The Corner Newsletter: March 28 , 2024
Welcome to The Corner. In this issue, we broaden the conversation past TikTok to the myriad ways tech platforms and their data-collection practices harm Americans.
Beyond TikTok: The Data and Security Conversation Congress Isn’t Having
Austin Ahlman
The recent vote in the House of Representatives to force the sale of TikTok by its Chinese owners was something of a breakthrough in a Congress that has thus far largely ignored the many ways that social media threatens the wellbeing of Americans. But the action also highlighted that the U.S. government as a whole still lacks any sort of coherent vision for protecting Americans from manipulation by foreign states and surveillance by foreign and even domestic governmental actors.
Nowhere is this dynamic clearer than in the ongoing debate over renewal of the Foreign Intelligence Surveillance Act (FISA), decades-old legislation that grants the federal government sweeping powers to surveil foreign nationals and Americans with whom they have contact. Democracy and privacy advocates have long criticized the policy for eroding the civil liberties and privacy of Americans, and other people around the world. But despite widespread opposition to the current Act, there is little indication that any substantial reforms will be included before a likely vote in Congress next month to renew the policy.
One sticking point in particular encapsulates lawmakers’ disconnect: a loophole that allows law enforcement and intelligence agencies to purchase sensitive data from data brokers that they would otherwise need a warrant to obtain. (Data brokers are companies that scrape publicly available data, match it with the vast body of data harvested by tech platforms, and sell the package to the highest bidder.) Bipartisan bills have been introduced in both chambers that would narrow or close the loophole as part of the FISA renewal process. But the heads of the House and Senate Intelligence Committees have balked at limiting federal authorities’ ability to purchase Americans’ data at will, and leaders in both chambers have thus far declined to commit to including the provisions in the final package.
The ultimate irrationality of the policy — or rather, lack of policy — is made clear by the fact that the same loophole that allows federal agencies to purchase the data of U.S. residents also allows foreign states and corporations connected to those states to access that same highly personal information. This means that even if Congress passes the bill to force the sale of TikTok, the Chinese government could still get much of the same highly private information from other sources.
The dispute mirrors the dynamic that has played out in many other debates about how to craft new laws to protect Americans from online surveillance and manipulation. Although broad bipartisan majorities in both chambers favor reform, leadership in both parties — often backed by federal law enforcement and intelligence agencies — have largely backed unfettered access to data by the tech platforms.
One result is that some state legislatures have moved into the vacuum, most notably California. That state’s new DELETE Act is helping shed light on the scope of data brokers’ operations by creating a registry with insights into the types of data they deal in, as well as a one-stop shop where California residents can go to opt out of collection altogether. The Federal Trade Commission (FTC) has also set its sights on data brokers’ use of sensitive data. The results of the agency’s years-long effort to design rules to govern surveillance advertising should be announced in coming months, which may further rein in platforms and brokers. And President Biden issued an executive order last month that aimed to limit foreign adversaries’ access to the data held by brokers by instructing the Department of Justice and Homeland Security to develop new regulations.
But the outlook for Congressional action, which is essential to create durable structural changes to the platforms’ data practices and the business models of data brokers, remains bleak. Absent legislative reform to the way platforms and brokers collect and market data, it is far from certain that individual states and executive agencies alone can feasibly keep Americans’ data out of the hands of foreign governments. While several bipartisan efforts for comprehensive data standards have cleared committee votes in both chambers with overwhelming support in recent years, leaders from both parties have prevented any such package from reaching the floor for a vote. As a piece of “must-pass” legislation, the FISA renewal process may be Congress’s last opportunity to make serious progress this session. If Congress wants to prove it is serious about the threats that data-harvesting by platforms poses to Americans, TikTok must be the start — not the end — of the conversation.
Open Markets Files Brief in Support of Ohio’s Efforts to Deem Google a Common Carrier
The Open Markets Institute filed an amicus brief in Ohio v. Google in support of the state’s efforts to designate Google as a common carrier, to stop the tech giant from preferencing its own products and services. Making the case that states have longstanding authority to treat companies that serve the public as common carriers, the brief asserts that nondiscrimination and equal access rules do not raise First Amendment concerns for Google or impede the corporation’s rights and that courts have applied the common carriage concept dynamically as new industries and technologies emerged over the years.
