InsideSources

Sen. Josh Hawley (R-Mo.) thinks Silicon Valley is bad for economic and societal growth — and he wants Congress to do something about it.

“There is something deeply troubling — even wrong — about social media companies,” he said at a tech event hosted by the Hoover Institution on May 2. “Is Silicon Valley the best our best minds can offer?”

Hawley described how social media companies’ entire business model is to get you on their platforms and keep you there — in other words, addiction. Hawley said social media is likely a factor in the surge of teen suicides and overall rise of mental health issues like anxiety and depression.

Hawley also accused Big Tech companies of crippling the free market in Silicon Valley. Hawley wants to ensure existing platforms don’t stay entrenched and disadvantage small platforms.

“As a free market guy, I think the steps we need to take are pro-competitive,” he said. “One of the things that concerns me about Silicon Valley is, I’m not sure how competitive it actually is. Let’s be frank here, [Big Tech’s] interest is in their bottom line.”

Hawley and other tech experts at the event slammed Big Tech — specifically Google — for supporting policies to keep themselves entrenched as the dominant players in their markets. Some examples include net neutrality and Section 230 of the 1996 Communications Decency Act.

But not everyone at the Hoover Institution event agreed on the best way to address the issues. Some argued for an antitrust approach while others said the U.S. needs to brainstorm an entirely new regulatory framework to deal with tech giants.

Frank Pasquale, professor of law at the University of Maryland, started a panel discussion by describing how Google originally advocated for net neutrality because Google “wanted assurance that internet service providers (ISPs) wouldn’t block or throttle traffic” for different websites.

Luther Lowe, senior vice president of public policy at Yelp, detailed how Google used the net neutrality crusade to cement its own dominant market position. When Google and other tech platforms — like Yelp — originally supported net neutrality, Lowe said everyone seemed to worry about ISPs discriminating against tech platforms.

But then, Lowe said, Google “began to change the rules.”

“They began to siphon more traffic for itself,” he told the event attendees. When you search for something on Google.com, he explained, “you’re steered into a Google house product.”

Yelp accused Google of prioritizing traffic toward Google reviews of restaurants, retailers and other storefronts instead of Yelp reviews several times over the last decade.

Lowe said Yelp even created a Google Chrome extension to show how Google manipulates search results to direct traffic toward Google’s own in-house products (like Google reviews) or websites that pay Google the most in advertising dollars, effectively proving that Google does not benefit consumers.

“Consumers will be unwittingly mismatched to information because of the fast lanes Google gives itself,” Lowe said.

Pasquale also pointed out that Google paid Apple $9 billion to make Chrome the default search engine on iOS, according to Goldman Sachs data, supporting Lowe’s argument.

Former counsel for the House Judiciary Committee Dan Huff argued that lawmakers should be less concerned about ISPs than edge providers like Google engaging in discriminatory behavior.

“The Democrats pushing the Save the Internet Act (which restores the Federal Communications Commission’s 2015 Open Internet Order, which classifies ISPs as telecommunications providers subject to Title II regulation) don’t seem to notice there are two components to the issue,” Huff said, referring to Big Tech. “You should be more worried about discrimination by platforms than discrimination by carriers.”

In other words, they argued, net neutrality rules should address edge providers as well as ISPs.

The panelists also discussed Section 230 as another example of Google using public policy to entrench its market position. Section 230 grants tech platforms immunity from legal liability for what its users post or link to on the platform.

While restricting or rescinding Section 230 raises serious censorship concerns, the panelists pointed out how Google uses Section 230 protection to its advantage as a monopolistic tech payer.

“They built a million dollar business on not being liable for copyrights,” said Jeremy Carl, one of the panelists and a research fellow at the Hoover Institution.

His comment echoes the Oracle v. Google case, in which Oracle accuses Google of ripping off Oracle’s application programming interface (API) platform, Java SE, for Android then making billions of dollars off Android.

Part of the reason Google was able to do this, explained Hoover research fellow Adam White, is because Google was so influential in the public’s understanding of the internet.

White noted how Google’s mission “to organize the world’s information and make it useful” is inherently dangerous because it allows Google to define what “information” is and what “useful” means, essentially granting Google a monopoly over the very terms that define how we use the internet. It’s also why Google got along so well with the Obama administration, he said.

