreview.com/news/should-investors-worry-about-big-tech-breakups/ Should investors worry about big ttech breakups?

The market confronted the news about the potential for restrictions on big tech companies with a negative attitude. Cooler heads have started to prevail already. In the late 19th and early 20th century, businessman John D. Rockefeller gained almost total control of the oil business. At its height, the trust that controlled all of Rockefeller’s companies was responsible for no less than 91% of all the oil production in the United States as well as 85% of all petroleum sales. The government eventually stepped in and broke up Standard Oil, splitting it into several smaller companies, although small isn’t a way to describe some of them. Today, the surviving companies of this famous breakup include Exxon, Mobil, Chevron, Amoco, and several other smaller oil companies which were eventually sold to Sunoco and BP. Exxon and Mobil eventually merged, and became the largest oil company in the U.S., with Chevron in second place. They may have broken up the company but Rockefeller still owned them and this breakup ended up adding significantly more to Rockefeller’s wealth. In terms of one’s percentage of GDP, Rockefeller’s wealth far surpasses any of the more modest multi-billionaires of today, and this breakup played a significant role in this. Those who believe that breaking up a company is a bad thing for investors just assume this and don’t really look very much into the matter. Moves like this do serve to reduce things that interfere with competition, the goal of antitrust suits, but if we think that this will reduce the collective footprint of these companies, we may want to have another look at this. A more recent case in point is with eBay’s spinning off PayPal. Since the breakup, both eBay and PayPal have both done well, and while they may have done so together as well, they certainly have not suffered or inflicted any punishment upon themselves from any of this. This move in fact gave PayPal what they really needed for their stock to really shine, the ability for investors to focus on them along, and their price has tripled since and show no signs of stopping. eBay’s growth has been much more modest but they are still up 40% from the time PayPal left in 2015. Collectively, this move has added a lot of value to the stocks, and some people are expecting the same thing should we break up companies such as Amazon, Alphabet, Facebook, and Apple. Big tech companies make all sorts of acquisitions, with the new companies getting benefited by being brought into the fold and oversight of a much more successful and resourceful company. At some point though, after whatever transformation and enhancements that are involved take hold, it can be wise to let them leave the nest and get back to building their own niche. PayPal is a perfect example of this, as it was allowed to grow by being eBay’s payment processor, and after they left, they still maintained this relationship but now were in a position to attract a lot more investment from those who had a yearning to get in on the new digital payment craze. PayPal is by far the market leader in this field and now has much more control over their own niche than eBay could ever hope for, given they live in the very long shadow of Amazon.

Big tech companies aren’t monopolies

Ken Stephens, 6-10, 19, https://www.marketreview.com/news/should-investors-worry-about-big-tech-breakups/ Should investors worry about big ttech breakups?

We would at least think that this is always true, but with the concerns with Apple, Amazon, Facebook, and Alphabet, the parent company of Google, don’t really involve genuine accusations of restraint of trade, as they are instead about people just not liking how successful they have become. These companies are all now arguing that they do not have monopolies, and as long as we understand the concept of a monopoly, this is clearly not the case. The issue with a monopoly isn’t about market share per se, it’s using their market share or other means to stifle competitors and use this as a tool to artificially increase prices. This is what old John D. did with his oil company, for example by controlling the means of getting oil to the market and then denying his competitors access to it. If you need to send your oil by rail and your opponent controls the railroads, you either go out of business or sell it to the competitor at a reduced price, as you are trapped. The standard here isn’t quite that high, as merely interfering with the ability of your competitors to compete can be seen as enough to act upon. It doesn’t mean making phones that people like to buy, selling products at your site online that people love to shop at, creating a social media site that is immensely popular, or a search engine that people prefer over all others. We might think that we could construe a de facto monopoly out of arrangements such as YouTube being owned by Google, where YouTube is given preference in search results with Google’s search engine, and be seen as restraining other services similar to YouTube. This would involve a fundamental misunderstanding of what we are out to prevent with anti-monopoly laws, which is manipulation of prices. It does not involve intentionally backing off on what businesses do, which is to create value, and there is never an obligation to assist a competitor, only not intentionally restrain them. Otherwise, we get to run our businesses for the benefit of the owners, with no exceptions, nor should there ever be any. This is where the line is drawn, whether a company uses its power to limit its competitors directly, such as their competition being reduced by way of reciprocal acts between companies that infringe upon the right of outside companies to compete with them. If the intention is to just promote your own companies in a manner consistent with a free market, and the allegedly egregious acts are simply a manifestation of a company’s exercising their legal power, such as Google deciding how to run their own company without undue interference, this is not restraint of trade by any reasonable interpretation.

Markets answers – break-up benefits the markets

Ken Stephens, 6-10, 19, https://www.marketreview.com/news/should-investors-worry-about-big-tech-breakups/ Should investors worry about big tech breakups?

With all this said, if somehow regulators managed to win cases against one or more of these big tech companies, this would likely be bullish for the companies affected as well as their shareholders, as the value created by any breakups would allow for people to bid up their stocks even more. At least part of this effect, if not all of it, comes from the fact that stock prices are set by investor sentiment, and by breaking up your company, you can target more investors and even create more excitement among investors. This is exactly what happened with PayPal, which is one of the most loved stocks out there these days and has been a simply fabulous investment since they branched off on their own.

Wal Mart is 4X the size of Google and sells online

Paula Rosenblum, co-founder and Managing Partner, RSR Research 6-10, 19, , Politicians and Certain Analysts Hate Amazon: Are They Woke? Or Knee-Jerk?, https://retailleader.com/politicians-and-certain-analysts-hate-amazon-are-they-woke-or-knee-jerk

So why am I confused? Both Mr. Sanders and Ms. Warren seem to have missed the most essential issues, and for reasons I don’t quite understand, are letting giants like Walmart and Exxon off the hook. Walmart is four times Amazon’s size in actual revenue. I’m going to be bold here and say it is doing a lot better job figuring out how to sell online than Amazon has thus far figured out how to sell in brick and mortar stores. I will also say the company has worked hard to improve its image over the past three years, and frankly, is doing a really good job of it. So good, that both Mr. Sanders and Ms. Warren forgot all about it.

Break-up requires a lot of litigation (Note: Also a DOJ trade-off link)

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

“The likelihood of a Microsoft- or AT&T-like Sherman Act proceeding is highly remote,” Andrew Jay Schwartzman, an attorney with Georgetown’s Institute for Public Representation told MarketWatch in a phone interview, alluding to the Sherman Anti-Trust Act (1890), the first federal law that outlawed monopolistic business practices. Any endeavor to slice off pieces of the four tech titans or impose restrictions on how they do business is a Sisyphean task in terms of legal maneuvering, resources, and especially time, according to antitrust experts, former regulators and legal scholars. “Antitrust is a slow, messy remedy,” warns Adam Thierer, a senior research fellow at George Mason University’s Mercatus Center. “It can be a sledgehammer approach when what this situation requires is a scalpel.” How the heck would any of this apply to Facebook, Amazon, or Apple? How do you cleave off their units and divest them?” Thierer says.

Companies will react with a litigation tsunami

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

The sheer size and resources of the four companies under scrutiny — collectively, they employ over 900,000 people and rang up nearly $700 billion in sales last year — afford them the luxury of hiring an army of attorneys that dwarf the federal government, setting up a confrontation that could wend its way through court for years, according to Schwartzman. Which leads to the inevitable question: What is likely to happen, if anything? Efforts by Rep. Ro Khanna (D., Calif.), whose district covers Silicon Valley, and other Congressional members to regulate tech could prove to be the most likely outcome over the next few years. “What’s needed is a measured approach through legislation, not a bludgeoning of four companies that are so vital to the U.S. economy and its workforce,” Khanna told MarketWatch in a phone interview. “There needs to be give and take between Silicon Valley and the Beltway, not confrontation.” More: Silicon Valley congressman says, ‘It is embarrassing how technologically illiterate most members of Congress are’ For now, Facebook has faced the most scorn, although Alphabet has been fined billions of dollars in the past year by the European Union.

