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The House makes its move
The good, the bad, and the gridlock in Congress' big antitrust report
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Rep. David Cicilline during the July antitrust hearing (Graeme Jennings-Pool/Getty Images)
On Tuesday afternoon, after 16 months of investigation, the House Judiciary subcommittee on antitrust released a doorstop. Democrats’ 449-page report — which was supplemented by rival reports from Republicans — laid out the case that four of our biggest companies have developed monopoly power and are using that power in abusive ways. Today, let’s talk about some ways to think about it.
There are at least two things to like about the committee’s report. The first is that it is based on evidence collected directly from current and former tech company employees, along with their users, sellers, developers, and other interested parties. Journalists don’t have subpoena power, but lawmakers do. And in this case, they used it to produce a wide range of fascinating internal documents about the giants’ approach to competition (and how to limit it.)
From Facebook, we got a look at how the Instagram acquisition looked from the inside. From Amazon, we learned that the company calls sellers on its platform “internal competitors” — and may have perjured itself when it told Congress, apparently falsely, that it does not use internal data about individual sellers to develop competing products.
For Apple, lawmakers talked to a former director of review at its App Store, who told them that “Apple has struggled with using the App Store as a weapon against competitors.” And at Google — which the report devotes more pages to than any of the other three companies — lawmakers found that the company had improperly scraped competitors’ websites to gain advantages, creating “an ecosystem of interlocking monopolies” across search, ads, maps, and more.
And so a good result of this investigation is that lawmakers clearly now grasp platforms’ businesses better than they ever have before, and how they can disadvantage competitors. We are a long way here from “Senator, we sell ads.”
The second thing to like about the report is that using this evidence, lawmakers have prescribed specific solutions. Here are three that I like, from Lauren Feiner at CNBC:
Instructing antitrust agencies to presume mergers by dominant platforms to be anticompetitive, shifting the burden onto the merging parties to prove their deal would not harm competition, rather than making enforcers prove it would.
Preventing dominant platforms from preferencing their own services, instead, making them offer “equal terms for equal products and services.”
Requiring dominant firms to make their services compatible with competitors and allow users to transfer their data.
These seem like good, commonsense solutions to the concentration of power.
On the other hand, even these recommendations aren’t likely to become law any time soon. America’s divided Congress has been defined by inaction this year; it is currently failing to provide basic economic relief to tens of millions of Americans during a historic pandemic. And we expect these lawmakers to pass a thoughtful collection of reforms and get the president to sign it?
In fairness, the committee has been clear that nothing will pass this year. For anything to pass at all, Democrats may have to take back the presidency and the Senate, and make it through what promises to be a chaotic and even dangerous transfer of power. Until and unless that happens, the status quo seems likely to endure.
And yet even in a world where many of these changes were to be adopted, how different would the tech world really become? If Amazon couldn’t use seller data to inform new product decisions, and Apple couldn’t take 30 percent of Spotify’s revenue, and Google couldn’t put its inferior restaurant reviews above Yelp’s, would Silicon Valley truly be rocked on its axis? The marketplace would certainly seem fairer. But I’m sure it would operate much differently day to day.
What would rock the tech world is if the giants were forced to unwind some of their largest properties — YouTube from Google, Instagram and WhatsApp from Facebook, and perhaps even Amazon Web Services from its parent. But while they do recommend that lawmakers explore “structural separations,” Democrats stop short of issuing a full-throated call for a breakup of any company. It’s not clear why — if you know, please tell me. But if lawmakers won’t call for it in this report, I don’t know why we expect that they ever would. Maybe they don’t have the evidence; maybe they don’t have the political will. Either way, on this point I imagine Big Tech is breathing a sigh of relief.
In private, anyway. In public they all issued statements fulminating about the unfairness of it all, and if you want to read them you’ll have to Bing them, because today’s newsletter is running long as usual.
That said: I’m still mostly happy with the process that led us here, and the recommendations we got. If implemented, our biggest tech companies would stay big, and that comes with all the bad externalities we cover here each day. But Big Tech would also be easier to compete with, and in such a world I can squint and see the day where new challengers arise and could eventually topple one or more of the giants.
That’s not a perfect outcome. But for an investigation into market competition, it would strike me as a pretty good one.
Elsewhere: Steve Kovach looks at the areas of the report where Democrats and Republicans agree. Emily Birnbaum profiles Slade Bond and the small team of House staffers who led the mammoth investigation. And Ben Thompson’s article on the report has an entertaining pocket history of American anti-monopoly sentiment.
Today in news that could change public perception of the big tech companies.
