2018: A Turning Point for "Big Tech"

 You’re reading the Benton Foundation’s Weekly Round-up, a recap of the biggest (or most overlooked) telecommunications stories of the week. The round-up is delivered via e-mail each Friday.

Round-Up for the Week of January 21-25, 2019

Earlier this month we examined how partisan division at the Federal Communications Commission impedes progress towards closing the digital divide. Now, we review another big telecom policy story from 2018: the democratic harms of “Big Tech”. 

Big Tech, Big Problems

In 2018, we got a better, but more disturbing, understanding of the size and influence of large technology companies (Apple, Amazon, Facebook, Google, and Microsoft), and particularly how social media platforms affect our democratic discourse and elections. Furthermore, we saw how their power and influence can keep consumer protection policies from being enacted.

The Year of Social Media Reckoning

Last March, we learned that Cambridge Analytica -- a political consulting firm which combines data mining, data brokerage, and data analysis with strategic communication for the electoral process --  harvested, without consent, millions of U.S. Facebook users’ profiles to build a powerful software program to influence the 2016 U.S. election.

Facebook used to have a policy that allowed app developers and other advertising and tech companies to draw user data out of Facebook. The policy eventually generated an eight-count complaint from the Federal Trade Commission in 2011 that resulted in a consent decree in which Facebook pledged not to share user data outside the company without explicit permission from users. The Cambridge Analytica scandal indicates that Facebook did not honor that pledge, with enormous consequences. 

In April, I wrote a three-part series, Is Facebook a 'Bug' in Our Democracy?, that described how the Cambridge Analytica story helped illustrate the size and scope of Facebook’s business model, which relies on massive data collection. I detailed the harmful effects on our democratic discourse.  

The scandal highlighted the urgent need to enact consumer protection policies focused on privacy and transparency. “While offering us services for no charge, what they really cost us is our privacy,” I wrote. “We have come to a tipping point where we, and our policymakers, must ask if these services are worth the trade-off.”

In April, Facebook CEO Mark Zuckerberg testified for over 10 hours before Congress. The hearings made consumer privacy a national headline and revealed how little some Members of Congress knew about Facebook and its business model. “Few lawmakers seem to truly understand how data is used and shared between platforms, advertisers, data brokers, and app developers. Several Members suggested that Facebook provides users' personal data directly to advertisers. Off-point algorithm questions resulted in blank stares and stammers from a baffled Zuckerberg,” I wrote.  

In September, Facebook COO Sheryl Sandberg and Twitter CEO Jack Dorsey testified at two Congressional hearings. I wrote, “At the end of the day, both hearings allowed lawmakers to get some questions answered about what the major platforms are doing to reduce foreign influence in elections and what they are doing to make their platforms a safe and trusted space ahead of the 2018 midterms.” Echoing Zuckerberg’s April testimony, Sandberg said, “We don’t think it’s a question of whether regulation. We think it’s a question of the right regulation.” 

In December 2018, we learned that Facebook gave Microsoft, Amazon, Spotify, and other companies far greater access to people’s data than it had previously disclosed. Facebook allowed Microsoft’s Bing search engine to see the names of virtually all Facebook users’ friends without consent and gave Netflix and Spotify the ability to read Facebook users’ private messages.

The companies that could have received data from Facebook as late as 2017 include powerful global firms such as the Russian search engine (and Kremlin partner) Yandex, Chinese phone maker Huawei (under sanctions for producing insecure devices that enable state surveillance), Yahoo and Sony (which have both suffered a major security breaches), and the New York Times itself.

Lots of Talk, Little Action 

“You created these platforms...and now they’re being misused,” Senator Dianne Feinstein (D-CA) told the top lawyers from Facebook, Google, and Twitter at a hearing in October 2017. “And you have to be the ones who do something about it—or we will.”

Congress promised to act in 2018, but didn’t. “The era of the Wild West in social media is coming to an end,” said Senate Intelligence Committee Vice Chairman Mark Warner (D-VA) in September. “Where we go from here is an open question. The size and reach of your platforms demand that we, as policymakers, do our job, to ensure proper oversight, transparency and protections for American users and for our democratic institutions."

2018 came and went without any notable policy or legislation. 

The “Curse of Bigness” and “Big Tech”

In November, the New York Times examined how Facebook has avoided accountability. The company has not been forthcoming about the scope and impact of Russian meddling with the 2016 election. And the story weaved together the harmful effects of the concentrated power Facebook wields, detailing how the company uses political influence to block legislation and disinformation campaigns to attack critics and deflect blame.

How big and concentrated is Big Tech? Very. Apple, Amazon, Facebook, Alphabet (Google’s parent company), and Microsoft are collectively worth more than the entire economy of the United Kingdom (the 5th largest in the world). Siva Vaidhyanathan, professor of Media Studies at the University of Virginia, is a leading academic expert on the democratic harms of Facebook. He wrote, “Google and Facebook have achieved a global concentration of power not seen since the British and Dutch East India Companies, but Google and Facebook grew nonviolently and with less state support.”

In response to the New York Times article, Vaidhyanathan wrote in a December op-ed: 

One Influence of Lobbying: Curbing Policy Solutions

Earlier this week, the Washington Post reported that “Apple, Amazon, Facebook, Google, and Microsoft spent a combined $64 million to shape U.S. regulations and stave off government scrutiny in 2018.” That’s more than a 10 percent increase over their record-setting 2017 spending. The tech sector’s most prolific spender was Google: It shelled out more than $21 million last year to lobby Congress, the White House, and key federal agencies on issues including online privacy. According to the Center for Responsive Politics, Alphabet now spends more on lobbying than players like Comcast and AT&T. 