It will turn into a quagmire

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

The Justice Department’s antitrust lawsuit against AT&T, and its unsuccessful bid to break up Microsoft, took years to unfold and bled from one presidential administration to another. Indeed, whoever wins the White House in 2020 may be out of office before a potential case against one of the targeted four companies is decided or settled. A two-year FTC probe of Google for violating antitrust and anti-competition statutes in how it arranges its Web search results resulted in no action in 2013. Before that, uneventful government investigations of IBM Corp. IBM, +0.72% and Microsoft took 13 and 11 years, respectively. The former was “referred to as the DoJ’s antitrust Vietnam, it was such a quagmire,” Thierer says What complicated those investigations, and is likely to undercut any new probe, is the speed with which the tech market moves. The IBM probe was focused on its dominance in mainframe computers even as the market quickly moved on to personal computers. Indeed, tech market leaders rise and fall, as in the cases of Myspace, Motorola, Nokia, and BlackBerry Ltd. BB, +3.66% .

Collectively, they are monopolies

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

Regulators face an onerous task. None of the individual companies cry out “monopoly,” but collectively — as Big Tech — they present strong evidence. Apple and Google, for example, control more than 95% of all mobile app spending by U.S. consumers, and the Google-Facebook tandem command nearly 60% of all digital advertising spending world-wide. Amazon, meanwhile, has significantly impacted industries such as booksellers, grocery stores and the postal service.

No way to break it up, geographical approaches fail

Jon Swartz, 6-11, 19, https://www.marketwatch.com/story/breaking-up-big-tech-is-a-big-task-2019-06-10, Four reasons why antitrust actions will likely fail to break up Big Tech

In past marquee antitrust cases, the road map for a breakup was relatively straightforward. The Standard Oil case, decided by the Supreme Court in 1911, split up the company largely along geographic lines. Easier said than done with tech. Critics of Facebook contend it’s a monopolistic entity because it dominates the online attention of more than two billion people and controls their personal data. But Facebook has competition in the social-media market with Twitter Inc. TWTR, -1.83% and Snap Inc. SNAP, -2.72% unlike AT&T Inc. T, +1.10% and its Bell System, which had a nationwide stranglehold on local telephone operators, long-distance service and telephone equipment before its breakup in the 1980s. Facebook also doesn’t have such easily identifiable boundaries. Social networking occurs only through reaching as many people as possible and connecting them with others, making the idea of separating parts of the business much more complex. Even Sen. Amy Klobuchar (D., Minn.), who has made regulation of Facebook a major tenet of her presidential campaign, contends it is premature to call for breaking up big companies. Her legislation calls for tweaks to legal standards to make it easier to challenge mergers successfully in court.

Big Tech supports innovation and competition in other industries

Karen Webster, 6-10, 19, The Only Thing Missing From The Big Tech Breakup Debate: A Debate, https://www.pymnts.com/news/regulation/2019/big-tech-breakup-debate/

And who’s responsible for that? Big Tech. Now That We’re Global In a digital world where smartphones now make every product more or less a local purchase for that consumer, Big Tech is helping companies large and small find new customers and build their businesses. They have been doing that increasingly over the last couple of decades. Take Google. Google says the number of “near me today/tonight” searches increased 900 percent in the period between 2015 and 2017, when there was also a 150 percent increase in “near me now” searches. “Near me” searches related to fashion and car dealers increased 600 percent and 200 percent, respectively. A majority were done via mobile devices, with 76 percent of those searches resulting in an in-store visit. Many of those visits were likely new customers. Take Instagram. Instagram today has one billion active monthly users – two-thirds of whom visit the platform every day. More than two million businesses have bought ads there, many of which are intended to drive users to their websites to buy products. Many of those ads and those sites are new or young businesses. Shoppable tags now make it easy for users to tap and buy from that tag, via an influencer or in an ad, and from a variety of sellers. Instagram says 130 million people do that every month. Then there’s Amazon. Amazon reports there are five million marketplace sellers on the eCommerce platform globally that represented 53 percent of paid units sold in 2018, up from 26 percent in 2007. During the 2018 holiday season, one billion items were sold by third-party sellers. In 2018, 75 percent of those active sellers had between zero and five employees – the very small businesses that would be impossible to find outside of a platform with scale and a built-in audience of eyeballs ready to search, shop and buy. And Apple. Apple’s App Store now has 1.8 million apps that consumers can search for, find and download. Additionally, $120 billion has been paid to developers since the App Store opened. Many small app developers became big app players on the Apple platform. Many of those apps help SMBs manage and grow their businesses. All of these platforms – Apple, Instagram, Google and Amazon – compete with each other for eyeballs and sellers, while creating an environment for those who would otherwise have no shot at finding buyers outside of their own local markets to grow and thrive. They also encourage many others to start businesses, since getting customers is easier than ever.

Lots of venture capital investment in new industries

Karen Webster, 6-10, 19, The Only Thing Missing From The Big Tech Breakup Debate: A Debate, https://www.pymnts.com/news/regulation/2019/big-tech-breakup-debate/

Follow the VC Money VCs may not be putting money into building the next Big Tech behemoth, but they are investing in lots of adjacent businesses that compete with them in different ways. Take the many vertical search platforms, now operating at scale themselves, that aggregate buyers and sellers – many of them small – to help them find each other. 1stdibs gives several thousand sellers, mostly small antique dealers, a way to reach eyeballs from around the world – and for those eyeballs to find unique items they’d otherwise never find easily. And it enables dealers to reach buyers who spend a lot: The average transaction value on 1stdibs is $3,000. Chairish does, too, with a mix of sellers ranging from people selling high-quality vintage stuff to dealers who want to expand their storefronts to anyone with a mobile phone. In doing that, both 1stdibs and Chairish have unlocked opportunities for interior designers, who can now source and curate from these online showrooms and boost their own businesses. According to 1stdibs, 40,000 interior designers have registered on their site. Houzz, one of the first sites to offer shoppable tags, does the same thing for home renovations and remodeling. An aggregator of both ideas and the items to complete and furnish the project, Houzz also gives local professionals an opportunity to be found when homeowners are on the site contemplating a potential project. There’s also plenty of money being poured into food aggregators like Delivery.com, Grubhub, Uber Eats and DoorDash, which gives restaurants a chance to be found beyond the more traditional channels like Yelp and Google. Oodles of money have also been poured into subscription businesses, many of which package items from a variety of businesses to bring a unique experience to the consumer and offer distribution for small sellers. Barkbox, the monthly subscription service that started as a small business, packages and mails goodies to delight precious fur babies. In those boxes are products from small businesses that make the best organic dog treats, or the most puppy-friendly squeaky toys. Shots Box does something similar for craft beer, offering samples of craft beers via a subscription service in an effort to create the largest online tasting room and drive distribution of the local distillers’ products. VCs have made investments in innovators – once small businesses themselves – to help other small businesses be more successful. New tools and tech help digital businesses accept all forms of electronic payments, including the digital wallets that make it easier for consumers to buy from them online. They also enable the businesses to connect to marketplaces and contextual platforms, do business on a global scale, fight fraud, find outsourced help on gig platforms, and integrate front and back office operations into their accounting systems. Big Tech has given rise to an entirely new set of innovators who are reaching new audiences because Big Tech is — well — Big, and gives them access. Billions have been invested to help businesses form, grow and even leverage opportunities provided by Big Tech platforms to do business — in a safe and secure manner. If anything, Big Tech has spawned innovation and a whole new set of competitive dynamics in the markets in which they operate and compete – and helped to grow and fund new players who compete in different ways.

Big Tech controls the news we see

Christiano Lima, 6-11, 19, https://www.politico.com/story/2019/06/11/news-publishers-congress-tech-scrutiny-1521220, News publishers seize moment as Congress amps up tech scrutiny

Chavern of the News Media Alliance said the measure would given publishers a chance to shape how their content generates revenue, who controls data collected from readers and how tech companies prioritize certain stories over others. “In the online world, there are two companies that stand between news publishers and th public, and that’s Google and Facebook,” he said. “They determine everything about our relationship with our customer, including what news gets delivered to who and when, whether it’s monetized and really whether we live or die.”

