What Congress should as at Wednesday’s tech antitrust hearing
A few minutes after I sent out Thursday’s newsletter previewing this week’s antitrust hearing, news came that the event would be postponed to accommodate the memorial for Rep. John Lewis. Indeed it was, but only for two days: the hearing will now take place on Wednesday, and you can stream it here.
The bad news is that the entire tech-and-democracy world will now be sitting around for another two days twiddling our thumbs while we wait for the social networking event of the summer. The good news is that the extra time will give Congress more opportunities to consider their approach to navigating a strange hearing in which the CEOs of four very different but similarly successful companies will take questions about monopolies, acquisitions, and competition. (In keeping with Republican tradition, there will also be bad-faith questions about conservative bias.)
Today seemed like a good day to think through what good questions for Tim Cook, Jeff Bezos, Mark Zuckerberg, and Sundar Pichai might look like. Fortunately, New York University professor and podcaster Scott Galloway offered up a sharp, data-driven guide to what Congress might ask, paired with helpful charts that help an average person understand the scale at which Apple, Amazon, Facebook, and Google are operating — and how that scale disadvantages competitors and likely discourages various categories of business from ever starting.
I particularly liked this proposed question, about Amazon:
In a five-week period during the pandemic, your firm added the value of the world’s largest firm by revenue — Walmart. If your firm can accrete the value of the largest firm in the world in five weeks, and money is power, then isn’t your firm the most powerful private entity in history? Hasn’t your firm reached a level of soft and economic power well beyond the point when the DOJ has historically taken antitrust action?And this one, about Apple.
And this one, about Apple:
Q: Apple TV+ is offering consumers $1 billion in original content for every .80c a month the consumer spends on your Apple TV+ streaming video service. Isn’t it your opportunity to differentiate your $1,300 phones and fund Apple TV+ from the revenues of an unrelated product that allows you to offer a media product at well below cost? In sum, isn’t Apple guilty of “dumping,” that is, buying market share with unfeasibly low prices?
Inspired by Galloway, I also asked you all for suggested questions on Twitter. Most of you responded with jokes — if you can imagine! — but a few took the challenge seriously. Some that struck me as interesting:
CNBC’s Matt Rosoff: “How often do you guys talk?”
Jeremy Jacobs: “How does your large share of advertising/ecommerce/devices/software not stifle innovation among smaller companies looking to gain traction in industries where critical mass is an economic driver?”
Sam Houston: “Question for Sundar: What work is YouTube doing to investigate how they can increase engagement with their product WITHOUT radicalizing the viewer?”
Meanwhile, the CEOs have two more days of prep. At Facebook, Zuckerberg plans to continue hammering his message that a strong Facebook is a necessary counterweight to Chinese influence, Sarah Frier reports at Bloomberg:
Zuckerberg plans to portray his company as an American success story in a competitive and unpredictable market, now threatened by the rise of Chinese social media apps around the world — and increasingly, at home, with the popularity of TikTok, according to people familiar with the matter, who asked not to be identified because the CEO’s remarks aren’t yet public.
The broader argument the CEO plans to make is that any weakening of U.S. companies will cede territory to Chinese companies abroad, particularly in high-growth markets like India. Zuckerberg made a similar argument at a 2019 hearing about Libra, the now-renamed cryptocurrency. “China is moving quickly to launch a similar idea in the coming months,” he warned. “If America doesn’t innovate, our financial leadership is not guaranteed.” Later that year, he said that it was important not to let China set the rules for the internet in the rest of the world, arguing that the country’s values aren’t democratic.
I won’t offer too much editorial comment on this line of thinking now — I want to see what Zuckerberg says at the hearing — but it really is notable what a gift TikTok has been to Facebook as it prepares for these hearings. Not only has a genuine, bona fide competitor to Facebook emerged — thanks in part to spending a good portion of $1 billion on Facebook ads — but it comes from a repressive authoritarian regime whose censorship of political speech offends Republicans and Democrats alike. I’d still rather have a truly competitive domestic market for social apps than a monopolistic national champion waging battle on America’s behalf, though.
Over at Amazon, Bezos is preparing for his first-ever appearance before Congress. This is interesting because, as Jason Del Rey notes at Recode, when it comes to government relations Amazon has been perhaps the most arrogant company of its peers:
Despite this growing scrutiny from politicians and the public, Bezos’s company has openly flaunted its power over the last few years. In its hometown of Seattle, Amazon successfully quashed a proposed payroll tax meant to combat homelessness by threatening to pause construction on its massive new Seattle headquarters, which would have boosted commercial activity in the city’s downtown neighborhood. Later, the company plowed funds into a local Seattle election to try to defeat those politicians who supported the payroll tax. It has also sparred with its hometown US House representative, Pramila Jayapal, in a baffling move that has cemented her status as a company critic while she also serves on the very antitrust subcommittee investigating the company.