“The big concern is that the lobbying influence will result in a debate focusing on the wrong questions,” said ACLU Senior Legislative Counsel Neema Singh Guliani. “The central question should be, ‘What is good for consumers?’"

For example, Senator Warner has been advocating for the Honest Ads Act, which would improve the transparency of online political advertisements. But Facebook has been lobbying against the bill. Antitrust researchers Matt Stoller and Barry Lynn wrote: 

Days after the bill was unveiled, Facebook hired Senator Warner’s former chief of staff, Luke Albee, to lobby on the bill.

Which brings us to another issue. In addition to spending lobbying money, Facebook and others increased their influence through the hiring of former high-profile policymakers and regulators. Jeff Chester, the executive director for Center for Digital Democracy, said that there’s been a “revolving door” between both Republican and Democratic administrations and the technology industry lobby. “There is ultimately a huge conflict of interest,” he said, as Congress seeks to pass privacy legislation. [For more on Facebook's lobbying influence, see: How Facebook Avoids Accountability]

The public is beginning to better understand which side of the influence divide they fall. An Axios poll in November found, "In the past year, there has been a 15-point spike in the number of people who fear the federal government won’t do enough to regulate big tech companies — with 55% now sharing this concern." There was also a 14-point increase in those who feel technology has hurt democracy and free speech. 

With the ability to deploy so many lobbyists, Big Tech often finds itself on the winning side of any policy debate. 

A National Privacy Law in 2019? 

The outsized political influence of Big Tech has and will continue to slow or weaken a push for a national privacy law. 

In September, I covered a Senate Commerce Committee hearing on the issue, and wrote, “Ultimately, lawmakers say these discussions will probably continue past the midterm elections into 2019, when they plan to pass privacy legislation. Which is great -- and the same message we've been hearing since 2000. Don't hold your breath.”

In November, there was an FTC hearing on consumer protection. The takeaway was that the FTC agrees it needs help in effectively protecting consumers. For that help, we look to Congress. But, as it stands now, national consumer protection enforcement is under-supported, and continued large-scale privacy violations can be reasonably expected.

So, can we expect legislation in the 116th Congress? Former U.S. Department of Commerce General Counsel Cameron Kerry writes:

Conclusion

Numerous scandals and hearings in 2018 pulled back the curtain, a bit, into how harmful Big Tech, and particularly social media platforms, have been for our democracy. But the sheer size of Big Tech makes public-interest regulation difficult. 

With so many privacy violations occurring, short-term data protection solutions get more oxygen than the long-term fixes needed to address surveillance capitalism and other harmful business models. Short-term policy solutions can help curb some of Facebook’s harmful effects, but the larger task before policymakers -- and all of us -- is to critically examine the long-term health of our democratic discourse. What’s needed are policy solutions that take into account business models that are inherently at odds with the public interest.

But there might be reasons to be optimistic. Apparently, the FTC is discussing a record-setting fine against Facebook for violating its 2011 consent decree. The Open Markets Institute and other groups are calling on Congress and the FTC to immediately investigate how to protect America’s independent news media from the power and predatory business models of Google and Facebook. And, in the aftermath of the 2018 Midterm Election, new House Communications Subcommittee Chairman Mike Doyle (D-PA) has said privacy and data security will be main parts of his agenda. [For more on the communications policy priorities of the 116th Congress, see: Elections Matter: Who’s Who in Telecommunications Policy in the 116th Congress]

Here at Benton, we will continue to advocate for public interest communications policy in the digital age, which includes policies aimed at addressing the democratic harms wrought by Big Tech. Benton Senior Fellow and Public Advocate Gigi Sohn will continue her role as one of the nation’s leading public voices for open, affordable, and democratic communications networks. Read her policy framework for an Open Internet Ecosystem.

And Benton Senior Fellow Jon Sallet has been before the FTC outlining how Louis Brandeis’ antitrust philosophy can be updated for the digital age.

Finally, Benton will continue to keep policymakers and the public informed of communications policy news to help foster a more inclusive debate around key issues. And, if you weren't aware already, the Benton Foundation curates and distributes the only free, reliable, and non-partisan daily digest of media and communications news. You can subscribe to Headlines here. 

Bring on 2019!

Quick Bits

• Broadband expert says USDA shutdown is hurting rural internet expansion (StateScoop)
• New House Judiciary Subcommittee Chair Johnson (D-GA) Eyes Net Neutrality Action (Multichannel News)
• A T-Mobile-Sprint merger would be onerous for California's working families (Jessica González Op-Ed)

Weekend Reads (resist tl;dr)

• If 5G Is So Important, Why Isn’t It Secure? (Tom Wheeler Op-Ed)
• Government shutdown halts the Trump FCC’s deregulation agenda (Tom Wheeler Op-Ed)
• The Age of Surveillance Capitalism: Shoshana Zuboff’s new book is a chilling exposé of the business model that underpins the digital world (The Guardian)
• Remember When Ajit Pai Said Killing Net Neutrality Would Boost Network Investment? About That... (Karl Bode)
• How a Vermont Social network Became a Model for Online Communities (Vox)

ICYMI from Benton

Elections Matter: Who’s Who in Telecommunications Policy in the 116th Congress, Robbie McBeath

Events Calendar for Jan 28 - Feb 1, 2019

Jan 28 -- National Privacy Legislation: A Bipartisan Call for Action on Data Privacy, Progressive Policy Institute

Jan 29 -- State of the Net 2019, Internet Education Foundation

Jan 30 -- FCC January 2019 Open Meeting (Updated)

Jan 31 -- Hearing on Government Shutdown, House Commerce Committee

Benton, a non-profit, operating foundation, believes that communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities to bridge our divides. Our goal is to bring open, affordable, high-capacity broadband to all people in the U.S. to ensure a thriving democracy.

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