Online news media critical to democracy

David Chavern, and I am president and CEO of the News Media Alliance, a nonprofit trade association representing over 2,000 newspapers across the United States, June 11, 2019, http://www.newsmediaalliance.org/wp-content/uploads/2019/06/Chavern-Testimony-House-Antitrust-Subcomm.-Hearing-61119.pdf

The news media has played a key role in our democracy since our founding. Its mission has been to enrich society’s knowledge base and to foster the public discourse that is vital in a healthy democracy. And over the years, the news media has fulfilled that mission. We are an industry of innovators. News organizations have always been among the first to adopt new technologies and to find new ways to connect with the public. That has never been more true than with the advent of the Internet…. Online platforms serve an important purpose. Today, 93% of Americans get at least some of their news online.1 Digital platforms help online users find news and other content that they might otherwise miss. In doing so, they have contributed to the enormous growth in digital news audiences over the past two decades.

Only a couple platforms control the news, this is crushing the economics of journalism, as they suck the profits out of jorunalism

In the same way that digital platforms are critical for online news, online news is critical for the digital platforms. According to a study conducted by NMA, approximately 40% of clicks on “Trending Queries” and 16% on high-volume queries in Google Search are news content. 2 That translates into big money for Google. Our researchers estimate that links to news content have earned approximately $4.7 billion annually for Google in search advertising revenue—and that number does not even include the revenue Google generates from ads that appear on news organizations’ own sites. 3 Faceb The platforms’ and news organizations’ mutual reliance upon one another would not be a problem if not for the fact that concentration among the platforms means a small cadre of tech giants exercise an extreme level of control over news. At the same time, those same platforms also control the digital advertising technologies that news organizations use to monetize traffic. This has proven to be a dangerous combination. In today’s digital age, the tech giants’ dual control over news distribution and monetization threatens the very survival of news organizations. These tech giants use secret, unpredictable algorithms to determine how and even whether content is delivered to readers. They scrape news organizations’ content and use it to their own ends, without permission or remuneration for the companies that generated the content in the first place. They also suppress news organizations’ brands, control their data, and refuse to recognize and support quality journalism. In effect, a couple of dominant tech platforms are acting as regulators of the digital news industry. Only these regulators are unconstrained by legislative or democratic oversight. And their primary motivation is not to serve the public interest, but rather to maximize their own advertising revenues. Indeed, two dominant platforms—Google and Facebook—now take the vast majority of U.S. online ad revenue through their online advertising services, leaving news organizations with little to reinvest in high-quality, original journalism. They capture that revenue in two ways. First, they scrape news organizations’ content and display it on their own pages, where they can monetize it through ads. Second, they control the advertising technology news organizations use to sell ads on their own sites, and the platforms charge increasingly exorbitant fees for the use of those technologies. The result of the tech platforms’ regulation of the news industry has been to siphon revenue away from news organizations. This trend is clear if you compare the growth in Google’s total advertising revenue to the decline in the newspaper industry’s ad revenue. In 2004, Google’s US revenue (which came overwhelmingly from digital advertising) was $2.1 billion, while the newspaper industry accounted for $48 billion of advertising revenue. In 2017, in contrast, Google’s US revenue had increased over twenty-five times to $52.4 billion, while the newspaper industry’s ad revenue had fallen 65% to $16.4 billion. The effect of this revenue decline on news organizations has been catastrophic, and they have been forced to cut back on their investments in journalism. That is the reason that newsroom employment has fallen by nearly a quarter over the last decade One question that might be asked is, “If the platforms are, on balance, having such a negative impact on the news media, then why don’t news organizations do something about it?” The answer is that they cannot—at least not under the existing antitrust laws. News organizations face a collective action problem. It is in each of their interests to resist harmful or exploitative policies imposed by platform monopolists. It is in their interest to resist scraping, to demand attribution for their content, to demand better remuneration for their content, and to demand a greater focus on originality and reliability. But no news organization on its own can stand up to the platforms. The risk of demotion or exclusion from the platforms is simply too great. And the antitrust laws prevent news organizations from acting collectively, so the result is that publishers are forced to accept whatever terms or restrictions the dominant platforms choose to impose.

Big tech dominance undermines a diversity of view points that is critical to the marketplace of ideas

Mark Epstein, June 9, 2019, Epstein is an antitrust attorney and freelance writer, Wall Street Journal, Antitrust, Free Speech, and Google, https://www.wsj.com/articles/antitrust-free-speech-and-google-11560108712

Donald Trump’s 2016 campaign promised to use antitrust law against oligopolies it said were “destroying an American democracy that depends on a free flow of information and freedom of thought.” The Justice Department’s investigation of Google may appear to fulfill this pledge. But Makan Delrahim, who heads the antitrust division, has voiced skepticism. In a 2018 address, he rejected the notion that “antitrust enforcers should step beyond consumer welfare and think about . . . values like the free speech the First Amendment protects.” He worried it would lead to subjective enforcement because “Republican and Democrat prosecutors, or those of any party or political orientation, carry with them their own perceptions of what is good and bad for our democracy.” Yet platform neutrality isn’t a strictly partisan issue. When Facebook temporarily blocked Democratic Sen. Elizabeth Warren’s campaign ad in March, she tweeted: “I want a social media marketplace that isn’t dominated by a single censor. #BreakUpBigTech.” Her Republican colleague Ted Cruz agreed: “She’s right—Big Tech has way too much power to silence Free Speech.” The Justice Department does have authority to consider how Google’s dominance affects the marketplace of ideas, and federal prosecutors routinely make decisions with partisan policy implications when enforcing campaign-finance, election-fraud, and voting-rights laws. Even in the antitrust context, regulators must consider viewpoint diversity in cable and broadcast mergers. Special statutes apply to these industries, but there is also precedent to address similar concerns under the broader antitrust laws. In Associated Press v. U.S. (1945), the Supreme Court held that the Sherman Antitrust Act of 1890 complemented the First Amendment, which “rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.” Antitrust law has evolved since Associated Press to focus solely on consumer welfare. But as Maureen Ohlhausen, then a member of the Federal Trade Commission, argued in 2016, the consumer-welfare standard applies to “values like openness and free speech” because “consumers care about a host of qualities for Internet access, not just price.” Thus the Justice Department may consider whether Google uses its dominance to reduce consumer choice. Many startups, for instance, attempt to compete against big tech by offering less-moderated content. As Google-owned YouTube enacted content guidelines, some creators and viewers moved to freer platforms such as BitChute and DTube. Antitrust enforcers could use the welfare standard to evaluate whether Google used its dominance in the search or mobile operating system market to exclude these competitors. Antitrust law isn’t a panacea, and the department should avoid getting caught in the partisan bickering over fake news and censorship that consumes most congressional hearings on Silicon Valley. Whether Google abuses its market dominance in search, online advertising, and mobile operating systems is a question that directly affects consumers and worries Democrats and Republicans alike.

Competition is what makes market economies work and be effective for consumers

Jacob Goldstein from NPR’s Planet Money June 9, 2018, https://www.npr.org/2019/06/09/731044346/big-tech-and-antitrust, Big Tech And Antitrust

GOLDSTEIN: So, you know, there’s this just really basic idea about antitrust that I find really interesting. And that’s this. Competition is at the heart of why a market economy is good for ordinary people. Competition is why companies are always trying to make things better or cheaper or safer. So, you know, that’s great for us. But if you’re a company, competition is terrible.

Enforcing antitrust law will fail

Reuters, June 3, 2019, https://ca.reuters.com/article/idCAKCN1T62K3-OCATC?utm_source=34553&utm_medium=partner

What would the U.S. government need to prove to bring a case against the tech companies? FILE PHOTO: The logos of Amazon, Apple, Facebook and Google in a combination photo from Reuters files. REUTERS It is difficult to show a violation of U.S. antitrust law, legal experts said. It is not enough for regulators to establish that a company has monopoly power. They must also show anticompetitive conduct – an abuse of that dominant position aimed at bypassing fair competition. “You can get a monopoly just by being a good competitor and that’s fine,” said Chris Sagers, a professor of antitrust law at Cleveland State University. Under current precedent, the Department of Justice and the FTC also need to show that consumers are being harmed, something that in recent decades has typically been measured by whether prices are going up and innovation is slowing. Using these metrics, it could be difficult to prove that technology companies, which do not charge money for many of their services, are hurting consumers, some legal experts said.

