As the Senate trudges along on a long-delayed road to technology legislation, the Federal Trade Commission isn’t waiting.
Aggressive legal action by the FTC in recent days shows Senate Majority Leader Chuck Schumer, D-N.Y., is taking control over antitrust bills targeting tech’s biggest names. Last week, the FTC announced a move to develop rules to regulate what it calls harmful commercial surveillance and lax data security, less than a month after the agency sued Facebook’s parent company, Meta Platforms Inc.
Virtual-reality company plans to buy Unlimited internally due to anti-competitive behavior. The lawsuit, which is headed to court in December, is FTC Chairwoman Lina Khan’s first against the tech heavyweight.
On the contrary, it has remained a cricket in Congress. While members defeated bills on climate change and health care this summer, more than two years of hearings detailing their monopolistic business practices have not resulted in a full vote on high-tech bills. European lawmakers, meanwhile, are backing legal challenges to laws ranging from Big Tech to the Digital Markets Act, which requires companies to rank their own products on internet platforms ahead of their competitors..
Banning Big Tech from co-opting their own products is one of the few bills introduced by Democrats over the past two years that still appear to have a chance to reach the floor with a month to go in the session.
This week, a Schumer spokeswoman confirmed to MarketWatch that the Senate Majority Leader, “with Sen. [Amy] Klobuchar and other supporters plan to gather the necessary votes and vote.
That will translate into a vote next month in Silicon Valley and the Beltway after months of political rhetoric and promises of action, a sustained entertainment game.
For now, Big Tech officials aren’t expecting a vote on Sen. Klobuchar’s American Innovation and Choice Online Act — which would protect large online platforms from the likes of Apple Inc.’s AAPL.
Amazon.com Inc. AMZN,
Google, Meta and possibly Microsoft Corporation MSFT;
From using their dominance in one field to give an unfair advantage to other products – at least until failure, as confirmed by people familiar with the discussions on the Senate vote. [Ironically, Meta’s recent stock plunge, which has pushed the company’s valuation down to less than $450 billion, could spare it from the bill, which currently covers online platforms with either $550 billion or more in revenue or $550 billion or more in market capitalization.]
More on Klobuchar’s bill: After three years of promises, trying to regulate technology comes down to one bill.
The four companies did not comment publicly when contacted by MarketWatch, although they continue to try to stop Congress from enacting laws to curb their market power. Meta only learned of the FTC lawsuit through Twitter, people familiar with the situation told MarketWatch.
The alternative ways to rein in Big Tech presents a complementary, if not conflicting, path between aggressive regulators who pursue lawsuits and investigations and a federal legislature that hasn’t enacted any significant technology legislation in at least 20 years.
“People are concerned about corporate power, and making sure our markets operate fairly and freely. That’s very important to people, when inflation is so high and markets don’t work properly,” said Charlotte Slaman, director of competition policy at Public Knowledge, with Klobuchar and Richard Blumenthal, D-Conn. And Marsha Blackburn, R-Tenn., a campaign group that supports high-profile bills in the Senate, told MarketWatch. The latter bill, the Open App Markets Act, would prevent Apple and Google from asking developers to monopolize the use of their app payment systems, or allow the two companies to compete and rate their apps against competing brands.
“For years we have been pushing for the existing law or new laws to be enforced. It doesn’t have to be an either/or proposition. We have to use all the tools available,” said Slaiman, who previously worked in the FTC’s anticompetitive practices division.
The FTC is plowing ahead without the benefit of the National Data-Privacy Act, one of the bills stalled in Congress. According to the FTC, there is a push for technology legislation among Americans and lawmakers — as well as Big Tech itself — around the National Data-Privacy Act. Sam Levin, the FTC’s chief of consumer protection, said the agency’s rulemaking decision does not supersede legislation such as the House’s American Data Protection and Privacy Act.
“The process we started today is not a substitute for strong, comprehensive federal privacy legislation. Congress has stronger tools. Congress has broader tools,” Levin said.