The Wednesday event is an evidentiary hearing, meaning that the questions asked of the CEOs are intended to generate material for potential antitrust action against the companies. To the extent there will be a tangible outcome of the day, it will be in any evidence the CEOs provide for or against the case that their companies should be limited in size or power.
But the hearing will also a spectacle — at least, to the extent that a Zoom call can be a spectacle — and there could be value in that, too. After a decade in which Congress mostly allowed tech giants to operate through a policy of benign neglect, a majority of Americans believe that the biggest tech companies have become too powerful. Sharply worded questions about power are no substitute for meaningful regulation, of course. But they may be a start.
Today in news that could affect public perception of the big tech platforms.
Trending up: Apple told US employees they can take four paid hours off on Election Day to vote or volunteer at a polling place. (Mark Gurman / Bloomberg)
⭐ Big tech companies including Google, Amazon and Qualcomm are bankrolling The Global Antitrust Institute at George Mason University, which teaches a hands-off approach to antitrust law. The news comes as Google and Amazon face increased antitrust scrutiny from regulators. Here’s Daisuke Wakabayashi at the The New York Times:
The emails illustrated how the institute’s leaders, including Joshua Wright, who has longstanding ties to Google, have worked closely with tech companies to fend off antitrust criticism. And they showed how the institute cultivated and tapped relationships with top competition officials — even, in an aggressive courtship, asking Brazil’s top antitrust regulator to recruit the country’s judges to attend its conferences with offers of business-class flights.
“This is not a significant expenditure for these companies. And the potential benefits, even making it moderately less likely to be on the losing end of an ambitious antitrust case is worth that price many times over,” said Michael Carrier, a professor at Rutgers University’s law school.
Facebook says EU regulators have asked broad questions beyond the scope of two ongoing antitrust probes and has asked that the General Court in Luxembourg to intervene. The company argued that some of the document requests were too broad and would capture private information from its employees. (Javier Espinoza / Financial Times)
The EU demanded that Google make major concessions relating to its $2.1 billion acquisition of Fitbit if the deal is to be allowed to proceed. Regulators are asking the company to pledge that it won’t use Fitbit data to “further enhance its search advantage.” (Javier Espinoza / Financial Times)
The Australian Competition and Consumer Commission has again taken aim at Google again for allegedly misleading customers. The commission said Google “misled Australian consumers about what it planned to do with large amounts of their personal information, including internet activity on websites not connected to Google.” (Matt Johnston / IT News)
Geofence warrants are staring down their first legal challenges. The warrants are used by police to monitor Google users’ locations en masse. (David Uberti / The Wall Street Journal)
A broad coalition of tech and health care organizations are banding together in hopes of helping the country prepare for the next pandemic. The new working group from the Consumer Technology Association brings together Facebook, Microsoft and more to plan for future health crises. (Issie Lapowsky / Protocol)
President Trump has bought hundreds of messages on Facebook to accuse Twitter of trying to stifle his voice and influence the November election. Joe Biden has also spent thousands of dollars advertising on Facebook to ask supporters to sign a petition calling on Facebook to remove inaccurate statements, specifically those from Trump. (Amanda Seitz and Barbara Ortutay / Associated Press)
Anxious Democrats are worrying about Trump using his executive powers to cancel the election. But a more realistic — and equally destabilizing — scenario is that the election will be mired in myriad bureaucratic snafus that will leave the US with its most uncertain, disputed result in a lifetime. (Garrett M. Graff / Politico)
Facebook is never going to make the fundamental changes that address the key systemic issues that make it ripe for manipulation and viral misinformation, says Yaël Eisenstat. She briefly worked on elections integrity at the company. (Ian Tucker / The Guardian)
Facebook hired a Ukrainian group battling Russian disinformation to flag misleading posts. Critics say the fact checkers’ work is starting to veer into activism. (Anton Troianovski / The New York Times)
Amazon is carrying extremist merchandise related to the boogaloo movement. Offerings include boogaloo patches, boogaloo flags, T-shirts depicting a “big igloo,” and even Aloha-style shirts that have become the de-facto uniform of the movement. Facebook and Twitter have taken steps to remove Boogaloo content. (Nick R. Martin / The Informant)
It’s too late to stop QAnon with fact checks and account bans, this piece argues. Twitter and Facebook won’t be able to deal with the “omniconspiracy” without “rethinking the entire information ecosystem.” (Abby Ohlheiser / MIT Technology Review)