Court clog link – antitrust enforcement depends on filing lawsuits in civil court

Reuters, June 3, 2019, https://www.reuters.com/article/us-tech-antitrust-legal-explainer/explainer-should-big-tech-fear-u-s-antitrust-enforcers-idUSKCN1T62K3, Explainer: Should Big Tech fear U.S. antitrust enforcers?

What can the U.S. government do if investigators find an antitrust violation? The FTC and Justice Department can both file civil lawsuits in federal court and ask judges to order changes to a company’s business model. The Justice Department can also bring criminal antitrust cases, but those prosecutions usually relate to cartels and price-fixing, making charges against big technology firms unlikely.

Monopoly on advertising means Google and Facebook can force advertisers to pay more

Jacob Schleisinger, June 3, 2019, https://www.wsj.com/articles/the-big-challenge-for-policy-makers-policing-american-tech-giants-11559559967 The Big Challenge for Policy Makers: Policing American Tech Gia

The huge share of the digital advertising market controlled by Google and Facebook also means they can charge more for those ads than they could in a more competitive market—costs that may be passed on to consumers with higher prices for the goods they buy online, the reports say. They add that the prominent placement of ads associated with those platforms also degrades the quality of the user experience for consumer

Facebook is not a monopoly

Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism, 6-2-19, Facebook isn’t a ‘monopoly,’ so let’s not make it into one, http://www.thenewsherald.com/opinion/facebook-isn-t-a-monopoly-so-let-s-not-make/article_b895b716-7c09-11e9-806e-bf1997a2e3d1.html

What commodity or service is Facebook a “monopoly” in? Certainly not social media. You’ve probably heard of Twitter. You may have also heard of Diaspora, Minds, MeWe, Mastodon, Gab and a number of other companies, sites and apps offering the ability to post updates to friends and followers and discuss those updates. Advertising? Not even close. Does the name Google ring any bells? How about Microsoft? There are plenty of smaller web advertising networks you probably haven’t heard of, as well. Then there’s messaging and chat. Yes, Facebook owns Messenger and WhatsApp. But it doesn’t own Discord or Slack or Signal or Skype or Telegram or any of hundreds of other messaging/chat apps. Facebook has lots of users. Facebook makes lots of money. But Facebook isn’t a “monopoly” in any of the services it offers. It has loads of competitors, many of them doing quite well, and its users and customers have the option of using those competitors instead of, or in addition to, Facebook any time they like. More importantly, Facebook has no ability to prevent new competitors from entering the markets it serves. And therein lies a political paradox. While so far resisting the “breakup” talk, Facebook and its CEO, Mark Zuckerberg, have recently become increasingly receptive to government regulation. Why? Because Facebook is big enough and rich enough to cheerfully comply with whatever regulations its detractors can come up with, and to hire armies of lobbyists to “capture” and shape that regulation. It can probably even survive and profit from a supposed “breaking up.” Your brother-in-law’s basement social media or advertising or messaging start-up, on the other hand, probably isn’t well-financed enough to navigate a substantial federal regulatory regime or to successfully fight for its life if the regulators come down on its head even once. Facebook isn’t a monopoly. Facebook isn’t close to becoming a monopoly. But if the people incorrectly calling it a monopoly get their way, they’ll have taken the first giant step toward making it into one.

Facebook’s monopoly enables it to control global discourse

Daniel Broudy & Jeffery Klaehn, Truthou June 3, 2019, Chomsky and Herman’s Propaganda Model Foretells a Weaponized Facebook, https://truthout.org/articles/chomsky-and-hermans-propaganda-model-foretells-a-weaponized-facebook/

Donald Trump’s Zany British Vacation: How Badly Will He Screw This One Up? The personal is now public. Consider Facebook. As the global leader in platforming interpersonal interactions with public discourse across boundaries, Facebook enjoys a virtual monopoly in reflecting power. Facebook’s massive global reach gives the platform immense influence to shape public perception, awareness and opinion. Notably, one of the platform’s creators, Chamath Palihapitiya, did admit that the team “knew something bad could happen,” having “created tools that are literally ripping apart the social fabric of how society works.” Still, public awareness of this subterfuge has changed nothing. The relevance of mediated social reality to everyday life has, for much of the industrialized world, never been as pronounced. Information technology and social media exist within political-economic contexts wherein ideas and information are routinely commodified for marketplaces. In 2001, researcher and author Edwin Black meticulously laid out the case of how publicly traded companies can (literally and figuratively) make a killing out of acquiring and managing private information for use in particular markets. Uncompromised, uncompromising news Get reliable, independent news and commentary delivered to your inbox every day. Your Email [email protected] Along with altruistic pretenses like its claims to respect the commons and connect the social world, Facebook also sells user data to advertisers and other institutions intent on managing public perception while simultaneously using personal data for private profit. The social is also now commodified. Facebook is strictly oriented around total profit in the commodification of user data. In fact, The New York Times detailed how Facebook has allowed its big tech partners to breach privacy rules to gather user data. Moreover, the very nature of corporatized social media makes users into active market actors, products to be sold. As professor and media theorist Robert McChesney points out in a C-SPAN interview, “Everything we do online is known by commercial vendors and the government to the extent it wants to know. We have no privacy at all.” Facebook is strictly oriented around total profit in the commodification of user data. No reasonable human being really wants to be integrated into the AI singularity, experimented on, spied on, or to have their private interactions packaged and sold. Resistance to this onward march, we are conditioned to believe, is futile. So how might Facebook’s digital citizens, now 2.3 billion strong, better comprehend and understand the company’s immense power over their ideas and their freedom to exchange ideas — the foundation of freedom itself? A conceptual model of the late 1980s can help pry apart the puzzling performances of this anti-social behemoth. A Model Fashioned for the Age of Mass Media First introduced in Manufacturing Consent: The Political Economy of the Mass Media (1988), Edward S. Herman and Noam Chomsky’s “Propaganda Model” of media performance situates superbly the technological zeitgeist of our times. The model is a representation of how big media in a market economy sift the raw material of news fit to print or broadcast — the residue of which propagates the socioeconomic status quo in so-called democratic societies. Since “democracy” implies the civilized practice of resolving differences through public dialogue across groups and classes, Herman and Chomsky postulate that five major filters (ownership, size and profit orientation of dominant media; advertising; sourcing; flak; and dominant ideologies, fear, othering) work to “manufacture consent.” Why are such efforts even necessary? As researcher and author Tim Coles notes in a Renegade Inc. interview, one of the aims of propaganda is to “alienate the public from their own interests,” so it’s natural that “whenever people in power are telling you that fake news is undermining democracy, they really mean that alternative sources of information are challenging their grip on power.” Since terms such as “fake news” and “controlling the narrative” have become increasingly prevalent in the age of Trump, the relevance and importance of the Propaganda Model becomes self-evident in today’s public discourse and unchecked commodification. Since one of the primary threats to personal privacy comes from advertisers, it is hardly surprising that Facebook has highly questionable associations. Citizens with the temerity to reject officially approved mainstream narratives on Facebook are witnessing firsthand how their own online interactions are being actively shaped (or filtered) by media controllers and propagandists. Try as they may, however, those who possess the power to filter media content cannot fully control perception in a growing number of participants who boldly criticize mainstream mythologies on social networking platforms like Facebook. The hypothesized filters that Herman and Chomsky describe in their book point to those actual mechanisms of control. Regarding the production, flow and control of information, Facebook is the owner (first filter), and it sells to advertisers (second filter) the content its participants generate and interact with. As BuzzFeed reports, Facebook is gratuitously trafficking users’ personal data. Beyond its “partnering” with assorted titans of propaganda, it now has a seat on the Atlantic Council, which reveals the great utility of the third filter: that Facebook has been “drawn into a symbiotic relationship with powerful sources of information by economic necessity and reciprocity of interests.” Subdue the urge for another dopamine hit and scratch the visually appealing surface of the platform’s interface to see facts about Facebook’s other strange partnership with its newest “fake news fact-checkers” like the Koch-funded right-leaning website, The Daily Caller. Facebook has further “plans to capture data on everyone, whether you’re a Facebook user or not.” Facebook management serves also as the system’s built-in flak machine (fourth filter) — enforcers who discipline users and alternative news outlets that fail to obey the algorithms written to filter out dissenting views. As a commentator on new technologies and their uses, Kim Komando has distilled, in her brief description of Facebook’s efforts, each of the Propaganda Model’s filters. Perhaps because of the surprising origins of its clandestine funding sources, Facebook remains open to striking deals with a range of government agencies and nongovernmental intelligence services keen to sift through content and other personal data for pseudo-official oversight of public discourse for possible ideological threats to its system (fifth filter). Information can enlighten and democratize. It can just as well imprison and impede the interests of the common good. Given the economic forces exerted by the streams of funding for Facebook’s brand of socializing, the participants interacting within these landscapes serve as both producers and products. Since one of the primary threats to personal privacy also comes from advertisers striving to track all activity on the web, it is hardly surprising that Facebook has highly questionable associations. It turns out that WPP, the largest advertising agency on Earth, receives backing from In-Q-Tel, an investment fund of the CIA that develops tools that scan social media networks for meaningful data. Further concerns about personal privacy have been recently heightened by Facebook’s hiring of Jennifer Newstead, who helped craft ever more powerful electronic surveillance guidelines for the PATRIOT Act during the Bush administration. Given the explanatory power of the Propaganda Model to unfold such obscure machinations, it is possible to see the reasons why, notes Komando, the most significant part of “this plan is to be completely secretive about what data they collect, who gets to see it, and what kind of profile they build about your life.” Shouldn’t these mechanisms of control, as explained by Herman and Chomsky’s Propaganda Model, be a part of any public discussion of media performance today? Or, should we simply accept vague terms like “fake news” and “controlling the narrative”? Should we go on pretending that practices of legitimization and mystification are no longer in play, or that structures of ownership and advertising are no longer relevant? In the contemporary world, what media theorist Marshall McLuhan imagined as “a global village” where “everybody gets the message all of the time,” the personal is increasingly public, and information reigns supreme. Today, information can enlighten and democratize. It can just as well imprison and impede the interests of the common good. The processes of commodification and marketization described here are sustained by a framework directed largely by Facebook, Google, Microsoft, Apple and Amazon, which monopolize privatized and commercialized discourse. This sort of power did not emerge naturally. But can interpersonal and public discourse be liberated from the filters of commodification? Prisons are only as secure as citizens’ awareness of the echo chambers they channel us into. The Propaganda Model is a useful key for opening wider awareness of these forces shaping media content and performance. One needs only to make use of their powers of personal observation to witness the filtering and the active construction of our mass-mediated reality, a world of powerful illusions pretending to be real and meaningful..

