The Corner Newsletter: September 14 , 2023
Welcome to The Corner. In this issue, we look at how the FCC’s new Democratic majority could act to rein in Big Tech, and at Musk’s misuse of Starlink.
FCC Chair Rosenworcel Finally Has a Majority. Will She Deliver?
Austin Ahlman
After spending the last two and half years deadlocked 2 to 2, the Federal Communications Commission (FCC) has reentered the policy battlefield with the confirmation of new commissioner, Anna Gomez, last week. Democratic appointees now hold a majority for the first time since the Obama administration. The standoff has meant that few regulatory decisions of importance have been made since President Joe Biden took office.
Gomez’s quiet ascension follows a year-plus-long battle over former nominee Gigi Sohn, who withdrew from consideration in March, after a scorched-earth campaign against her nomination waged by large technology and telecommunications corporations undermined support among centrist members of the Senate Democratic caucus.
In recent months, FCC Chair Jessica Rosenworcel has shown signs she is willing to challenge platform and telecom monopolists, and Democratic commissioner Geoffrey Starks has demonstrated strong reformist instincts. This means the FCC’s direction appears to hinge on Gomez’s appetite for taking on these powerful corporations. Gomez’s mix of experience in both the public and private sectors smoothed her path to confirmation but led to some questions about whether she is up for big fights.
If Gomez, Starks, and Rosenworcel prove ready to follow President Biden’s lead in cracking down on dangerous concentrations of private power and control, there is no shortage of items they can quickly address, including:
Restoring net neutrality to internet service providers: In most advocates’ view, the Commission’s top priority is to again categorize the internet as a “common carrier service” under Title II of the Communications Act of 1934. The 2015 implementation of such “net neutrality” provisions under Obama-era FCC chair Tom Wheeler was the crowning achievement of the open internet movement, before being reversed by Trump-appointed FCC chair Ajit Pai in 2018. Net neutrality is a rare issue where public advocates and large tech companies mostly align, sharing distrust of a regulatory regime that gives internet service providers the power to discriminate against some internet content by throttling the speed at which it is delivered. With every Democratic commissioner previously voicing support for net neutrality, such a move looks likely.
Applying net neutrality principles to Google, Facebook, and Twitter. In a November 2017 speech sponsored by the Open Markets Institute, Senator Al Franken said the FCC’s authority under the Federal Communications Act of 1934 can also serve as a model for regulating Big Tech platforms. A reinvigorated FCC could swiftly move to take up this challenge from Franken, who also was a leading champion of net neutrality, by declaring the platforms to be essential online communications infrastructure and regulating them accordingly. Most importantly this would include requiring them to provide the same service at the same price to all users.
Taking this path would also enable the FCC to work more effectively with the Department of Justice (DOJ) and Federal Trade Commission (FTC) in addressing some of the threats to democracy posed by Facebook and Google. For instance, the FCC could target Facebook’s threat to block access to news in California, as Facebook is already doing in Canada, as punishment for legislation to force the platforms to pay the news publishers who employ the journalists who actually create the information that underlays the platforms’ business model. Such a move would also enable the FCC to join the DOJ and FTC in addressing the threats to democracy posed by Elon Musk’s control of Twitter and Starlink, as the Open Markets Institute called for them to do last November. Since then, Musk has throttled access to news sites and competing platforms and to directly interfered in Ukraine’s war of defense against Russia.
Reversing Trump-era deregulation of television broadcast stations. Under former chair Ajit Pai, the FCC drastically cut restrictions limiting cross-ownership of print media and television broadcast entities, allowing for greater concentration in smaller media markets. Building on the Obama-era FCC’s questionable decision to scale back restrictions on foreign investments in broadcast stations, the Trump-era FCC also made it easier for American television stations to bring on foreign investors and weakened rules for reporting their identities. Rosenworcel recently demonstrated an interest in combatting consolidation in the sector: When hedge fund Standard General moved to buy broadcast television giant Tegna Inc., Rosenworcel used regulatory maneuvers to block the deal without a full vote of the deadlocked commission.
Ensuring fair distribution of new infrastructure and IRA benefits and funds. The FCC can also ensure that the expansions of telecom infrastructure under the Infrastructure Investment and Jobs Act and the Inflation Reduction Act are implemented equitably. Pending rulemaking around “digital discrimination of access” language in the infrastructure bill will clearly indicate whether the new Democratic majority is willing to challenge telecommunications providers and large platforms on behalf of the public.
