Daily Digest 3/20/2018 (More Facebook-Cambridge Analytica Fallout)

Perhaps at some point in the past few years you’ve told Facebook that you like, say, Kim Kardashian West. When you hit the thumbs-up button on her page, you probably did it because you wanted to see the reality TV star’s posts in your news feed. Maybe you realized that marketers could target advertisements to you based on your interest in her. What you probably missed is that researchers had figured out how to tie your interest in Kardashian to certain personality traits, such as how extroverted you are (very), how conscientious (more than most) and how open-minded (only somewhat). And when your fondness for Kardashian is combined with other interests you’ve indicated on Facebook, researchers believe their algorithms can predict the nuances of your political views with better accuracy than your loved ones. That is what motivated the consulting firm Cambridge Analytica to collect data from more than 50 million Facebook users, without their consent, to build its own behavioral models to target potential voters in various political campaigns. The company has worked for a political action committee started by John Bolton, who served in the George W. Bush administration, as well as for President Trump’s presidential campaign in 2016. “We find your voters and move them to action,” the firm boasts on its website.

In 2012 the Obama campaign was desperate to reach twentysomethings who were hard to access because they had only cell phones. So it sought to reach them on Facebook. Two GOP campaign analytics sources said the Obama camp used a common Facebook developer API – the same one used to access the data for Cambridge Analytica – to create a Facebook app that could capture the personal data not only of the app user, but also of all that person’s friends. The tactic, which the campaign called “targeted share,” was based on research showing that social friends usually share more than cat pictures – they share political beliefs. So the campaign’s app searched out potential Obama voters within the friend lists of current supporters. The Obama campaign’s director of integration and media analytics Carol Davidsen said on Twitter that Facebook was surprised to learn how much user data could be pulled out through its graph API. “We were actually able to download the entire social network of the US,” Davidsen said during a Personal Democracy Forum speech in 2015. “Facebook in 2011 had the ability for people to opt in, and the Obama campaign rocked this,” she said. “We got people to opt in, and the privacy policies at that time on Facebook were that if they opted in, they [Facebook] could tell us who all their friends were.”

[Commentary] Whether the AT&T-Time Warner deal goes through or not is super important for all the usual reasons relating to media concentration, competition in telecommunications, and all that other stuff I usually care about. But the AT&T/TW trial raises a lot of super important questions for the future of antitrust enforcement. Specifically, does antitrust law care about vertical integration or not? If antitrust law no longer cares about vertical integration, or adopts a presumption that makes it harder (than it already is) to prove a case challenging a vertical merger, that will have huge impact on what kind of deals we see move forward — not just in the entertainment industry or telecommunications industry but pretty much in all industries. By contrast, if the DoJ wins — especially on the coordinated effects argument (I’ll get to that later) — it may put the breaks on major merger activity (at least while Delrahim is at DoJ). It will have ripple effects beyond whether Comcast tries to buy News Corp assets. It would potentially have substantial impact on future acquisitions by platforms such as Amazon, Facebook and Google as these platforms seek to expand from their existing markets into new markets. Also at stake is the question of whether or not the government needs to consider a proposed behavioral remedy when contemplating a merger, or whether the DoJ can simply decide “nope, its divestiture or nothing.” Likewise, since everyone keeps pointing back to Comcast/NBCU, it raises the question of whether a settlement creates some sort of legal precedent (either with regard the nature of the market or the nature of any proposed remedy). Finally, the rather important question of what you need to prove (and how you have to prove it) is subject to a lot of argument in the pre-trial briefs.

1. Does Antitrust Law Care About Vertical Integration? And Does It Have a Different Standard Than Horizontal Integration?
2. Statements By The Parties v. Expert Testimony, or Fact v. Theory. 
3. Do We Still Believe The Basic Cable Market Power Story? What Is The Relevant Market These Days?
4. Is There A Threshold Amount On Monopolization/Price Increase? Do Efficiencies Counter Small but Significant Non-Transient Increase in Price?
5. Comcast/NBCU: Is It Relevant? Precedent?
6. AT&T’s Proposed Remedy: Do You Get To Chose Your Own Remedy? Does The Government Have To Consider It?
7. The Return of the Coordinated Effects Doctrine?