Big Tech controls global data flows and social influencing

Zachs Equity Research, May 31, 2019, The Zacks Analyst Blog Highlights: Facebook, Alphabet, Apple, Amazon, IBM and SAP, https://finance.yahoo.com/news/zacks-analyst-blog-highlights-facebook-151803489.html

As far as lawmakers are concerned, these mega platforms are to a large extent their making. It’s not by chance that the U.S. has its own Facebook, Google, Amazon and Apple. Policies have in the past supported the creation of behemoths that have today become a phenomenon beyond everyone’s control. And it comes with a feeling of entitlement for these companies that could do no wrong just a few years back by virtue of their representation of America’s power and progress. That could be why Facebook executives Zuckerberg and Sandberg glibly ignored summons to testify before the international grand committee on big data, privacy and democracy, hosted by Canada’s parliament in Ottawa. While the company did send its subject-matter experts, the disrespect to lawmakers around the world didn’t go unnoticed. Jim Balsillie, chairman of the Ontario Centre for International Governance Innovation said, “By displacing the print and broadcast media in influencing public opinion, technology is becoming the new Fourth Estate. In our system of checks and balances, this makes technology co-equal with the executive, the legislative and the judiciary… When this new Fourth Estate declines to appear before this committee — as Silicon Valley executives are currently doing — it is symbolically asserting this aspirational co-equal status … The work of this international grand committee is a vital first step toward redress of this untenable current situation.” New Democratic Party lawmaker Charlie Angus added, “Facebook has serious responsibilities in terms of the misuse of the platform that has led to mass killings in Myanmar, the undermining of electoral systems around the world, the attack on private rights and citizen rights.” As legislators around the world get together to control the influence of American technology companies, it’s high time the government did something about the situation. This could be why representatives on both sides have started calling for a split up of Facebook, which could open the door to splitting up other companies as well.

Splitting up companies won’t solve privacy and fake news problems

Is Splitting the Solution? The big question here is whether this is the solution, i.e. whether it addresses the problem at all Take Facebook for example. Splitting up the company would mean that WhatsApp, Instagram and Facebook will be different companies. While this could garner undivided management time to solve privacy and other issues, it’s still a practically insurmountable task given that there are billions of posts every day. So filtering fake news remains a problem. Facebook has already stepped up hiring to manually remove offending posts and is supplementing this with artificial intelligence-inspired suggestions/algorithms. The results are disastrous. Until the government can come up with a viable solution to the fake news problem, splitting up the company won’t help. The privacy problem on the other hand may be easier to solve by regulating the business as a utility. If Facebook doesn’t have a financial need to capture or sell user data (to advertisers), it can be more scrupulous about it and collect data only when it’s required to improve the service.

Break-up hurts privacy because it takes enormous financial resources to protect privacy

Seth Rosenblatt, May 31, 2019, Privacy impact of Big Tech breakup far from clear, https://the-parallax.com/2019/05/31/privacy-impact-big-tech-breakup/

Big Tech has what it takes to make the biggest strides in consumer privacy, Kissner says. And while regulation is warranted, breaking up any of these companies might actually harm privacy research and development more than it improves it. “There’s a lot of research going on in differential privacy, federated learning, anonymization—[and] pretty much everybody who’s working on that on a practical level is working at Google, Apple, Netflix. All of that research is coming out of large tech companies and academic institutions. There are not that many companies that find this research feasible to do,” she says. “There is a lot of technology that has not been implemented because people can’t figure out how to make it run fast enough yet. Properly implementing cutting-edge privacy protection technology requires a significant amount of research and development, Kissner adds. Take shortcuts, and you risk interfering with security features already in wide use across the Internet, such as Single Sig

Apple is a monopoly

Sejutu Banejera, May 30, 2019, https://finance.yahoo.com/news/apples-antitrust-problem-173205019.html Apple’s Antitrust Problem

This doesn’t of course mean that Apple is guilty of antitrust activity, especially since there’s no collusion involved and also as Apple says, it merely charges for the service of maintaining a secure and malware-free platform where each app goes through a stringent vetting process. What it does mean however is that developers and consumers can now sue it. Apple is confident that it can prove its innocence and the plaintiffs are equally confident that they can prove guilt. They may be both right and wrong. Wrong because app developers can also make apps for the Android or other ecosystem, they don’t have to make apps for iOS. Moreover, Apple’s 30% charge is only for digital services on its platform and not for other apps. But there are good reasons why they may be right- First, this is not the way other app ecosystems function. For example, Android also charges 30%, but users are free to download their apps from anywhere other than Alphabet’s GOOGL Play Store. So in case of Android users, they have the choice of paying the 30% fee or not. If the service provided is valuable, which it must be for some, they can choose to buy the apps from the Play Store. Microsoft MSFT also has an online store for apps, but it charges 5% to try and woo users who are under no obligation to use it. Apple denies this choice to users and has even moved to make jailbreaking (modifying the device to remove manufacturer restrictions) illegal. Second, Apple claims that developers have the choice of targeting people other than iOS users. This of course shuts out a market segment for them and limits user choice, which is highly anti-competitive. Third, Apple says it isn’t a monopoly but by its own rules, it is the sole distributor of iOS apps. Fourth, it denies a direct relationship with users in the process of app sales to them. But the stewardship of its user base enables it to negotiate terms with app makers. Therefore, its users give it leverage against them. Apple in turn becomes the gatekeeper of all goods/services flowing through to its users. Fifth, in case of services such as Spotify SPOT, Apple offers a competing service such as its Music. So when it charges Spotify for a fee that it doesn’t earn (Spotify doesn’t need the platform for anything because it is so well-established and its website downloads are as secure as anywhere else), it is nothing short of extortion. Particularly so because by forcing Spotify to raise prices or go bankrupt, Apple gives its own service a leg up, thereby limiting competition. Conclusion These are early days yet and Apple will no doubt keep the matter in courts for several years. After that, it may have to alter its practices and/or pay damages to users/developers. Developers of course won’t be in any hurry to sue it because they need the sales. If the Pepper lawsuit wins though, other class action lawsuits may follow. Apple could alternatively charge a lower fee to pacify users. Since this could compromise app store maintenance, it’s extremely unlikely that Apple will do this. Whatever the outcome, this is a bad time for such a thing to happen, just as Apple is trying to metamorphose into a services company.