More on the data-privacy bill: The long-awaited US data-privacy bill appears to be on the way.
“It’s safe to say that the FTC has gotten a little fed up with how data collection and monetization practices have evolved in recent years,” Verve Group’s senior vice president of marketplaces, Avi Edery, told MarketWatch. But he warned that the FTC’s “broad and sweeping” changes, no matter how well-intentioned, could have “unintended consequences” for developers and consumers.
But that doesn’t seem to be the case with FTC Chairman Khan Lam, who seems intent on imposing it on Congress, with or without help.
“Companies now collect personal data on individuals at an alarmingly high rate,” FTC Chairman Kahn said at an online news conference on Thursday. Our goal today is to begin building a strong public record to inform the FTC that it needs to issue rules to address business surveillance and data security practices, and what those rules should look like.
Integration of events
Coupled with recent federal regulatory actions, congressional inaction could be interpreted as deliberate or accidental, the result of a combination of events long overdue for a third Democratic vote to appoint the FTC and a lawsuit to block negotiations between the Justice Department and Google. [Alvaro Bedoya, who joined the FTC in mid-May to give Khan a majority, co-wrote a 2016 report on the use of facial recognition by law enforcement and the risks that it poses to privacy, civil liberties, and civil rights.]
Antitrust attorney Joel Mitnick says he doesn’t think enforcement agencies are conducting investigations because of delays in legislative reform in Congress. “Investigations take a long time, especially at large and well-funded targets,” Mitnick told MarketWatch.
“Both the current administration at the FTC and [the Justice Department] “He came into office with an aggressive agenda, and I think it’s a coincidence that some of these issues are coming to fruition at a time when legislative antitrust reform is stalling,” said Mitnick, who began his career as a trial attorney. FTC
The Justice Department is expected to sue Alphabet Inc.’s GOOGL.
Gog
Google sued for antitrust violations in September as its online advertising supremacy. “Rather than competing on merit, Meta is trying to get the upper hand,” said John Newman, deputy director of the FTC’s Office of Competition, when Meta filed a lawsuit in late July to block the VR company from being bought by Unlimited. A Meta spokesperson told MarketWatch that the FTC’s lawsuit is “based on ideology and speculation, not evidence.”
Deep down: Facebook and Apple are at war, with the biggest battle yet to come.
Bhaskar Chakravorty, dean of international business at Tufts University at the Fletcher School, told MarketWatch that the FTC’s lawsuit against Meta is a sign of a new antitrust approach that I call the “minority report” school of antitrust: take action. Destroying Monopoly Before It Happens”
Such an approach carries risks, Chakravorti warns. “When the charge occurs at the beginning of evolution [metaverse] Industry, the government is likely to lose the case and may undermine the FTC’s mission and the credibility of this new approach, he said. The FTC added that it is “crowded with many different industries to oversee, and technology itself is a giant hairball among them all.”
Without new legislation, regulatory pressures may be difficult to succeed. If approved, Klobuchar’s “self-selecting” bill would have stopped Google from placing its own products at the top of its search results and prevented Amazon from giving preferential treatment to sellers who can pay in its online store.
The major tech law would go too far and would essentially “change the entire structure of technology” and penalize consumers, Matt Schruers, president of the Computer and Communications Industry Association, whose members include Amazon, Apple, Google and Meta, told MarketWatch. The organization spent more than $10 million this year buying television ads that said Klobuchar’s bill would “break the prime minister” and “end the guaranteed two-day freebie.”
See also: Hearing on data-privacy bill shows latest hope for tech regulation
Last week, Amazon accused FTC employees of harassing executives, including CEO Jeff Bezos and CEO Andy Jassy, for taking “unusual and confusing” actions during an investigation into the company’s Prime subscription business. The FTC is asking both to testify.
Midterm elections are wild. If Democrats somehow hold the Senate, as some increasingly predict, votes on the bills could be delayed until next year. If Republicans take control of the Senate and/or House, however, the bills could be out of play.