Open Markets and CJL Call for Public Access at Google Trial
The Center for Journalism & Liberty at the Open Markets Institute released a statement to underscore their deep concerns about the decision to hear U.S. v Google, a case over the tech giant’s monopolization of the search market that went to trial this week, behind closed doors. “This decision impairs the public’s right to information of national interest and restricts the ability of journalists all over the world to access first-hand information as the trial unfolds,” the statement read. OMI joined other groups including the American Economic Liberties Project, Demand Progress, and the Revolving Door Project in filing a transparency motion seeking a publicly available audio feed of the unsealed portions of the trial, which received coverage in Common Dreams.
Separately, Open Markets executive director Barry Lynn was quoted in The American Prospect on the trial, saying, “This is the most amazing period in antitrust in a hundred years,” while cautioning against high expectations. “It’s important not to oversell this case. Our side always does this.” Open Markets senior reporter Karina Montoya also published an article in Tech Policy Press on what to watch for during the proceedings. “As the trial unfolds, the public and journalists should closely scrutinize anything Google says about what happens behind the court’s closed doors,” Montoya writes. In addition, Open Markets published a blog post explaining the issues at stake in the case, such as the exclusive deals and the favorable terms the company strikes to maintain its dominant position in the search market.
Open Markets Forewarned of Consequences From Musk’s Satellite Monopoly a Year Ago
A new biography of Elon Musk this week disclosed that he used his control over the Starlink Satellite network to block a Ukrainian attack on Russia’s naval fleet in Crimea, in an action that affected the course of the war. The revelation came roughly a year after Open Markets Institute first warned of such a danger in a policy brief published last September. Open Markets and CJL called for a stricter regulatory regime to lay the groundwork for a fair space broadband market.
📝 WHAT WE'VE BEEN UP TO:
Open Markets Institute legal director Sandeep Vaheesan and chief economist Brian Callaci co-authored an op-ed for Bloomberg Law outlining how the new merger guidelines released by the FTC and DOJ can be improved. “The agencies’ proposed revisions don’t go far enough,” the authors write. “In their final guidelines, the DOJ and the FTC should announce stricter market-share tests—think 15% instead of 30%—and put the largest corporations on notice that their mergers and acquisitions won’t be tolerated.”
Vaheesan and Callaci also co-authored an op-ed for The New Republic calling on the FTC to support independent contractors by banning contracts that exert employment-like control while depriving contractors of rights given to employees. “The FTC should use its statutory powers to rein in mistreatment of workers in the so-called ’gig economy’ and other ‘fissured’ workplaces, where employers disclaim employment responsibilities for workers they control,” they wrote.
Open Markets Institute reporter Austin Ahlman published an article in The Intercept on the FTC’s about-face on the acquisition of Aerojet Rocketdyne, which the agency blocked when Lockheed Martin tried to buy it last year. Of the FTC’s recent decision to allow another defense contractor, L3 Harris, to purchase the rocket propulsion firm, Ahlman wrote, “A move that would [have put FTC Chair Lina Khan] at odds with the Defense Department and the Biden administration’s fervent support for Ukraine may have been a bridge too far.”
The Open Markets Institute and European partners SOMO and the Balanced Economy Project made a formal submission to the UK’s Competition and Markets Authority (CMA), urging the regulator to reconsider its preliminary decision to accept Amazon’s weak commitments, which came in response to it antitrust investigation of Amazon’s UK marketplace. “Amazon’s proposals are too narrow, leave the company with too much leeway to escape or frustrate enforcement, and will be challenging to monitor,” the submission read.
Center for Journalism & Liberty director Courtney Radsch was quoted in the Los Angeles Times on Elon Musk’s recent decision to remove the blocking option on X, formerly known as Twitter. “Getting rid of block takes away an important tool for combating online harassment or having a more positive user experience,” Radsch said. Yahoo Finance and Ms. reprinted her comments on the subject.
DRG News reported on the appearance by Open Market Institute’s food systems program manager Claire Kelloway at R-CALF USA’s 24th Annual National Convention and Trade Show, where she offered expertise on monopoly power and market concentration in cattle production.
Chief economist Brian Callaci was quoted in In These Times commenting on the labor fight for fair working conditions in the clean economy. Drawing a comparison to today’s battle at EV plants to the UAW’s past efforts to extend bargaining agreements struck with automakers to larger auto parts suppliers, Callaci said, “The parts industry ultimately grew largely outside the UAW’s influence, and today employment in parts dwarfs employment at the Big Three.” The article was repinted in The Real News Network.
Open Markets Institute’s strategic councilor on democracy and power, Caroline Fredrickson, was quoted in Bloomberg Law in an article on the judicial nomination process saying, “Republicans have shown less of an interest in ensuring that we have a more broadly diverse judiciary.” She was also featured on Bloomberg’s The Tape podcast talking about the Trump indictment.