“I understand the impulse to go with antitrust,” he said, referencing 2020 presidential candidate Elizabeth Warren’s plan and other lawmakers’ comments to use antitrust law to break up Big Tech, “but I think it’s a little shortsighted. It might be a proxy for some of the problems. We need to think up an entirely new regulatory framework.”

White warned that whatever the U.S. decides to do with Big Tech, they will be stuck with that regulatory precedent for decades, just like how the feds still use the 1934 Communications Act to regulate telecom.

“I think we ought to think about forcing these companies to provide more disclosures and transparency [about how they operate],” White said. “We should start with transparency. Companies say they’ll protect your data but they don’t really consider it your data, they consider it their data that you’ve given them.”

But Hawley and other members of Congress seem to be leaning towards the antitrust route.

At a Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights hearing in March, Hawley advocated for using antitrust law against Big Tech. In November 2017, when he served as attorney general for the state of Missouri, he opened an antitrust investigation of Google on consumer protection and privacy issues, which is still ongoing.

“You’ve got to have the rule of law for markets to function,” he said at the Hoover tech event. “This is a market so new to us that we haven’t kept up. Is the market really well functioning when consumers don’t know what’s being taken from them (personal data) and can’t meaningfully get it back?”

As Pasquale said to end the panel discussion, “We’re sleepwalking into giving all of this power to these very large firms, and we might want to rethink that.”

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The service is free, but researchers found that Facebook users wouldn’t give it up for less than $1,000 a year — a finding that may support antitrust efforts against the social media giant.

A survey of college students (age 18-22) found that the average Facebook user demanded at least $1000 to deactivate his or her Facebook account for just one year.

According to the authors of the study, this shows Facebook’s immense market power, even though the social media giant offers its services for free.

“While the measurable impact Facebook and other free online services have on the economy may be small, our results show that the benefits these services provide for their users are large,” the authors wrote.

Aram Sinnreich, chair of communication studies at American University, said the reason Facebook is so successful and influential is “not because they invented something new, it’s because they’ve insinuated themselves so successfully into something old: our psychosocial need to develop various kinds of relationships with friends, romantic partners, business partners, and fellow members of the public.”

Before Facebook, people forged different kinds of relationships via different institutions. Instead of making career connections on Facebook (or LinkedIn), people met their future employers and business partners at conferences, mixers and events. While people still use conferences and events to make career connections, social media is now the primary way many make their connections, especially college and high school students.

“That can be a good thing, when I got laid off from a corporation 10 years ago, it was Facebook that got me hooked up with a consulting job a few days later,” Sinnreich told InsideSources. “That happens every day. You might meet your next lover on Twitter or Instagram, or discover your next political cause you want to back through LinkedIn or Facebook. Historically, because these functions were separated institutionally, no single company or entity really wielded as much social power as Facebook does, because no one had the ability to serve as a middleman.”

Now people rely so much on social media companies — especially Facebook — that to do without could severely handicap one’s ability to develop and maintain various kinds of relationships.

“People who are high school and college age now have never known a world without social networks so they also lack the skills to develop those independently,” Sinnreich said. “So you can almost think of it as a parasitic relationship. If you are infected with a bacterial infection, penicillin has a lot of value to you. But it wouldn’t have the value if you didn’t have the infection to begin with. So Facebook’s value is very opportunistic in nature.”

As a result, Sinnreich said, “There’s value being diminished elsewhere in exchange for the values created by Facebook. Facebook has essentially devalued other social institutions, like journalism or social clubs and concert venues, dating services and job services — all of these different institutions that used to handle the separate stuff is being brokered by Facebook.”

Facebook decreases users’ dependency on other social institutions, so those who give up Facebook may struggle to get in touch with friends, find career opportunities, and even stay up to date on the news.

In other words, Facebook monopolizes the market of social influence.

“Facebook’s hold will not be broken without compromising a lot in terms of people’s institutional relationships,” Sinnreich said. “So how can we minimize the pain to its user base and preserve the social dimensions of the service it offers? And for all that, I think antitrust is probably the best route.”

Historically, U.S. antitrust law has relied on the Chicago School of Economics’ definition of competition, which is, good competition leads to lower prices for goods and services and thus benefits the consumer. Because Facebook offers its services at no monetary cost to the consumer, it doesn’t exactly fit the traditional criteria for a big bad company that should be broken up via antitrust litigation.

