Commentary: US lawmakers are gearing up for antitrust action against Big Tech

Commentary: US lawmakers are gearing up for antitrust action against Big Tech

US lawmakers have fired a warning shot in announcing they have begun work on legislation that require large platforms like Facebook to provide users with an estimate of the value of their data to service providers.

WASHINGTON: Facebook reminds me of nothing so much as kudzu, an indomitable creeping vine which can be chopped, mowed, sprayed with herbicide or even set on fire, and yet will keep growing, suffocating everything to which it attaches itself.

Each week seems to bring a new scandal for the social media company, yet it just beat estimates on revenue, earnings and growth, making more per user than it ever has before.

US LAWMAKERS GEARING UP FOR ACTION

But US lawmakers are preparing to do what the most aggressive gardeners do to kudzu — inject poison into the roots.

Last week, following new revelations about how the company had lured people aged between 13 and 35 into selling their privacy so that Facebook could harvest more of their personal data, Senator Mark Warner announced he had “begun working on legislation that would require large platforms such as Facebook to provide users, on a continual basis, with an estimate of the overall value of their data to the service provider”.

This is a big deal, and an important new strategic twist in the battle between Big Tech and regulators.

User data are the most valuable commodity for companies such as Facebook, or indeed any company in the digital economy. But its value is fully known only to the companies that harvest it.

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The Warner proposal aims to create the sort of transparency that might give users pause. If you knew, for example, that Facebook or Google were earning twice as much from your data this year as they did last year, but offering no better service in return, you might be more inclined to think about switching to a platform that gave you more.

REVIEWING PLATFORM COMPETITION

That, of course, presupposes the existence of viable competitors to the current handful of platform giants — which is another thing that putting a price on data could facilitate.

The antitrust conversation is heating up in the US: there is growing interest in the topic within not only the Federal Trade Commission and the Department of Justice, but also Congress, where the House subcommittee on antitrust may begin looking at platform competition issues soon.

But monopoly policy in America is currently driven by “Chicago School” thinking, which espouses the idea that as long as consumers aren’t paying too much for a good or service, all is well.

Members of the “New Brandeis” school of thought, including the legal scholar Lina Khan (who recently consulted at the FTC) and Big Tech critic Barry Lynn, who runs the influential Open Markets Institute (which has advised presidential candidate Elizabeth Warren), disagree.

They would like to take antitrust policy back to a broader interpretation of political power, in which societal welfare, rather than just that of consumers, is taken into account.

This makes a lot of sense in an era in which the big technology companies, who have blanketed Washington with money and lobbyists, are exerting kudzu-like control over the political economy.

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A PRICE ON DATA

However, it’s a slow burn solution that will require time and case law to develop. In the meantime, putting a price on data, or at least treating it as a core asset for companies, could allow regulators to build an antitrust case by proving that platforms like Facebook, Google or Amazon have actually harmed consumers by taking disproportionately more value than they give.

In his new book Zucked, Roger McNamee, a Facebook seed investor turned Big Tech critic, lays out how this might work, using Google as the proxy. “Each new search, email message, or map query generates appropriately the same form of value to the user,” Mr McNamee writes.

“Meanwhile, Google receives at least three forms of value: whatever value it can extract from that data point through advertising, the geometric increase in advertising value from combining data sets, and new use cases for user data made possible by combining data sets.”

That is what allows them to send you targeted advertising with all the precision of a drone strike, something that businesses of all kinds pay dearly for. Mr McNamee concludes that consumers are giving up far more in data value than they receive.

If data were dollars (which, of course, they are) “the Chicago School would find that situation to be in violation of its antitrust philosophy”.

UNTROUBLED CONSUMERS

Facebook and Google would argue that consumers are not troubled by any of this. But consumers are not troubled by many things — predatory subprime mortgages, say, or algorithmic credit biases — until the full implications of these things are understood.

I suspect that if we all knew how precisely we are being tracked and how richly we are being monetised by the platform tech companies, there would be more of a public outcry.

LISTEN: That awkward conversation we need to have with Facebook, an episode on The Pulse podcast

Academics are busy working out how to price data fairly (Mr Warner’s legislation would give the Public Company Accounting Oversight Board that task).

Meanwhile, Big Tech antitrust issues have already become a litmus test for Democratic presidential candidates in 2020. Ms Warren has made the topic a central part of her platform, while Kamala Harris came under fire recently for not addressing it adequately. 

And Cory Booker has said: “I think the US government absolutely should take a look at Google.”

One way or another, I suspect it will.

Source: Financial Times/sl

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