While Republican and Democratic senators might not agree on the best legislative approach to addressing consumer and competitive harms caused by “big data”—the collection and use of consumer information by large tech firms—they seem to have firmed a consensus that companies like Facebook, Inc., and Google LLC should be held to account for those harms.
During a hearing before the Senate competition policy, antitrust, and consumer rights subcommittee this afternoon, officials from Facebook and Google repeatedly insisted that their businesses are about providing “great” and “innovative” products, not collecting data, and that the safety and privacy of their users are of primary importance.
Subcommittee Chair Amy Klobuchar (D., Minn.) said in her opening remarks that the time is “long overdue to update antitrust laws.” Among the vehicles she cited for doing so are her proposed Competition and Antitrust Law Enforcement Reform Act, which would increase antitrust enforcement budgets at both the Federal Trade Commission and the Department of Justice; change the legal standard for blocking a merger from “substantially” to “materially” lessening competition; and shift the burden of proof to the merging entities in cases that would significantly increase market concentration, that involve dominant firms acquiring competitors or nascent competitors, or that have a value of more than $5 billion (TR Daily, Feb. 4).
She also cited her Merger Filing Fee Modernization Act, which has passed the Senate and has been approved by the House Judiciary Committee (TR Daily, June 23). She noted that more funding for the antitrust enforcement agencies could be provided in the ongoing budget reconciliation process.
Sen. Klobuchar noted, “Big Tech companies are not the only ones keeping tabs on all of us. Data brokers, including Kinesso and its sister company, Acxiom, also buy, process, and sell massive amounts of personal information about consumers, and they have actually been doing it since before we even knew what the internet was. They collect information from the Department of Motor Vehicles, from public records, from our grocery store loyalty cards, and even from other data brokers. Today, they also buy our browsing histories, and guess how much money we make and what religion we practice.”
However, she added, Facebook in 2018 ended a partnership with Acxiom under which they combined their data for individual consumers to sell targeted ads and share the profits. This action raises “questions about whether massive technology companies now have so much data that they don’t need to buy from data brokers. In today’s hearing, we will discuss how this kind of control over enormous data affects competition.”
In his opening statement, subcommittee ranking member Mike Lee (R., Utah) noted the potential harms from data collection, including increased risks related to data breaches and the potential to “weaponize” privacy protections “to entrench incumbents.”
However, he said, “punishing companies for amassing enough data for economies of scale smacks of penalizing success.” He asked whether “we will, in the name of privacy, next demand that they share that data” with competitors.
Witness Sheila Colclasure, global chief digital responsibility and public policy officer at IPG Kinesso, an affiliate of Acxiom, said during her prepared testimony that “responsible companies are ready for a comprehensive federal privacy law.” She urged lawmakers not to impose limits on who can collect data.
Charlotte Slaiman, director–competition policy at Public Knowledge, said that gatekeeper power is at the root of data collection problems.
Steve Satterfield, vice president–privacy and public policy at Facebook, and Markham Erickson, VP–government affairs and public policy at Google, were repeatedly criticized by senators questioning them for not responding directly.
Sen. Klobuchar, who asked how important consumer data was to their companies, was frustrated when they talked about using that data to serve users rather than how they generate revenue from data through targeted advertising.
When Mr. Satterfield essentially responded “it’s complicated” when asked about the much higher revenue value of an individual U.S. user ($51.58 per year) compared to one in Europe ($17), Sen. Klobuchar abandoned her attempts to get an answer from him and turned to witness John Robb, author of The Global Guerrillas Report, and asked whether Facebook should pay each user $51.48.
Mr. Robb said, “If you owned the data, you could at least negotiate. I don’t think you would get the full amount.”
Sen. Lee asked why companies don’t tell users what their data is worth.
Mr. Satterfield repeated that Facebook sees data as something it uses to benefit consumers.
Sen. Lee suggested to Ms. Slaiman that rather than updated antitrust law, “we should enforce the laws we have,” adding that under the Obama administration, antitrust regulators let Google and Facebook “off the hook.”
Ms. Slaiman responded, “We absolutely need to improve antitrust enforcement. I believe it will be necessary to improve antitrust law as well.”
Sen. Blumenthal asked why Facebook misrepresented its research on women and teens—recently the subject of a Wall Street Journal story citing internal company documents—when it responded to a letter on the subject sent last month by Sen. Marsha Blackburn (R., Tenn.) and himself.
Mr. Satterfield said he “disagree[s] with that characterization,” and that he thinks it was “important research” and is “proud we did it.” However, not publishing the research facilitates internal company discussions on “hard research,” he said.
Sen. Blumenthal unsuccessfully sought a commitment from Mr. Satterfield to have a Facebook official appear at a Sept. 30 hearing before the Senate Commerce, Science, and Transportation Committee’s subcommittee on consumer protection, product safety, and data security, which he chairs.
Sen. Josh Hawley (R., Mo.) sought unsuccessfully to get answers on whether Mr. Satterfield or Facebook Chief Executive Officer Mark Zuckerberg had read the research on women and teens cited in the Journal article.
Mr. Satterfield said that those were “not areas I work on.” Sen. Hawley expressed disbelief, given that Mr. Satterfield is vice president-privacy and public policy.
“Why you should be able to advertise to teenagers at all? Why shouldn’t we prohibit that?” Sen. Hawley asked.
Advertising pays for Facebook’s services, Mr. Satterfield responded.
Similarly, Sen. Ted Cruz (R., Texas) was also dubious. “In preparing for this hearing, you didn’t inquire into whether the Journal was right that Zuckerberg knew about this research?” he asked.
Mr. Satterfield said that he came to testify on data collection.
Sen. Cruz asked whether Facebook made any changes to reduce the chance of teen suicide as a result of this research. Mr. Satterfield offered a briefing for the senator and his staff.
“It’s the American people who deserve a briefing,” Mr. Cruz said.
Sen. Blackburn, one of the original sponsors, along with Sens. Blumenthal and Klobuchar, of the Open Apps Market Act (TR Daily, Aug. 11), asked how Apple’s and Google’s data practices factor into the way they run their app stores.
Ms. Slaiman said that their app stores give them a “privileged position” with regard to the decisions consumers can make about their data depending on whether they want to preference a given app.
Ahead of the hearing, Competitive Enterprise Institute Senior Fellow Ryan Young said in a statement, “Sen. Klobuchar and her colleagues are arguing that the sheer scale of Big Data makes it difficult for smaller companies to compete in areas such as targeted advertising and algorithm development. There are several problems with this argument.
“One is that new companies are still entering the market and succeeding. … Two, simply having data and established networks of users did not stop Amazon from failing with its Fire phone, Google failing with its social Network Google+, or the anemic performance of Facebook’s Portal devices. Three, if the ad market was anti-competitive, the big companies would be able to get away with raising their prices. Instead, ad prices fell by half over the period 2009-2019, even as print ad prices doubled in some cases,” he continued. —Lynn Stanton, [email protected]
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