“Google is far and away the most dominant player in the online search market: the platform through which billions of people seek or share information and news, buy, sell, and advertise goods and services, and more,” said Tara Pincock, Open Markets policy counsel and one of the brief’s author. “This dominance gives Google vast powers to harm consumers and its business competitors. Lawmakers established common carrier laws to prevent exactly this kind of market power abuse from companies that broadly serve and have great influence over the public and our economic liberties.” Read the full brief here.
Open Markets Co-Hosts Premiere of Food Inc 2, Based on OMI’s Reporting on Consolidation
Food Inc. 2, the sequel to the 2009 blockbuster documentary exposing how corporate consolidation has led to a fragile food system, will premier April 9 in Landmark Theatres across a dozen cities, including Washington, D.C., Bethesda, Maryland, and Cambridge, Massachusetts. The sequel drew from reporting by Open Markets’ Claire Kelloway, who manages OMI’s food and agriculture program. Open Markets Institute is also working closely with Food Inc.’s filmmakers, which include healthy food evangelist Michael Pollan, on a campaign to raise awareness and advance conversations around processed foods, antitrust laws, and workers’ rights. The original Food Inc. ignited a cultural conversation about the multinational corporations that control our food system at enormous cost to our planet, workforce, and health.
Open Markets Institute Hails DOJ’s Lawsuit Against Apple for Smartphone Monopoly
In a landmark lawsuit announced last week, the Department of Justice and 16 state attorneys general are suing Apple for a wide range of unfair competition practices and its monopoly over smartphone markets and applications. Open Markets Institute’s executive director Barry Lynn lauded the move to take on one of the world’s largest corporations. “For more than a decade, Apple has engaged in unfair competition designed to entrench its monopoly control in the smartphone market and in multiple closely related marketplaces such as wireless apps,” Lynn said. “By deploying a complex suite of intertwined practices that collectively restrict the availability of alternative services, Apple stifled the development of rival businesses, reduced consumer choice, imposed higher prices for consumers and developers, and piled up vast wealth for a tiny collection of people.” Common Dreams quoted from OMI’s statement in its reporting.
📝 WHAT WE'VE BEEN UP TO:
Open Markets Institute’s legal director Sandeep Vaheesan takes stock of the performance of the Federal Trade Commission and the Department of Justice three quarters of the way through the President Biden’s term in the Democracy Journal, concluding that the agencies’ performance is mixed, with more work to be done on translating lofty ideals into policies. “Antitrust officials have set in motion positive changes in enforcement priorities,” he writes. “The next step is to convert these principles into binding rules of the road that will end the 40-year experiment that Bork and Breyer initiated.”
Center for Journalism & Liberty’s director Dr. Courtney Radsch published a story for Brookings Institution calling for journalism to adapt its business models in the era of AI or face continued demise. “News outlets must consider how to optimize revenue streams and assert their pricing autonomy throughout the AI value chain,” she writes. “They will need to figure out how to unlock the value of journalism by adopting sophisticated and dynamic compensation frameworks and pricing strategies for news content in various parts of AI systems and AI applications.”
Dr. Radsch and OMI senior reporter Karina Montoya co-authored an article in Competition Policy International delving into how market concentration in cloud services can severely impact investigative journalism given the cloud’s infrastructural role. “How we govern this infrastructure has profound repercussions for wide swaths of the economy and our information and communications systems, and regulators and policymakers should consider the effects on public interest journalism and implement policies to redress concentration and potentially anticompetitive practices in the cloud services market,” they write.
Dr. Radsch also wrote a story for Tech Policy Press on the European Union’s AI Act, which she hails as a pioneering effort but one that falls short of addressing the immediate and existential risks AI poses. “Failing to address the harms that have already been caused by the rapid proliferation of these technologies, from the theft of intellectual property and the rise of synthetic media-making tools to the impacts of unaccountable algorithmic decision-making and facial recognition systems, means these harms may be irreversible by the time the law comes into effect,” she writes.