Big tech benefits the consumer and the economy

Brett Swanson, American Enterprise Institute, May 28, 2019, http://www.aei.org/publication/apples-app-store-monopoly-or-miracle/, Apple’s App Store: monopoly or miracle?

Anyway, at some point we’ll get back to the merits of whether the App Store (and other digital platforms) are harmful monopolies. And on this point, I continue to wonder how anyone can assert that the benefits — millions of apps, enterprise quality web services that are often free, one-day (instantaneous) delivery of multitudinous goods (services) — don’t massively outweigh the costs. The benefits must include those that are difficult to measure. Most recently, MIT professor Erik Brynjolfsson and colleagues estimated that embedded smartphone cameras, if measured more accurately, would have added 5.63 percentage points to GDP between 2008 and 2017.

Big Tech competition protects privacy

Brett Swanson, American Enterprise Institute, May 28, 2019, http://www.aei.org/publication/apples-app-store-monopoly-or-miracle/, Apple’s App Store: monopoly or miracle?

Do some of these services impose costs, for example to our privacy? Yes, sometimes. But even here, competition is working. Apple’s long focus on privacy is spurring even data-hungry Google to follow. For example, Apple attempts to process as much data on the device as possible to avoid transmitting sensitive information across the network or storing it in the cloud. Well, at its recent I/O conference, Google revealed it would also utilize more on-device processing and adopt other privacy enhancements, such as “incognito mode” for maps and search.

Big tech may benefit consumers, but it crushes suppliers

Swarup Gupta, May 27, 2019, https://finance.yahoo.com/news/campaign-break-big-tech-succeed-111811976.html

In contrast, U.S. regulators have taken a favorable view of the incredible growth of Big Tech. Better smart phones, free online services and cheap e-commerce are believed to be the favorable outcomes of their growing power and influence. This has led U.S. regulators to believe that the success of tech majors has had a positive effect on competitive markets. However, it is equally true that tech majors have been crushing suppliers as well as nascent competition. In the process, they have employed a range of questionable tactics, as was witnessed during Amazon’s AMZN ruthless price wars against its competitors.

Breaking-u Big tech won’t solve the underlying issues

Eric Johnson, May 24, 2019, Vox, https://www.vox.com/recode/2019/5/24/18637823/alex-stamos-facebook-mark-zuckerberg-ceo-kara-swisher-decode-podcast-interview-collision-conference https://www.vox.com/recode/2019/5/24/18637823/alex-stamos-facebook-mark-zuckerberg-ceo-kara-swisher-decode-podcast-interview-collision-conference

Alex Stamos, the former chief security officer at Facebook who left the company last year for a role at Stanford University, isn’t convinced that breaking up Facebook will actually solve the problems it has created. “You cannot solve climate change by breaking up ExxonMobil and making 10 ExxonMobils, you have to address the underlying issues,” Stamos said on the latest episode of Recode Decode with Kara Swisher. “I think there’s a lot of excitement for antitrust because it feels good to be like, ‘I hate this company, so let’s break it up.’ Having three companies that have the same fundamental problems doesn’t make it any better.” Instead, he told Recode’s Kara Swisher at the Collision conference in Toronto, Facebook should model its future on the “internal revolution” at Microsoft that began in 2002, in the aftermath of the antitrust case United States v. Microsoft. And part of that revolution should be the replacement of CEO and founder Mark Zuckerberg (who currently has an untouchable majority of voting shares). “There is a legitimate argument that he has too much power,” Stamos said. “He needs to give up some of that power. If I was him, I would go hire a new CEO for the company. He’s already acting as the chief product officer with Chris Cox gone, that’s where his passion is. He should hire a CEO that can help signal both internally and externally that the culture has to change. “My recommendation would be Brad Smith from Microsoft. Some adult who has gone through this before at another company.” You can listen to Recode Decode wherever you get your podcasts, including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts, and Overcast. On the new episode, you’ll also hear a live interview with Twitter co-founder Ev Williams, who’s now the CEO of Medium and a partner at Obvious Ventures. Below, we’ve shared a lightly edited full transcript of Kara’s conversation with Alex. Kara Swisher: So, Alex and I know each other really well. We like to argue with each other about a lot of things, and we were most recently up in Napa Valley at this stunning resort, and all we did … we were in a wine cellar and we started screaming at each other, essentially. We’re hoping to replicate that here, a little bit. So, let’s talk about some … Alex Stamos: There’s a lot less wine … I’m going to give you … I’m going to go off from our discussion. One of Alex’s contentions, even though he talked a lot, he’s been one of the more forthright people in tech, about what happened at Facebook and other places, is that it’s misunderstood. One of your arguments is that Facebook is misunderstood. Is that correct? What I think is … I think there’s a lot of directionally correct criticism, where the details are wrong. Directionally correct, they ruin democracy, and?

Election interference isn’t unique to big tech – It was done in India with what’s app

In India, the election is over, the counting is happening right now. India is a fascinating issue, because most of the disinformation is driven by domestic actors. And they’re doing it on WhatsApp. WhatsApp is the exception that proves that some dumb criticism about Facebook and algorithms is poorly built, because WhatsApp has no algorithmic ranking. It has a huge amount of privacy for people, and yet there’s a disinformation problem, because the problem is people. In this case, in India, you have the ability to enlist hundreds of thousands of people to push propaganda on behalf of your political party.

Breaking-up big tech threatens the United States’ ability to compete in AI

Maz Zhan, Mary 23, 2019, https://finance.yahoo.com/news/facebook-google-mark-cuban-170108760.html, Facebook and Google are America’s ‘biggest competitive advantage,’ says Mark Cuban

In a new interview, Dallas Mavericks owner Mark Cuban rejected calls to break up tech companies like Google (GOOG, GOOGL) and Facebook (FB), saying the internet giants constitute America’s “biggest competitive advantage” over China and Russia. “If you were to break up any of those companies,” Cuban says. “We’re going to lose our greatest competitive advantage that we have versus the Chinese and the Russians in a space that we need to dominate.” Cuban, a billionaire entrepreneur and host of the television show “Shark Tank,” said the Chinese and Russian governments understand the significance especially of artificial intelligence, pointing to national plans on the subject underway or under development in the two countries. “In the United States, we don’t have those plans yet,” he says. “But what we do have is five to 10 really, really big tech companies who dominate the research and development in the AI space.” Cybersecurity and tech innovation have become a central point of contention in the trade war between the U.S. and China. Last week, Trump declared a national emergency over threats to the U.S. posed by foreign tech companies, a move many perceived as a blow to Chinese telecommunications equipment company Huawei. Trump is reportedly considering imposing limits on the Chinese tech firm Hikvison, which produces surveillance technology used by the Chinese government to track members of the country’s Uighur minority, about 1 million of whom have been detained in internment camps. The spirited defense of big tech aired by Cuban, who is mulling a 2020 presidential run, distinguishes him from many Democratic presidential candidates who have called for the breakup of companies like Google and Facebook. In March, Senator Elizabeth Warren called for the breakup of major tech companies. She argued that rather than promote innovation, they stifle it. “Weak antitrust enforcement has led to a dramatic reduction in competition and innovation in the tech sector,” she wrote on Medium. Sen. Bernie Sanders (I-VT) and Rep. Tulsi Gabbard (D-HI) have since backed Warren’s proposal. Former vice president Joe Biden and Sen. Kamala Harris (D-CA) have both said the break-up of big tech is worth considering. Cuban made the remarks to Editor-in-Chief Andy Serwer in a conversation that airs on Yahoo Finance on Thursday in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment. While Cuban is known for the Mavericks and “Shark Tank,” he made his first billions with an online streaming company called AudioNet that he co-founded in 1995. The company, which later became broadcast.com, sold to Yahoo in 1999 for stock valued at $5.7 billion. Soon after, in 2000, Cuban purchased the NBA’s Dallas Mavericks for $285 million; the team is now valued at $2.3 billion, according to Forbes. He also co-founded 2929 Entertainment, a film production and distribution company. Cuban has invested in hundreds of start-ups as a host of the TV show “Shark Tank,” which he joined in 2012. Mark Cuban appears on Influencers with Andy Serwer Mark Cuban appears on Influencers with Andy Serwer More ‘You don’t have to use Facebook. You don’t have to use Amazon.’ Expanding upon his support for big tech, Cuban argued that antitrust action is unnecessary because consumers can go elsewhere for similar products.