Lawrence White, professor of economics at New York University’s Leonard N. Stern School of Business, thinks Facebook’s enormous influence over its users does not deserve antitrust scrutiny.

“From a traditional antitrust perspective, this is not an antitrust problem,” he told InsideSources. “The traditional antitrust problem is, are they charging and excessively high price or otherwise deteriorating the product and providing less value than a competitive marketplace would provide? That’s hard to apply in this case.”

But that doesn’t mean Facebook’s enormous influence revealed by the study isn’t troubling — and it doesn’t mean antitrust action is impossible.

Both White and Sinnreich think Facebook’s influence could be reduced if users were given more control of their data, which is something a privacy law could manage.

“Americans need more stringent data security regulations than we currently have,” Sinnreich said. “It’s not going to be a panacea, it’s not going to instantly cure all of our problems, but it will set a new set of parameters for consumers to build more power relative to titans like Facebook.”

For starters, Sinnreich said, privacy bills like Center for Democracy and Technology’s set the right tone.

“I think they’re thinking along the right lines, I think they have a very evidence-based approach,” he said. “They have a very realistic approach, and it’s a beginning, and they understand it’s a long process.”

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Following up on multiple hearings on Capitol Hill over Facebook’s treatment of users’ private data, Sen. Mark Warner (D-VA) released a 23-page white paper this week detailing about 20 policy proposals for regulating social media companies and big tech companies so that incidents like the Facebook-Cambridge Analytica scandal are not repeated.

Warner lauds Silicon Valley for their groundbreaking technological innovations, but says the current business model “involves offering nominally free services, but which results in consumers providing ever-more data in exchange for continued usage,” which he believes means “these tech giants” — including Apple, Amazon, Facebook, Google, and Twitter —  now deserve “increased scrutiny.”

The paper outlines three ways Warner believes tech companies should be regulated: 1) to stop the spread of “disinformation” and “fake news,” 2) to better protect and facilitate consumer privacy, and 3) to encourage competition and prevent a handful of platforms from dominating the market.

“The size and reach of these platforms demand that we ensure proper oversight, transparency and effective management of technologies that in large measure undergird our social lives, our economy, and our politics,” Warner states in the paper. “Numerous opportunities exist to work with these companies, other stakeholders, and policymakers to make sure that we are adopting appropriate safeguards to ensure that this ecosystem no longer exists as the ‘Wild West’ — unmanaged and not accountable to users or broader society — and instead operates to the broader advantage of society, competition, and broad-based innovation.”

The whole paper is call for tech companies to claim responsibility for the data-sharing practices and information services they use — something which Facebook has repeatedly evaded in congressional hearings and interviews.

For example, Warner believes tech companies have a “duty to clearly and conspicuously label bots, …determine origin of posts and/or accounts,” and “identify inauthentic accounts” to stop the spread of misinformation on social media.

Regarding the latter, Warner also wrote, “Failure to appropriately address inauthentic account activity — or misrepresentation of the extent of the problem — could be considered a violation of both SEC disclosure rules and/or Section 5 of the FTC Act.”

Warner says Congress should consider making “platforms liable for state-law torts (defamation, false light, public disclosure of private facts) for failure to take down deep fake or other manipulated audio/video content,” and floated the idea of a Public Interest Data Access Bill “to allow researchers to measure and audit social trends on platforms. This would ensure that problems on, and misuse of, the platforms were being evaluated by researchers and academics, helping generate data and analysis that could help inform actions by regulators or Congress.”

He suggests requiring tech companies to obtain first party consent for data collection, giving the Federal Trade Commission (FTC) more regulatory power to “police data protection and unfair competition in digital markets,” and a “comprehensive (GDPR-like) data protection legislation.”

While the policy proposals Warner discusses in the paper are still just proposals, they do show lawmakers increasingly seeking out regulatory solutions to recent big data scandals like Facebook-Cambridge Analytica.

Technology think tanks almost predicted some kind of regulation for tech companies that collect private user data, and they are already diving deep into the issues.

Research on the subject has been conducted as early as 2013, but not all experts think the focus on regulating companies’ treatment of user privacy is the key to preventing an incident like Facebook-Cambridge Analytica from happening again.

