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House Judiciary Online Platform & Anti-Trust

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Posted on September 11 2019

Dear Big Data ...

“your self regulating days are over”

 

Some of you may not be that familiar with the various subcommittees, like many of the House Committees the Judiciary Committee, majority (Democrats) site found here and minority. (Republicans) found here. Below you will find the various House Judiciary subcommittees:

  

The Subcommittee on Courts, Intellectual Property, and the Internet has jurisdiction over the Administration of the U.S. Courts, the Federal Rules of Evidence, Civil and Appellate Procedure, judicial ethics, patent, trademark law and information technology.

The Subcommittee on the Constitution, Civil Rights and Civil Liberties has jurisdiction over all matters concerning the United States Constitution, including amendments and constitutional rights.

 

The Subcommittee on Crime, Terrorism, and Homeland Security has jurisdiction over the Federal Criminal Code, drug enforcement, sentencing, parole and pardons, internal and homeland security, the Federal Rules of Criminal Procedure, prisons and criminal law enforcement.

The Subcommittee on Immigration and Citizenship has jurisdiction over immigration and naturalization, border security, admission of refugees, treaties, conventions and international agreements, claims against the United States, federal charters of incorporation, private immigration and claims bills, and non-border enforcement.

 

The Subcommittee on Antitrust, Commercial and Administrative Law has jurisdiction over bankruptcy judgeships, administrative law, independent counsel, state taxation affecting interstate commerce, interstate compacts, and antitrust matters.

 

 

There is one particular subcommittee that you really should follow because their docket is important. Especially if you have concerns about your data and that of your children. In the late Spring of 2019  - I received a whisper from a friend of mine from the Hill. We accidentally ran in to each other Bourbon Coffee. Yes even the Hill has a “hipster” coffee shop. Side note they bring their coffee in from Rwanda and it’s deliciously strong coffee. After this chance encounter,  I took their tip under advisement and started checking the Committee and it’s Subcommittee on Anti-Trust Commercial and Administrative Law announcements.

 

On June 3, 2019 subcommittee chairman Cicilline announced a Bipartisan Investigation into Competition in Digital Markets. Lawmakers stipulated their investigation would focus on the following three areas:

 

  1. Documenting competition problems in digital markets;
  2. Examining whether dominant firms are engaging in anti-competitive conduct; and
  3. Assessing whether existing antitrust laws, competition policies, and current enforcement levels are adequate to address these issues.

 

“The growth of monopoly power across our economy is one of the most pressing economic and political challenges we face today. Market power in digital markets presents a whole new set of dangers,” said Antitrust Subcommittee Chairman David N. Cicilline (D-RI). “After four decades of weak antitrust enforcement and judicial hostility to antitrust cases, it is vital for Congress to step in to determine whether existing laws are adequate to tackle abusive conduct by platform gatekeepers or if we need new legislation.”

 

The unfortunate reality that all of us face is; Congressional bipartisanship under the current administration is a rare occurrence - perhaps that’s not a “bug” but an actual cornerstone feature of the current administration. Regardless it is nice to see Congress coalescing around a topic that indeed impacts all Americans, irrespective of their political “party” affiliation. The subcommittee’s Investigation was later affirmed by this June 4, 2019 Speaker Pelosi following tweets.

 

 

In preparation of tomorrow’s hearing, which is the last in the three part series - it might be worthwhile for you to refresh your memory of what transpired in Part I and Part II

 

Online Platforms and Market Power

 Part 1: The Free and Diverse Press

 

In Part 1 the subcommittee held a hearing on June 11, 2019. Admittedly this was largely overlooked and I wasn’t aware of it until I started researching this topic The Hearing  included a six member panel of witnesses. I’ve taken the liberty of embedding each witness’ testimony and highlighting the various relevant sections of their written testimony below. Full disclosure some of the statistical data is...in a word, alarming. This link will take you to the hearing and respective written statements.

 

Witness - Mr. David Chavern President, News Media Alliance 

 

Our members represent today’s most trusted and compelling news media brands. Their job is to keep the world informed. Our job is to help them succeed. We make sure they are in front of key audiences and decision makers inside and outside the industry: Consumers. Advertisers. Legislators. Innovators.