The New York Times Dealbook column cited Open Markets Institute’s Europe director Max von Thun on Europe’s diverging views from the U.S. on the threat emanating from Chinese-owned TikTok. He was as quoted as saying Europe’s trade relationship with China “makes it very difficult for Brussels to reach the consensus needed to take tough measures singling out either China itself or leading Chinese companies.”
Von Thun was also quoted in Jacobin on Europe’s failure to check monopolization of the emerging AI space by Big Tech monopolies, illustrated by the partnership between Microsoft and Paris-based Mistral AI. He described the tie-up as symptomatic of the “huge structural concentration that you see in the tech sector, which is not new, which has been around for a long time, but which has basically put the Big Tech companies in a position to essentially co-opt or neutralize any potential players in AI who might challenge them directly.” LexBlog also noted von Thun’s thoughts on the partnership between Mistral and Microsoft.
Additionally, Von Thun was quoted in articles on the EU’s AI Act published by AdMonsters and EuroNews, in which he emphasized that weak regulation poses the biggest threat to the public. He pointed out “significant loopholes for public authorities” but also said Brussels deserves "real credit" for being the first jurisdiction globally to pass regulation mitigating AI’s many risks.
California-based radio station KCRW quoted Open Markets’ chief economist Brian Callaci on an April wage hike for fast food workers in the state to $20 an hour. “Let's not lose sight of the fact that these are life-changing raises, and that's a huge positive, and it's good for the economy,” he said.
DC Journal quoted from Open Markets’ comments on X (formerly Twitter) decrying Ticketmaster’s attempts to undermine a DOJ investigation into its unfair practices. “The Open Markets Institute said it’s ‘not surprising’ that the company ‘is trying to evade a thorough investigation into its unfair competitive practices & abuse of its near-monopoly power over event ticketing & entertainment venues,’” DC Journal quoted.
🔊 ANTI-MONOPOLY RISING:
The European Commission announced a suite of investigations into tech giants Apple, Google, and Facebook, in its first crackdown following the Digital Markets Act going into effect earlier this month. (Reuters)
The National Association of Realtors (NAR) reached a settlement of more than $400 million in a lawsuit that claims brokers across the real estate industry conspired to keep brokerage fees artificially high. As part of the settlement, the NAR agreed to modify rules that preempted negotiations over commissions. (Wall Street Journal)
Senators Sheldon Whitehouse and JD Vance introduced bipartisan legislation to eliminate tax breaks and loopholes for large corporations in the merger and acquisition process. (The Hill)
Visa and Mastercard settled a years-long antitrust lawsuit led by small businesses that accused the two financial services giants of artificially inflating swipe fees for most transactions. The settlement caps fees for a limited time and enables smaller merchants to bargain with the companies in a similar fashion to large merchants. (Associated Press)
📈 VITAL STAT:
3
The number of class-action lawsuits against U.S. sugar companies filed in Minnesota last week by bakeries and restaurants for conspiring to fix prices. The companies include Cargill, Domino Sugar, and United Sugars, which includes American Crystal Sugar and the Minn-Dak Farmers Cooperative. (ABC News)
📚 WHAT WE'RE READING:
Paper Soldiers: How the Weaponization of the Dollar Changed the Modern World — Bloomberg reporter Saleha Mohsin dives into the sweeping power of the United States Treasury Department and the way the centrality of the dollar to global commerce gives American officials unprecedented leverage in foreign policy disputes, while simultaneously driving domestic conflicts. Mohsin explains how this power has been wielded in recent years both to achieve just outcomes, such as isolating Russia following their invasion of Ukraine, as well as in more disastrous instances like Afghanistan, where the seizure of dollar reserves triggered a massive humanitarian catastrophe. Finally, Mohsin examines emerging threats to the Treasury’s powers and questions what role those powers should have in an increasingly multipolar world.
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