Breaking-up social networking companies reduces their actual value and they will reconstitute themselves

Dwight Silverman, May 17, 2019, https://www.houstonchronicle.com/techburger/article/Robert-Metcalfe-Ethernet-inventor-says-breaking-13851833.php Robert Metcalfe, Ethernet inventor, says breaking up big tech is not the answer

Metcalfe is the inventor of Ethernet, the primary way computers talk to each other when they are joined by wires. On Wednesday, his creation will be 46 years old. For context: The internet itself turns 50, and the World Wide Web will be 30 this year. While Wi-Fi — once known as “wireless Ethernet” — is more top-of-mind for most folks wanting to hop online to watch Netflix, shop at Amazon, download a repair manual or argue politics with Uncle Fred on Facebook, Ethernet is still in the mix. If you are receiving information, images or data from across the great Network of Networks, Ethernet is involved. His achievement is so profound there is a law named after him. Metcalfe’s Law states that a network becomes more valuable financially and in utility as more people — and now things — connect to it. That helps explain why networks such as Facebook, Twitter, Google and others are so compelling. With so many other computers — and by extension, the people who use them — linked together, the result is arguably the most powerful tool our species has created. “These are the pathologies of connectivity,” Metcalfe said, adding that other maladies have preceded them as our connectedness has evolved. “First there was porn, and we dealt with that. And then there was spam, and we dealt with that,” he said. “Now you have fake news, security breaches, invasions of privacy and so on. These pathologies need to be dealt with.” There are now calls from consumer advocates, social scientists and politicians for the largest of the social networks to be broken up, a la the original AT&T. Several of the candidates for the Democratic presidential nomination in 2020 are among those advocating a tech breakup. U.S. Sen. Elizabeth Warren has said she wants to see Facebook, Twitter, Google and even Apple trustbusted. Not to be outdone, front-runner Joe Biden said last week it was worth considering, as did U.S. Sen. Kamala Harris. But here’s the thing: If you take a company like Facebook and reduce it in size, it becomes less useful for those who rely on it. History also shows us that technology companies broken up and reduced in size tend to want to reconstitute. AT&T, once broken up into separate regional components, is once again a telecommunications behemoth. DENIED: Facebook rejects calls for its breakup by a co-founder Metcalfe doesn’t think breaking up a company like Facebook is the answer. If the social network were to be taken down a notch, its actual usefulness would decline, as per Metcalfe’s law. “Breaking Facebook into pieces would greatly diminish its value,” he said. ‘Adult supervision’ Metcalfe believes that the problem with Facebook lies in its founder, Mark Zuckerberg, who controls most of its stock and is both its chief executive and chairman. Facebook, he says, needs “adult supervision”. “Zuckerberg should have brought in adult supervision to run that company a long time ago,” Metcalfe says. “He brought in Sheryl Sandberg, but he didn’t make her CEO. She’s the COO.” Indeed, most of the big tech companies that critics charge are eroding society’s fabric still have their founders overseeing things. Besides Zuckerberg, there’s co-founder Jack Dorsey helming Twitter. Larry Page, who co-founded Google, is chief executive of its parent company, Alphabet Inc. New leadership is not always easy to find and “mistakes are made.” Metcalfe said.

Break-up gives a huge advantage to Chinese big tech companies

Physics.org, May 17, 2019, https://phys.org/news/2019-05-facebook-breakup-boost-china-rivals.html, Facebook breakup could boost China rivals: Sandberg

Facebook chief operating officer Sheryl Sandberg said Friday a breakup of big US technology would not address “underlying issues” facing the sector and suggested that such a move could help rivals in China. Sandberg, interviewed on CNBC television, was asked about the latest calls to break up Facebook and other major Silicon Valley firms which dominate key sectors. “You could break us up, you could break other tech companies up, but you actually don’t address the underlying issues people are concerned about,” Sandberg said in the interview. Sandberg said the social network used by more than two billion people was working to address concerns about election security, online violence promotion and data protection, but that a breakup might only serve to help competitors from China. “While people are concerned with the size and power of tech companies, there’s also a concern in the United States with the size and power of Chinese companies, and the realization that those companies are not going to be broken up,” she said. The comments come a week after one of Facebook’s co-founders, Chris Hughes, said in an essay “it’s time to break up Facebook,” warning that it has gained too much power over what people see online. Democratic presidential candidate Elizabeth Warren has also called for a breakup that could require Facebook to spin off its Instagram and WhatsApp units. Sandberg maintained that Facebook’s teams are working hard on safety and security issues, echoing comments since the company came under fire over a series of missteps including leaking of data in 2016 to a consultancy working for Donald Trump. “We know at Facebook we have a real possibility to do better and earn back people’s trust,” she said. Facebook chief executive Mark Zuckerberg said this week he was optimistic about progress toward a new regulatory framework that would apply to internet platforms. “Overall I think in order for people to trust the internet… there needs to be the right regulation put in place,” Zuckerberg said after meetings with French President Emmanuel Macron to discuss a report called “Creating a French Response to Make Social Media Responsible.”

Big tech critical to the development of artificial intelligence

Tom Simonite, February 12, 2019, https://www.wired.com/story/pentagon-doubles-down-ai-wants-help-big-tech/

IN THE 1960S, the Department of Defense began shoveling money toward a small group of researchers with a then-fringe idea: making machines intelligent. Military money played a central role in establishing a new science—artificial intelligence. Sixty years later, the Pentagon believes AI has matured enough to become a central plank of America’s national security. On Tuesday, the department released an unclassified version of its AI strategy, which calls for rapid adoption of AI in all aspects of the US military. The plan depends on the Pentagon working closely with the tech industry to source the algorithms and cloud computing power needed to run AI projects. Federal contracting records indicate that Google, Oracle, IBM, and SAP have signaled interest in working on future Defense Department AI projects. “AI will n THE PENTAGON DOUBLES DOWN ON AI–AND WANTS HELP FROM BIG TECHot only increase the prosperity of the nation but enhance our national security,” said Dana Deasy, the department’s chief information officer, at a news briefing Tuesday. He said Russian and Chinese investments in military AI technology heighten the need for US forces to use more AI, too. “We must adopt AI to maintain our strategic position and prevail on future battlefields,” Deasy said. Previous Defense Department efforts to tap into the tech industry’s AI expertise haven’t all gone smoothly. Last year thousands of Google employees protested against the company’s work on Project Maven, which was intended to demonstrate how the US military could benefit from tapping commercially available AI technology.