Our advocacy, proprietary research and events bring together the brightest minds united under one shared purpose. Together, we’re creating the strategies and business models that will enable news to thrive for years to come.

 

In Mr. Chavern’s written testimony, found here, there are multiple data-points that tend to get overlooked. There is a symbiotic relationship between news organizations and technology platforms. I wouldn’t go as far as labeling it as a host:parasite relationship but that might be an accurate analogy. The technology “platforms” are largely controlled two giants Google and Facebook. Both of whom have engaged in, what certainly appears to be: the over monetization of “news” at the peril of the news organization, specifically see the charts included in pages 2 thru 6.

 

The advertising revenues have skyrocketed for Google and Facebook- which has had devastating consequences for news organizations writ large:

 

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 overarching concern here is when Tech Giants like Google and Facebook not only unjustly enrich themselves but it’s also about “content” - more precisely the strong presumption that Tech Giants are filtering and (possible) manipulation of what “content” is served to the user/reader. I suppose you could say the business practices of Google and Facebook are predatory and the prey happens to be the very same news organizations, that you and I rely on for facts and accuracy. 

 

Witness Ms. Sally Hubbard Director of Enforcement Strategy, Open Markets Institute:

 

The Open Markets Institute uses journalism to promote greater awareness of the political and economic dangers of monopolization, identifies the changes in policy and law that cleared the way for such consolidation, and fosters discussions with policymakers and citizens as to how to update America’s traditional political economic principles for our 21st century digital society.

 

In Ms. Hubbard’s written testimony - in clear and unequivocal terms she explains how disinformation and propaganda harms Democracy. Furthermore she asserts that Google (to include YouTube) and Facebook respective algorithms not only amplify disinformation and propaganda but encourage users to stay on their platforms longer.

...two private corporations simultaneously have centralized control over the flow of information and news between reporters and readers and diverted advertising revenue away from both traditional and Internet “native” publishers, at both the national and local levels, into their own coffers

 

Ms. Hubbard also notes (see footnotes on page 3 of her written testimony) in past year Google and Facebook accounted for an 85% increase growth in digital advertising revenue. That actualized to a staggering >$150 billion - when you add North American and European “digital marketing”.  Ms. Hubbard’s also presents other important factors, such as silencing criticism, manipulation of “content served”. In short Google and Facebook’s unfettered power that’s embedded in their proprietary algorithms to “obscure” factual content and could be viewed as punitive in nature (see pages 4 thru 6 in her written testimony). Naturally one could simply write this off as “Peripheral” issue that doesn’t necessarily have any direct impact on you. I’d argue that these algorithms do impact you and the content you read. Moreover you may not even know providers like Facebook and Google are using the data they scraped of your online traffic to target you with certain news articles or propaganda and/or disinformation.

Jen and Cynthia tried to enlist financial support from their huge base of Facebook followers. But Facebook, again, had other plans. All posts that used words like “donate” or “contribute” got buried by Facebook’s algorithms and did not show up in their followers’ news feeds. Why? Facebook had vertically integrated into fundraising, and in order to get donations to show up in followers’ feeds, Jen and Cynthia needed to use Facebook’s own fundraising feature.

 

Generally speaking competition and free markets are a good thing for consumers. Conversely when you have merger after merger that typically means “the little guy” is now part of a much larger conglomerate. In Ms. Hubbard’s written testimony she further explains the “starvation of journalism”

 

To show you in almost real time the devastating consequences to local news organizations one only needs to see how many local newspapers are closing or have been purchased by a larger media conglomerate*

 

 

*graphic and data sourced from newspaper ownership

You might find the newspaper ownership report (this organization continues to track data from 2004 to present) a helpful reference guide to see which media conglomerates ownership of various newspapers, found here. A comprehensive list of local newspapers that have closed, can be found here.

The aforementioned data is substantiated in Mr. Gene Kimmelman President, Public Knowledge  - Gene Kimmelman Written Statement - who echoed the same sentiments of the panel. That regulation is in fact needed to prevent monopolistic conglomerates who’s acquisitions and mergers tend to quality journalism in favor of maximum profitability, all at the expense of the consumer.

Critical analytical journalism, a pillar of the democratic process, should benefit from a mass communications distribution platform to reach the broadest public. But as with past platforms, the internet distribution system needs public policy oversight to prevent monopolistic players from limiting robust, diverse, and thought-provoking journalism from reaching the public.