The nonpartisan Technology Policy Institute’s President and Senior Research Fellow Scott Wallsen wrote in an article for RealClearPolitics that “while the users whose data was taken were not directly harmed, anyone whose voting behavior changed because of misinformation targeted with the help of that data was harmed. This private harm aggregates to larger social harms if it affected the outcomes of any elections.”

He continues to say that “Regardless of whether one believes European-style privacy rules would be a net benefit, they are not a response to the problem at hand. After all, strict privacy rules did not prevent similar election interference in Europe,” and that Facebook’s real responsibility is to stop the spread of misinformation campaigns — which Warner’s paper addresses.

The nonpartisan Center for Democracy and Technology (CDT) noted in a 2017 paper that to efficiently address user privacy and give more control back to users, third parties may need to “perform state-mandated impact assessments of data-management practices, advocating for users’ interests and creating greater transparency,” especially if companies fail to improve transparency and “self-regulate.”

The paper also advocates for a “multipronged approach,” arguing regulation alone will not fix the issue but that private sector transparency and media literacy among individuals are also key.

Furthermore, the CDT wrote in a June paper that not all companies collecting personal information — especially nonprofit organizations — may have the resources to handle that data responsibly.

“Many are not equipped…to implement sophisticated legal, technical, and ethical compliance regimes or to understand how certain data collection, use, and sharing activities could put the communities they serve at risk,” the paper reads.

Big tech companies like Facebook and the others mentioned by Warner may have the resources to comply with future regulations regarding data collection and user privacy, but smaller companies and small businesses may not, which could put them at a competitive disadvantage.

While regulations like the European Union’s GDPR are touted as the solution to improving individual privacy rights, concerns over whether an American version would stifle tech innovation may prevent such a comprehensive regulation from taking off in the U.S.

The CDT was unable to grant InsideSources’ request for comment.

Why doesn’t the United States routinely check social media of people coming to America from terror-sponsoring countries?

Obama administration officials faced versions of that question over and over again on Thursday — including from incredulous Democrats — during a hearing of the House Committee on Oversight and Government Reform.

Assistant Homeland Security Secretary for International Affairs Alan Bersin and U.S. Citizenship and Immigration Services Director Leon Rodriguez said the federal government has pilot programs to screen social media, but lawmakers were skeptical the efforts are adequate — especially after the terrorist attack in San Bernardino, California.

“You need to not just have three pilot programs. It needs to be the policy of our government to look at social media and other publicly available information of people seeking entry into the United States,” said California Rep. Ted Lieu, a Democrat.

Several of his fellow Democrats, including Virginia Rep. Gerry Connolly and Massachusetts Rep. Stephen Lynch, noted that it’s already commonplace for workplaces to use social media when evaluating prospective employees.

“If half the employers in America are doing that in the private sector, if colleges are doing it for [admitting] students, why the hell wouldn’t the Department of Homeland Security do it for someone coming from a terrorist country — or a country that sponsors terrorism — into the United States? It would seem to be, I dare say, a no-brainer,” Lynch said.

The congressman also argued that it’s particularly vital since the Islamic State uses social media as a key recruiting tool.

Rodriguez said he didn’t know why the government only began the social media pilot programs last year, but that the efforts had been less valuable to preventing terrorism than one might expect.

That was just one bit of testimony that led the committee’s Democratic ranking member to say he found the whole proceeding “very upsetting.”

“You know, one of the things that I will go to my grave remembering is [Hurricane] Katrina,” said Maryland Rep. Elijah Cummings. “People constantly told everybody that things were going to be all right if we had an emergency. … But when it came time for the rubber to meet the road, we discovered there was no road.”

Exasperated, Cummings asked the Obama officials if they had learned anything from San Bernardino to help foil future attacks.

“I’m trying to get to where we’re going — if we’re going anywhere,” the congressman said.

Rodriguez’s response was that officials are “autopsying the situation now” and “social media is clearly something that we need to be talking about.”

“We’re certainly increasing the scope of our pilots,” he added.

The committee’s hearing came as President Barack Obama sought to reassure Americans about his handling of terrorism heading into the holidays. Speaking Thursday afternoon from the National Counterterrorism Center outside Washington, the president said there isn’t currently “any specific and credible information about an attack on the homeland.”

“We have the very best intelligence, counterterrorism, homeland security and law enforcement professionals in the world,” he said, pledging to continue working with a variety of stakeholders — including “high-tech leaders” — to keep the country safe.

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