David Streitfeld, Jan. 1, 2019, Big Tech May Look Troubled, but It’s Just Getting Started, New York Times, https://www.nytimes.com/2019/01/01/technology/big-tech-troubled-just-getting-started.html

That is not the path the companies are taking. “The tech companies are not flinching,” said Bob Staedler, a Silicon Valley consultant. “Nothing has hit them on the nose hard enough to tell them to cut back. Instead, they are expanding. They’re going around the country acquiring the best human capital so they can create the next whiz-bang thing.” There is so much of life that remains undisrupted. The companies are competing to own the cloud — to become, in essence, the internet’s landlord. They have designs on cities: Google made a deal in 2017 to reimagine a chunk of waterfront Toronto from the ground up. Amazon is reworking the definition of community from the inside, as warehouses in rural areas provide the urban middle class with everything they want to stay home all weekend. ADVERTISEMENT These changes are only beginning to redefine society. When every home has an Amazon Echo, Google Home, an Apple HomePod or some other smart speaker, the companies are already signaling, all human and metaphysical needs will be fulfilled. For those who insist on venturing out, there will be driverless cars operated by Big Tech. And the companies are plunging further into artificial intelligence, with consequences unclear even to them. To accomplish all this, Big Tech needs hundreds of thousands of new employees, which means it needs somewhere to put them. This isn’t a matter of reconfiguring a floor or two at corporate headquarters. It means building new campuses around the country. Big Tech’s push into New York City and the Washington area has been well documented in recent months, with Google bulking up in the first and Amazon planning satellite offices in both. But even in its backyard of Silicon Valley, which is a mess of traffic congestion and housing prices that have attained levels even well-paid engineers can scarcely afford, there is a boom that, if anything, is accelerating. Anyone who wants to believe Big Tech is chastened should visit a section of San Jose just west of downtown, a jumble of carwashes and auto-body shops with a sprinkling of modern apartments. On a short street there is a house nearly a century old, a tiny thing with only one bath. Google bought it and another house last month in a package deal for $4 million, according to county documents reviewed by The Mercury News. A broken window reflecting construction in San Jose, where Google is putting together a campus that will total eight million square feet. Credit

Break-up won’t reduce the harvesting of personal information

Shari Ovide, May 13, 2019, //www.seattletimes.com/business/technology/commentary-the-case-against-breaking-up-facebook/, Commentary: The case against breaking up Facebook

Here are three problems I have with Facebook, and how a breakup might affect them: 1) Facebook has huge treasure troves of personal information. Facebook has vast knowledge about how the world spends its time on and off its internet hangouts, and in the real world. It hasn’t always been a reliable steward of that information, and Facebook hasn’t adequately justified why it needs all of it in the first place. Let’s say Facebook is split into multiple companies – the core Facebook social network, Instagram and WhatsApp, as Hughes suggests. Does a core Facebook with perhaps 1 billion users have less ability to harvest information such as people’s web-surfing habits and physical locations as they roam around with smartphones? No, it doesn’t. It’s true that a stand-alone Facebook wouldn’t know what people are doing on an independent Instagram and an independent WhatsApp, just as Facebook isn’t harvesting specific information now from people’s use of YouTube and Snapchat. I don’t know, however, that those limits would blunt Facebook’s aggressive data-harvesting machine.

The Supreme Court has said Apple can be sued for the *possibility of violating anti-trust

CNN, May 13, 2019, https://m.cnn.com/en/article/h_8c3090efda8cdc65bd292f9654ff2ea8, IPhone owners can sue Apple for monopolizing App Store, Supreme Court rules

A group of iPhone owners who accuse Apple of violating US antitrust rules can sue the company, the Supreme Court ruled Monday. They claim Apple’s App Store is a monopoly. Justice Brett Kavanaugh, in the majority opinion, said that when “retailers engage in unlawful anticompetitive conduct that harms consumers,” people buying those companies’ products have the right to hold the businesses to account. “That is why we have antitrust law,” Kavanaugh wrote. The court’s four liberal justices joined Kavanaugh in the 5-4 decision. The Supreme Court opinion notably does not accuse Apple of violating antitrust law: It holds that consumers have the right to sue the company for monopolistic behavior, because they purchase apps directly from Apple. The ruling could have wide implications for other tech companies that operate similarly walled-off online storefronts, said Gene Kimmelman, president of the consumer advocacy group Public Knowledge and a former Justice Department antitrust official. “It definitely should make tech companies wonder how the antitrust laws will be applied going forward in an online platform environment,” said Kimmelman. That is why we have antitrust law” JUSTICE BRETT KAVANAUGH The case stems from a 2011 class-action suit by iPhone owners alleging that by taking a 30% cut of app sales, Apple has encouraged app developers to raise their prices in response. Consumers have been harmed by the practice, the suit claimed, because Apple does not allow customers to download apps from any other source other than the iTunes App Store. Unlike Android, iOS customers can only get apps from that official source, which Apple says serves as kind of quality control to weed out security threats and apps that violate the company’s terms of service. Apple (AAPL) argued that the iPhone owners do not have the right to sue because Apple is an intermediary. But the Supreme Court held that iPhone owners have a “direct purchaser” relationship with Apple, and may sue under a precedent known as Illinois Brick. Had Apple been allowed to set the terms of the legal fight, the court said, it would have hindered the ability of consumers to seek relief from alleged monopolists. “Apple’s line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits,” the opinion said. Apple said it is confident it will ultimately prevail in the case now that it can proceed. “The App Store is not a monopoly by any metric,” the company said in a statement. “Developers set the price they want to charge for their app and Apple has no role in that.” The company also noted developers can build apps for other platforms, including smart TVs, rival operating systems and video game consoles. But the customers bringing the case note the iTunes App Store remains the only place Apple customers can get software for their iPhones and iPads. Antitrust experts welcomed the Court’s reasoning that allowing Apple to avoid the class-action suit “would provide a roadmap” for others to evade the law. “It’s important that we get rid of these silly, technocratic barriers to seeking relief under the antitrust laws,” said Sally Hubbard, director of enforcement strategy at Open Markets, a think tank that has criticized the tech industry as being too powerful and concentrated. What will follow will likely be years of litigation, she added. “I expect Apple will contest this heavily and fight this case for several years to come, because it’s a lot of revenue at stake.” The Supreme Court did not rule on the customers’ likelihood of success — only that they have the right to sue. Apple argued that it was not a monopoly, rather a platform for app developers who can set their own prices. It has said that if the court allowed the case to proceed, it would disrupt the e-commerce market.

Breaking up Facebook won’t slow its influence

Shari Ovide, May 13, 2019, //www.seattletimes.com/business/technology/commentary-the-case-against-breaking-up-facebook/, Commentary: The case against breaking up Facebook

2) Facebook has outsized influence over what people think, do and buy.

This is undoubtedly true, and scary. Google, Facebook and a handful of other global technology superpowers are incredibly influential in what information people see or don’t. Facebook has been a megaphone to demagogues, a platform to sow ethnic violence and an echo chamber that’s helped fan dangerous conspiracy theories. It can also be a bridge to connect people with shared interests and make us feel less alone. When any single entity has the power to touch and influence billions of people, we are right to ask whether it should exist. That might be the strongest argument I can think of for blunting Facebook’s power through an enforced breakup. That would mean, however, that we need to agree on the root cause of this dangerous aspect of Facebook. Do we believe that no single platform can reach 2.7 billion people a month without doing more harm than good? (Follow up question: What about Google?) Or the size of Facebook’s audience isn’t the problem, but it’s the black-box algorithm that’s the problem? Or it’s Facebook’s cultural rot and repeated failures to set and enforce rules of healthy online behavior? A breakup would pare Facebook’s reach, but I think we need to decide what makes Facebook’s power so particularly pernicious, and how to address it.

Break-up won’t solve the problems we have with Facebook

Shari Ovide, May 13, 2019, //www.seattletimes.com/business/technology/commentary-the-case-against-breaking-up-facebook/, Commentary: The case against breaking up Facebook

3) Facebook uses its power to squash or co-opt rivals.

This is true, but not the whole story. Facebook does have competition, and much to fear. Facebook missed that people might want to communicate in private, short-lived digital chats as they do on Snapchat. It’s missing the frivolity happening on the Tik Tok music-video app. And Apple and Google remain the front doors to smartphones, which are the primary way that billions of people access the internet. Yes, Facebook and its constellation of apps are unrivaled communications tools and using them has become a necessity of digital life. But the company’s hold isn’t unchallenged nor may it be permanent. Again, I’m not saying Facebook is fine. The company went unchecked for far too long. We’re awake now to Facebook’s power and its malfeasance. Awareness isn’t enough, of course. Facebook must be forced to better defend against politically minded propaganda and ethnic hate, and it should ditch live video. There should be more limits on the kind of personal information Facebook gathers, how long it keeps it and what it does with it. The company and regulators have tackled some of these issues, but there are few easy answers or quick fixes. For its own part, Facebook said Thursday that breaking up a successful company won’t enforce accountability, and instead repeated calls for new regulations. Maybe so. Or maybe the problems that Facebook’s power and influence have created are so encompassing that they can’t be rooted out without more radical measures. For sure, the public and regulators should keep the pressure on Facebook permanently. I worry, however, that we won’t heal the underlying rot if we break up the Facebook family without uniting around what problems we’re trying to solve.

Tagsapp,bigtech,Daily Update,topicblog