 

On the opposite side of this vast spectrum you’ll note Mr. Matthew Schruers 
Vice President, Law and Policy, Computer and Communications Industry Association - written testimony.

Generally speaking I agree with his sentiments that the rise of digital media can and does give news organizations a new and much larger platform. However one thing to keep in mind Mr. Schruers’ represents a large constituency, the CCIA is a not-for-profit global organization. And while I understand the complexity of the issues facing both the news organizations and consumers - it is important to remember that Anti-Trust laws are meant to protect consumers, encourage competition and diversity. Unsurprisingly the CCIA is not in favor of exemptions from Anti-Trust laws, 

that antitrust law is a specific tool for a specific goal: protecting consumer welfare through lower prices, higher quality, and greater innovation.
Historically, attempts to exempt certain industries from complying with these protections have negatively affected consumers and the economy as a whole. Providing another antitrust exemption to news publishers in addition to the existing exemption––which is widely regarded as unsuccessful––is not advisable.

 

Witness # 5 - Mr. David Pitofsky General Counsel, News Corp - in his Written Statement I was struck by the third and fourth paragraph on page one. I incorrectly assumed that News Corp’s position would be in opposition of any new antitrust legislation. 

There appears to be a bit of Old School and New School Media rivalry. But the fact remains that these witnesses have a few commonalities - big tech has all but devoured their advertising revenue. With an increased frequency of using their proprietary algorithms to down filter or “boost” original news content. In short companies like Google and Facebook have leveraged their technology to pick news organizations winners and losers. 

 

 “...online platforms are placing news organizations under siege through massive free-riding. They deploy our highly engaging news content to target our audiences, then turn around and sell that audience engagement to the same advertisers news publishers are trying to serve.”

When tech giants like Google and Facebook fail to factor in the “quality” of the news content. That means you as the consumer might be exposed to disinformation and/or propaganda.  Unlike some “freelance journalist” I’ve never once engaged in plagiarism. Because I have found that those who plagiarize also tend to be unethical cheaters and no, I am not implying that you as a proven plagiarist would also cheat on your spouse. Moreover  I do find that those same individuals will lie about, everything and anything.  Although in my line of work, if you are caught plagiarizing - you are effectively black-listed. Nor do I have an editor. Nor have I ever purported to be a “freelance journalist” with over “20 years of experience” - so certainly if I was paid by the PAC (spoiler alert, the PAC’s FEC filings are public information, then perhaps I could afford to pay for a copy editor - until such time you should expect typos and grammatical errors. Mainly because English was/is my second language but largely because I blog in my free time and unlike some I’ve never monetized any of my writings or research. But I digress - this isn’t about me, this is about the bipartisan Congressional Investigation.

The final witness for the June 11, 2019 was Kevin Riley  Editor, Atlanta Journal-Constitution In Mr Riley’s written testimony, he details the 2009 award winning series where his news organization dedicated an incalculable amount of time researching the Atlanta Public Schools, standardize test. There is a lot of truth in the colloquium “all news is local” because local news organizations are best situated to know the true pulse of the community that they often live, work and play in.

Preserving local journalism means that these kinds of stories will be reported. Too often, the debate about media and tech platforms is framed within a discussion of international news brands. But the greatest peril for our nation lurks at the local level, where a regional or community paper must cope with a fast-changing technological and financial landscape.

I should disclose I haven’t watched the entire hearing, because my actual work load has been off the charts busy - however I would urge you to at least watch subcommittee Chairman Cicilline’s opening remarks - it will help better frame the various witness testimony previously embedded.

 

Online Platforms and Market Power

Part 2:  Innovation and Entrepreneurship

 

Of the three part series, in my opinion Part 2 is the most critical, this link will take you to the full hearing and links to documents. This particular hearing had two panels but it’s panel number one’s witnesses that interest me the most:

 

Mr. Adam Cohen Director of Economic Policy, Google Cohen Written Statement, See Google’s Lobbing and it’s clear that they  have a cadre of lobbyist doing their bidding - granted the vast majority of the millions spent was Google self lobbying but ...well here you can read the report, found here. Also last week I may have dropped a few files on Google, found here.