The New Republic cited an article the outlet published earlier this year by legal director Sandeep Vaheesan on how “Amazon’s broad universe of contract work is one factor that makes it hard for antitrust regulators to bring the firm to heel.”
Writing in Wired, technology pundit Cory Doctorow used data compiled by Open Markets Institute to decry the widespread consolidation seen across U.S. “industries where between one and five companies account for the vast majority of business: pharmaceuticals, health insurers, appliances, athletic shoes, defense contractors, book publishing, booze, drug stores, office supplies, eyeglasses, LCD glass, glass bottles, vitamin C, car parts, bottle caps, airlines, railroads, mattresses, Lasik lasers, cowboy boots, and candy.”
Senior legal analyst Daniel Hanley’s 2021 article in Democracy Journal arguing that corporations should be required to obtain charters from the federal government was cited by the Capital Research Center.
MIT Technology Review cited an article by Courtney Radsch, director of the Center of Journalism & Liberty, on a new study out of Switzerland assessing the value of news to Big Tech outlets and their use of journalistic content.
Northeastern University’s NGN Magazine quoted executive director Barry Lynn describing John Kwoka, an economics professor at the school who also serves as chief economist to the FTC chair, as “the rare economist who understands that the purpose of antimonopoly law is to protect our democracy and to make every individual more free, more secure and more prosperous.”
Senior fellow Johnny Ryan’s claim that the Data Protection Commission (DPC) failed to fully investigate a complaint made five years ago about Google’s invasive data practices was dismissed by the High Court, in news that was covered by the Irish Examiner, RTE, Goodwin, and Business Post. The court said the DPC was entitled to conduct its own inquiry into the alleged data breach before resuming its investigation into Dr Ryan's complaint.
Nieman Lab cited a report co-written by senior CJL fellow Nikki Usher on how the decline of local news opens the door to increased corruption, because the journalistic watchdog is no longer able to keep a close eye on business and public officials.
Open Markets Institute’s joint letter with The American Booksellers, and the Authors Guild calling on the FTC and DOJ to investigate Amazon’s dominance over book publishing received coverage in Ars Technica, The Hill, ICV2, and The Jerusalem Post. This followed day-of coverage by The New York Times.
The American Prospect cited a co-authored report by Open Markets and Friends of the Earth on ineffectual carbon payment programs promoted by Big Ag in an article on how public agriculture funding continues to be funneled to giant corporations
🔊 ANTI-MONOPOLY RISING:
The European Union launched enforcement of the Digital Markets Act by designating Amazon, Google, Facebook, Microsoft, Apple, and ByteDance as so-called “gatekeepers,” meaning their market dominance will be subject to greater regulatory scrutiny. (Forbes)
The Seventh Circuit Court revived an antitrust case against McDonald’s over no-poach contracts preventing franchisees from hiring current or recent employees from other locations. (Bloomberg Law)
Following a probe from European Union antitrust officials, Microsoft will unbundle its Teams software and its office software suite. (CNN)
An administrative judge at the FTC ruled that Intuit, the provider of the TurboTax tax filing software, must cease deceptive advertising labeling the product as free. (Reuters)
The Department of Justice this week announced that two directors at Pinterest had stepped down from the board of social media platform Nextdoor in response to agency scrutiny, as part of a larger crackdown by American antitrust regulators on “interlocking directorates,” or the practice of directors sitting on the boards of multiple competing companies. Relatedly, the FTC this week barred private equity firm Quantum Energy Partners from taking a board seat at EQT, the largest US natural gas producer, as part of a $5.2 billion deal between the two. (Financial Times)
📈 VITAL STAT:
80%
The portion of general search queries in the U.S. going to Google’s search distribution channels, which forms the basis of the arguments in the complaint leading to Google’s trial. (CNN)
📚 WHAT WE'RE READING:
“Containing Big Tech.” In his book, the veteran Silicon Valley entrepreneur Tom Kemp offers an account of how Google, Facebook, Amazon, Microsoft, and Apple secured their dominant market position. Kemp also explores how their misuse of our personal data, their problematic deployment of underdeveloped AI tools, and their abuse of their outsized market power are threatening America’s economic and democratic values. Kemp explores a variety of potential policies to curtail the giants’ growing power.
“Market Concentration Implications of Foundation Models: The Invisible Hand of ChatGPT.” This report from the Brookings Institution details how the market structure of foundation models — the large AI models that enable products like ChatGPT — tends toward natural monopoly. Researchers Jai Vipra and Anton Korinek argue that the growing importance of these models and their bias toward monopoly present unprecedented regulatory challenges, especially to ensure there is viable competition among the producers of frontier AI models.
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