Local TV stations owned by Sinclair Broadcasting planned to air the discredited “Plandemic” researcher’s conspiracy theory about Dr. Anthony Fauci. On Monday, the company announced it would no longer air the segment, after facing massive criticism. (Oliver Darcy / CNN)
More than a thousand Twitter employees and contractors had access to internal tools that could change user account settings and hand control to others. The company is investigating the massive hack of verified accounts, and said the perpetrators “manipulated a small number of employees and used their credentials” turn over access to the accounts. (Joseph Menn, Katie Paul and Raphael Satter / Reuters)
Russia’s GRU military intelligence agency carried out a broad hacking campaign against US targets from December 2018 until at least May 2020. The hackers primarily tried to break into victims’ mail servers, Microsoft Office 365 and email accounts, and VPN servers. (Andy Greenberg / Wired)
If TikTok is a threat, so are WeChat, Alibaba and League of Legends. Since banning every Chinese-owned tech company wouldn’t be possible without erecting our own version of China’s Great Firewall, we need to figure out a way for Chinese apps and American democracy to coexist, this piece argues. (Kevin Roose / The New York Times)
⭐Google’s ad portal, which helps advertisers choose which search terms to associate with their ads, suggested hundreds of keywords related to “Black girls” — the majority of them pornographic. Searches for “White girls” returned no suggested terms at all. The news suggests Google’s algorithms contain a racial bias that link people of color to porn. Here are Leon Yin and Aaron Sankin at The Markup:
When The Markup entered “Black girls” into the Keyword Planner, Google returned 435 suggested terms. Google’s own porn filter flagged 203 of the suggested keywords as “adult ideas.” While exactly how Google defines an “adult idea” is unclear, the filtering suggests Google knew that nearly half of the results for “Black girls” were adult.
Many of the 232 terms that remained would also have led to pornography in search results, meaning that the “adult ideas” filter wasn’t completely effective at identifying key terms related to adult content. The filter allowed through suggested key terms like “black girls sucking d—”, “black chicks white d—” and “Piper Perri Blacked.” Piper Perri is a White adult actress, and Blacked is a porn production company.
Google’s Android Lockbox program allows employees to monitor how users interact with non-Google apps. The data was used to help YouTube launch its TikTok competitor called Shorts in India. (Alex Heath, Nick Bastone and Amir Efrati / The Information)
Google is allowing employees to work from home through June 2021. The change will affect nearly all of Google’s 200,000 employees. (Jessica Bursztynsky / CNBC)
TikTok signed a multi-year licensing agreement with the National Music Publishers’ Association (NMPA). The NMPA includes all three major music publishers, plus the world’s biggest indies. It previously threatened to sue TikTok for copyright infringement. (Murray Stassen / Music Business Worldwide)
Nebula, a creator-owned streaming platform, has hit 100,000 paying subscribers after one year in business. Think of it like Patreon, but for video. (James Hale / Tubefilter)
One of the largest Facebook groups for moms working in the tech industry is splintering over allegations of racism, censorship, and white fragility. Members say they were kicked out in recent weeks for posting about anti-racism. (Zoe Schiffer / The Verge)
Tesla CEO Elon Musk told the New York Times that his Twitter direct messages are mostly made up of memes, and he isn’t overly worried about them being hacked. (Kim Lyons / The Verge)
Match Group is naming Jim Lanzone as the new CEO of Tinder. Lanzone previously served as president and chief executive of CBS Interactive. Where I worked for him! Nice guy. (Georgia Wells / The Wall Street Journal)
Talking to strangers on the internet is the new activity of quarantine. Omegle, a website that pairs random visitors through video and text chat, has spiked in popularity in recent months. (Taylor Lorenz / New York Times)
How MSCHF learned to dominate the internet by designing products that were meant to blow up online. Among other things, they released a rubber chicken pipe to smoke weed out of. (Bijan Stephens / The Verge)
Things to do
Stuff to occupy you online during the quarantine.
Watch Lollapalooza on YouTube. The festival is streaming from July 30th to August 2nd, beginning at 6PM ET, and it’s free.
Those good tweets
WHO DID THIS pic.twitter.com/Hg851p6cEz
— Theo (@tprstly) July 26, 2020
“close friends” was originally made for Booty pics but it got appropriated by mental breakdowns
— he valencia (@extinctdaemon) July 14, 2020
— ☭ (@UnkleLuc) July 25, 2020
(In case you missed the original Jimmy from LinkedIn tweet, which we shared here last week, watch this before watching this truly incredible, Emmy-deserving riff on it.)
Jimmaayyy from Linkedunnnnn…. pic.twitter.com/SKjnggInmP
— ANTHONY ADAMS (@spiceadams) July 24, 2020
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