Google’s products and services, including Search, Google Ads, Android, Google Maps, Gmail, YouTube, Google Cloud, the Chrome browser, Google Photos, our Nest and Pixel devices, and more, provide significant value to a wide range of consumers and businesses across the country. And we believe strongly in the need to invest in the American economy. We’re proud that our tools and products helped create $335 billion in economic activity for millions of businesses, website publishers, and nonprofits across the U.S. in 2018....Google last year spent $21.4 billion on research, development, and related areas, three times more than in 2013

 

Mr. Matt Perault Head of Global Policy Development, Facebook Perault Written Statement - See Facebook’s lobbying here. Spoiler they spent a LOT of money...and the “oh we want to build a better platform” that’s not a compelling argument of why you shouldn’t be regulated into accountability. In the past I’ve had a lot to say about Facebook, various previous blog entries found here.

Facebook faces intense competition for all of the products and services that we provide. To name a few examples, Twitter, Snapchat, Apple, iMessage, Pinterest, Skype, Telegram, Viber, Google, YouTube, and Amazon offer photo and video sharing, messaging, advertising, and other services that compete with Facebook....

WhatsApp provides secure communication, including voice and video calls. Instagram offers a social experience centered around photo sharing with tools to connect and create. And the Facebook family goes beyond software, with hardware products like Portal and Oculus.

 

Mr. Nate Sutton Associate General Counsel, Competition, Amazon Sutton Written Statement - essentially Amazon is no go for any Anti-Trust or other enhanced regulations. See Amazon’s lobbying report, found here. I should note that Amazon via their AWS division does a significant amount of “cloud” computing services for the CIA, DOD and other various Federal Agencies. But that should not mean that they are exempt from potential Anti-Trust and other enhanced regulatory action that Congress may enact.

...the technology used to provide a service, or the business model a company deploys, is not the primary consideration in determining the scope of relevant markets in antitrust analysis or a jumping off point for sectoral regulation. In today’s retail market, the notion that two products that are exactly the same do not compete with each other simply because one was ordered online makes little sense.

 

Mr. Kyle Andeer Vice President, Corporate Law, Apple, Andeer Written Statement - there is one unique feature that Apple has that other large tech companies lack, because of the prolific number of apps, Apple users have a large variety to choose from. Full disclosure I’m a fan of their Apple News Service because the content is largely controlled by the users versus Apple pushing content based on scraping users web-habits. See Apple’s lobbying report, found here.

 

Only a very small number of the nearly 2 million apps in the App Store are made by Apple, and in every category where our software competes, we face strong competition. Apple believes users expect that their devices should provide a great experience out of the box, so our products include certain functionality like email, phone and a music player as a baseline. But users have various needs and they are free to discover and use any alternatives they might prefer. For instance, if a customer doesn’t want to use iCloud they can use Box, DropBox or any number of other options. There are dozens of camera and calendar apps available. We’re proud to host these apps and services on our store, and we work with these companies almost every day — because that is what’s best for our customers.

 

I have taken the liberty of isolating the Part 2 Hearing to start with the first panel of witnesses statements:

 

 

 It is unclear to me if Part 3 will occur as there are no witness statements and nothing has been updated on the calendar. Typically witness statements are uploaded 24 hours in advance of the hearing but I suspect the Impeachment Inquiry will suck up all the oxygen in tomorrow’s news cycle.

 

 

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6 comments

  • Maureen A Donnelly: November 11, 2019

    Hi Spicy. I too have missed your keen eye and wicked words. I hope you are doing well. I miss you and wish you the best for the end of the year.

  • Joyce : November 10, 2019

    Spicy, where are you? Is there somewhere else I can follow you?

  • Judy: November 10, 2019

    Spicy, Just wanted to say we all hope you are healing from your surgery. Please take care and be good to you. We all miss you but we want you well more than anything. #Peace

  • Mo Donnelly: November 11, 2019

    I miss you. I hope you are thriving.

  • Marie G: November 10, 2019

    Thank you, Spicy. I appreciate the opportunity to watch Chairman Cicilline’s commentary. Today was an especially good news day (9/18). I am encouraged and grateful for all you do. I think this calls for a Resist corkscrew (because, wine).

  • Judy: November 11, 2019

    Excellent writing and information!
    Just wanted to say you are sorely missed on twitter…:-(

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