from the there-are-so-many-tradeoffs dept
It’s taken as given among many politicians (and much of the media) that “something must be done” about “big tech” companies. The public seems a lot less concerned about it all. Unfortunately, as we’ve noted repeatedly, many in the government are focused on specific regulatory levers that seem incredibly unlikely to work (and which have a high likelihood of making any of the problems discussed even worse). A big one is antitrust. We keep hearing grandstanding politicians talk about how they need to break up “big tech” without any of them getting into how that will solve any particular issue. In the House, Rep. David Cicilline has been the poster child of this approach — insisting that antitrust is the answer, but refusing to actually explore the nuances and tradeoffs of that approach.
One of the big problems with the antitrust approach is that the traditional remedies of antitrust do very little to fix the issues that people insist come about due to the big internet companies. Big fines seem mostly meaningless to them (though they will shift some behavior). And breaking them up really doesn’t do very much at all. The value of the internet is the ability to communicate with everyone, and you can’t create “BabyBooks” for Facebook in the same way it was possible to create “BabyBells” out of AT&T in the 1980s (and, we can all see how well that worked in the long run).
Some of us have suggested alternative approaches that might lead to more real competition and better end-user control over data. Over the last few months, I have been having more discussions with various different government officials about exploring some of these alternative remedies, but I have been less and less sure if any government official would ever actually pay attention.
So it’s actually nice to see Rep. Zoe Lofgren, responding to Cicilline’s giant confusing mess of a “Digital Markets” report by posting her own thoughts on better ways to think about regulating the internet. I don’t agree with all of Lofgren’s points, but it’s one of the most sane and reasonable documents I’ve seen coming from a government official in a long, long time regarding issues on regulating internet companies. Unlike so many, it acknowledges the nuances and trade-offs inherent to this discussion, and the lack of any silver bullet fix.
The more difficult questions are in deciding how and when to regulate single-firm conduct, which the report often describes as a platform exercising its ?gatekeeper power? over who uses it and under what terms. Our laws should promote open platform ecosystems as a central objective, but this is far from a simple matter in practice, because many of a digital platform?s assertions of gatekeeping power can be good faith efforts to serve user interests ? such as privacy, security, and/or quality of service ? and may protect the long-term health of the larger ecosystem. In certain instances, platforms may need to exclude certain parties or content outright ? for example, moderating hate speech and the advertisement of fraudulent or harmful products ? to ensure that a platform otherwise remains open and vibrant for other speakers and transactions.
A platform company could also abuse gatekeeping power ? to promote its own products and services, to lock in users from leaving for other platforms, and so on. The challenge for Congress is to craft a legal framework to allow regulators to distinguish abusive gatekeeping from legitimate efforts to serve user interests and prevent ecosystems from breaking down. These sorts of cases will often resist easy categorizations and generalized answers, as regulators are forced to consider how deeply to intervene in the details of a platform?s operations, such as its precise terms of services or particular design aspects of its user interface.
The document also talks about privacy issues, and whether or not antitrust is truly the tool to deal with that.
The Report contends that privacy abuses by online platforms are symptoms of inadequate competition. This can be true in some cases, and in those instances competition policy could play a useful supporting role to give consumers more privacy-protective alternatives in the marketplace. But it is a mistake to treat privacy largely as a competitive problem with competition-focused remedies. Abusive data practices are found not only in large platforms but also from many smaller companies, as the latter are more likely to buy and sell sensitive user data to data brokers and other third parties. Even in more competitive digital markets, users often do not have enough visibility or understanding into how their personal data is being collected, used, and disseminated, and face insurmountable barriers to defending their own privacy interests, through either individual or collective action.
Effective privacy and data regulations can and will promote competition, both by restricting abusive business models that otherwise can trigger a race to the bottom, and by giving users more practical control over who holds their data and how it is used. The Report?s call for greater authority to promote data portability and interoperability is important. However, as with other privacy measures, it?s unlikely this can be accomplished through the ex post enforcement of generalized antitrust laws. Instead, it requires more specialized, expert, and prospective privacy regulation.
I still worry that we run into the same issues with most privacy legislative proposals as we run into with antitrust remedies: those putting in place the rules will misunderstand the nature of the problem and the remedy, and create results that only favor the largest companies who can comply with silly rules that don’t always make sense.
But taking approaches that (1) lead to more interoperability, (2) more end-user control, and (3) greater transparency have always seemed to be the approach that might eventually have a real impact. It’s good to see that Lofgren seems to be thinking along similar lines.
And, she also notes that many other private interests are trying to use these discussions to get their own favored results, and Congress should be wary of that. She doesn’t name them, but Hollywood, the telcos, and the legacy newspaper business (not to mention big lumbering old tech companies like Oracle and IBM) have been actively trying to co-opt this process in a punitive way against companies which effectively out-innovated them. This gets far too little discussion, but it’s great to see Lofgren point out the risk:
In all of this ? competition, privacy, and or any other fundamental objective in platform regulation ? we must be vigilant against regulatory and legislative agendas being co-opted to serve narrower interests. As I noted above, the rise of digital platforms unleashed a flood of new competition for earlier incumbents in many other industries. While these incumbents can have legitimate complaints about their treatment within platform ecosystems, this does not justify special regulatory protections that would lock down such ecosystems, favor conventional business models against digitally-native content and services, or attempt to restore markets to their pre-digital states.