[Harold Feld is Public Knowledge's Senior Vice President]

[Speech] As we have seen from data from the National Digital Inclusion Alliance, big internet providers have been intentional about focusing their investments on deploying broadband technologies, in high-income urban, suburban and middle-income neighborhoods. And as you already know, there is a glaring correlation between areas of high poverty, and places where companies have not invested in new technologies, such as fiber. The impact here is severe. Those being left out, not only are less able to get ahead, but they are more likely to be left behind. ... [W]hen we talk about digital divides, we must make sure that we are looking at both the infrastructure, and affordability sides of the equation. When our own data pegs the cost for basic broadband at over $75 a month, it is easy to understand why many families forego service, particularly if they make less than $20,000 a year. This is why I am a defender of the FCC’s Lifeline program, which provides low-income households, with a monthly discount on voice, voice-data, and broadband services. Lifeline is critical in ensuring that millions of low-income Americans on tight budgets, do not have to choose between their next meal or voice and/or internet service. It helps everyone from lowincome veterans to the homeless, to the full-time minimum-wage worker just struggling to get buy. And we must ensure that the Lifeline program remains robust for generations to come.

[Commentary] Sen John Kennedy (R-LA) has been flirting for months with the idea of being the fifty-first (read: deciding) vote for the Congressional Review Act effort to overturn the Federal Communications Commission's Restoring Internet Freedom Order in the Senate. Yet,recently, Sen Kennedy introduced the Senate companion to Rep Marsha Blackburn’s (R-TN) phony “net neutrality” bill. This legislation is at least fourteen steps in the wrong direction. Not only does it fail to restore the net neutrality protections consumers have come to expect and rely upon, but it could have negative intended and unintended consequences for a range of internet access issues unrelated to what we often think of as net neutrality. Here's a deeper dive into the legislation.

The New York Public Service Commission has threatened to terminate Charter Communications' franchise agreements with New York City, saying the cable company failed to meet broadband construction requirements and may not have paid all of its required franchise fees. The commission said Charter should pay a $1 million fine for missing a deadline to expand its broadband network statewide and is questioning Charter over declines in franchise fees paid to New York City. "It is critically important that regulated companies strictly adhere to the state's rules and regulations," PSC Chairman John Rhodes said. "If a regulated entity like Charter's cable business decides to violate or ignore the rules, we will take swift action and hold [it] accountable to the full extent of the law."

On March 22, the Federal Communications Commission will vote on an order to streamline environmental and historic preservation reviews for 5G facilities deployment. Reps. Frank Pallone (D-NJ), Anna Eshoo (D-CA) and Raul Ruiz (D-CA) wrote FCC Commissioner Brandan Carr, who is spearheading the FCC proposal, to ask him to reconsider, saying the order will short-circuit safeguards for tribal lands. The proposed order would render the National Historic Preservation Act (NHPA) toothless when it comes to protecting "tribally-significant" sites. They also argue that what remains of NHPA shifts burdens from corporations to cash-strapped tribes. "The proposed order claims these small wireless facilities are the size of a pizza box, but the wireless industry notes that hundreds of thousands of these sites will need to be deployed to meet consumer demand for new 5G networks," they told Commissioner Carr. "If the FCC were to carve out small wireless facilities from NHPA, the Commission could be subjecting culturally significant sites to death by hundreds of thousands of small-cell cuts." More broadly, they said the item reflects an FCC culture under Chairman Ajit Pai to "act always at the behest of industry again and again at the expense of consumers, localities, and otherwise marginalized and disenfranchised communities who are in the most need of their government to look out for them."

Nearly six months have passed since Hurricanes Irma and Maria devastated Puerto Rico and the U.S. Virgin Islands. In the immediate aftermath of the storms, communications networks were virtually wiped out. More than 95% of cell sites were out in Puerto Rico and 77% of cell sites were out in the Virgin Islands. Progress is no doubt being made, with 4.4% and 13.8% of cell sites now out in Puerto Rico and the Virgin Islands, respectively. But there's still much work to do, as too many still lack connectivity and basic infrastructure. More compelling than any statistic are the stories I heard on the ground. Earlier this month, along with members of the FCC's Hurricane Task Force, I visited Puerto Rico and the U.S. Virgin Islands. Following up on my visit to Puerto Rico last year, I wanted to get a firsthand assessment of the recovery and rebuilding efforts, and to hear from residents who shared countless examples of resiliency and inspiration.