⬆️ Trending up: Facebook is launching a new mental health portal for all users. The Emotional Health hub, which arrives amid during a growing mental health crisis related to the pandemic, will direct users to resources around the web. (Alison DeNisco Rayome / CNET)
⭐ Facebook will ban all political advertising in the United States indefinitely after the election as part of a misinformation crackdown. (Google announced a similar move two weeks ago.) The company is also cracking down on posts that use militarized language about showing up to the polls — like inviting a “Trump army” to serve as “observers.” I’ll have lots more to say about this tomorrow, and till then here’s the news from Mike Isaac at the New York Times:
On Wednesday, Facebook said it would take more preventive measures to keep political candidates from using it to manipulate the election’s outcome and its aftermath. The company now plans to prohibit all political and issue-based advertising after the polls close on Nov. 3 for an undetermined length of time. And it said it would place notifications at the top of the News Feed notifying people that no winner had been decided until a victor was declared by news outlets.
⭐ The Trump era has completely transformed comedy. It’s now the liberals who are pious, and conservatives who are drenching themselves in irony — but only as a means to smuggle deeply reactionary ideas into the discourse. Not traditional Platformer fare, I realize, but I found this piece essential to understanding our current information sphere. From Dan Brooks in the New York Times:
Such applications of ambiguous irony allow President Trump to embarrass conventional media in ways that exhilarate his supporters. Organizations like The Times and CNN have to take the president seriously. When he says something that isn’t true, they must soberly point out that it isn’t, even when the intent of the untruth is not to deceive but to achieve some rhetorical effect. As a result, news organizations unequipped to cover an ironic president get lumped in with partisans who misconstrue his irony in bad faith. Both groups are cast as humorless scolds, solidifying the loyalty of MAGA types who think of themselves as in on a joke the media does not understand.
⭐ The UK’s data watchdog’s final investigation into Cambridge Analytica found that the company largely overstated its capabilities and had roughly the same technology that its competitors did. Now let us never speak of it again. (Natasha Lomas / TechCrunch)
The Labor Department is investigating whether Microsoft's goal of increasing Black representation “constitutes racial discrimination.” White supremacy is a hell of a drug. (Ina Fried / Axios)
The Trump administration once again acted to limit the number of H-1B visas that tech companies rely on to hire foreign workers. The administration framed it as a way to protect American jobs during the pandemic. (Zolan Kanno-Youngs and Miriam Jordan / New York Times)
Declining trust between Americans and their leaders — and one another — poses one of the steepest challenges to the country’s way of life no matter what happens in the election. I have my quibbles with this long, sweeping essay about our current predicament, but found it useful in thinking about the role platforms play in building and undermining trust in this country. What more can they do here? (David Brooks / The Atlantic)
A relatively unknown investment firm named Centricus is pushing a long-shot bid for TikTok in the event ByteDance’s deal with Oracle falls through. The firm is based in London, which could let China permit a sale without appearing to have caved to American interests. (Kirsten Grind, Bradley Hope and Georgia Wells / Wall Street Journal)
Claudia Conway’s TikToks, explained. The teenage daughter of George and Kellyanne Conway has become a folk hero online for sharing her mother’s COVID-19 diagnosis and related anti-Trump sentiment. But the hero worship neglects what are clearly cries for help. (Rebecca Jennings / Vox)
Ariana Grande posted a tweet encouraging her fellow Floridians to register to vote, and the Florida Secretary of State’s website crashed soon thereafter. Florida extended its registration deadline to 7PM Tuesday. God is a woman, indeed. (Skyler Swisher / South Florida Sun-Sentinel)
⭐ Slack is getting Snapchat-like stories and push-to-talk audio in an effort to upgrade remote workplaces. Getting fired for something you did in a Slack story feels like a promising new YouTube challenge in the making. The company is also expanding its capabilities letting you message members of other Slack instances. Here’s Tom Warren at The Verge:
“It’s very much like Instagram stories, or snapchat stories, but in Slack,” is how Slack’s CEO, Stewart Butterfield, explained the new stories video feature in an interview with The Verge this week. “There was a joke going around that soon all software will have it, and I thought that was funny at the time. But especially during the pandemic, and the difference in how we as a company are approaching work, means it’s an idea that’s time has come.”
“Instead of having this 15-minute daily stand-up meeting, can we record the video earlier... and get rid of the 15-minute meeting?” asks Butterfield.
The biggest winner from the shutdown of Microsoft’s Mixer streaming service has been Amazon’s Twitch. Twitch now controls 91 percent of the market, according to new third-party research. (Jordan Novet / CNBC)
A bot using the artificial intelligence GPT-3 successfully posed as a human on Reddit for a week. Get ready for a lot more of this. Platforms, what’s your strategy here? (Kmeme)
BuzzFeed found a network of Facebook page with 1 million likes that appear to be tied to a cryptocurrency scam. It comprised a network of sites featuring articles that were largely plagiarized from other sites. (Craig Silverman / BuzzFeed)
Some Black-owned small businesses are struggling to navigate Instagram’s rules around political advertising. I spoke to the author about the trade-offs involved. (Kenzie Bryant / Vanity Fair)
Those good tweets
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