The Technology 202: Europe is leading the crackdown on tech companies and competition
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It’s not just Sen. Elizabeth Warren (D-Mass.). Competition concerns about tech titans are growing around the world, with European regulators taking the lead on antitrust issues that could have significant implications here at home.
The British government released a report yesterday stating the country needs to overhaul its antitrust and merger enforcement rules to adapt to the changing digital economy. The report, ordered by the country’s top treasury official, recommends the United Kingdom establish a new digital markets regulator charged with policing the conduct of large technology companies such as Facebook, Google and Amazon. (Amazon chief Jeffrey P. Bezos owns The Washington Post).
“These policies would create substantial benefits for UK consumers, businesses trying to start up and scale up in the UK, and greater predictability for the major digital companies,” wrote Jason Furman, chair of the digital competition expert panel. “Effective implementation in the UK could also serve as a model for the many governments around the world wrestling with these same questions.”
The U.K.’s new antitrust recommendations aren’t the only reason tech companies need to watch what’s happening on the other side of the pond. Yesterday Spotify filed an antitrust complaint against Apple with the European Commission.
Together, these actions mean Silicon Valley should perhaps be more worried about the regulatory climate in Europe than what’s happening in its own backyard. The U.K.’s report offered tangible and enforceable recommendations that British policymakers might be able to put into action much more quickly than any effort to break up all the country’s largest technology companies, such as the one Warren is proposing.
Even if Warren does manage to secure the White House, there are still big questions about how she would carry out her broad plan to bust companies such as Amazon, Google and Facebook. The Massachusetts senator has not yet introduced legislation on the subject. And as we’ve seen with the Trump administration’s challenges to the AT&T-Time Warner merger, trying to break up big companies would likely result in tough court battles.
The E.U. is arguably the toughest global regulato on tech issues, doling out record-setting fines in antitrust cases against companies such as Google. And its competition chief is hard at work to make sure the E.U. is prepared to address fresh antitrust concerns, scrutinizing issues like data collection.
During her visit to the South by Southwest festival, Margrethe Vestager, the E.U.’s competition commissioner, said by the beginning of April, her special advisers should also publish a report recommending how to modernize the E.U. playbook in the era of Amazon, Facebook and artificial intelligence.
Vestager’s term is set to end this fall, but if she becomes competition commissioner again, she said the E.U. may need new laws to deal with new digital trends.
Vestager is worried that big tech companies with broad control and access to data will have unfair competitive advantag
es. She’s also concerned about the nature of technology platforms like Amazon that act as both a host to other sellers and a retailer competing with those sellers.
In an interview, Vestager acknowledged her work could influence other regulators around the world. Right now, U.S. regulators are grappling with some of the same questions, and the Federal Trade Commission is hosting a series of hearings on how it needs to adapt to 21st-century competition issues.
“Inspiration — I think sometimes that travels much, much faster and much, much further than having one global regulator,” Vestager said.
In its complaint with Vestager’s commission against Apple, Spotfiy accuses the phone-maker of abusing its influence over its App Store and unfairly “taxing” apps such as Spotify that compete with the phone-maker’s own streaming service.
“Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience — essentially acting as both a player and referee to deliberately disadvantage other app developers,” Spotify chief executive Daniel Ek said in a statement on the company’s website.
In filing this case with the European Commission, Ek is effectively bringing a U.S. debate to Europe in a decision that could have broad global implications. Last weekend, Warren told The Technology 202 that Apple should not be permitted to play both roles and should be on the list of companies broken up.
BITS, NIBBLES AND BYTES
BITS: Federal prosecutors are conducting a criminal investigation into Facebook’s data-sharing deals with other large technology companies, according to the New York Times’s Michael LaForgia, Matthew Rosenberg and Gabriel J.X. Dance. A grand jury in New York has subpoenaed records from at least two smartphone makers that had partnerships with Facebook, which gave them broad access to the data of hundreds of millions of people.
“We are cooperating with investigators and take those probes seriously,” a Facebook spokesman said in a statement. “We’ve provided public testimony, answered questions and pledged that we will continue to do so.”
The phone-makers were among more than 150 companies, including Amazon, Apple and Sony, that had data-sharing deals with Facebook, first reported by the New York Times last year. Many were phased out over the last two years.
Sen. Ed Markey (D-Mass.) praised the investigation on Twitter:
I’m glad prosecutors are investigating whether Facebook broke criminal law when it broke consumers’ trust & shared users’ data without consent. I wrote to Mark Zuckerberg about these revelations in June & demanded answers because Americans have a right to control their own data. https://t.co/4NglCqqbDl
— Ed Markey (@SenMarkey) March 14, 2019
NIBBLES: Many members of the Paypal mafia became more successful after leaving the company. Now as Uber, Airbnb, Pinterest, Lyft and a host of other prominent tech startups prepare for initial public offerings, venture capitalists are bracing for a wave of new startups that these companies’ departing employees will create, reports Erin Griffith of the New York Times.
“It’s part of Silicon Valley’s often-incestuous circle of life,” Griffith writes. “The start-up world projects a meritocratic image, but in reality, it is a small, tightknit club where success typically hinges on whom you know. In this model, employees of tech start-ups frequently leave the companies once they have been enriched by their firms’ initial public offerings. Then networks of alumni from these companies — called mafias — support their peers’ new businesses with hiring, advice and money.”
As the New York Times writes about the new mafias, it also resurfaced an incredible photo of the PayPal folks. Here’s a #TBT:
From Johana Bhuiyan at the Los Angeles Times:
Tag yourselves. I’m Reid Hoffman’s gold chain. pic.twitter.com/B7C4sbvukv
— Johana Bhuiyan (@JMBooyah) March 13, 2019
BYTES: Facebook, Instagram and Whatsapp were down for millions of users on Wednesday and into Thursday, reports the Wall Street Journal’s Georgia Wells. One Facebook status page for developers listed the outage as lasting 11 hours, one of the longest in the company’s history.
It’s rare for mature companies like Facebook to experience outages of this size and scope for so long.
“The outage could force Facebook to issue refunds to advertisers—many of which use its platforms as a core means of reaching consumers—and further damage a brand already dented by scandals surrounding privacy and data protection,” Wells reported.
The company responded to the outage on its rival service Twitter:
We’re aware that some people are currently having trouble accessing the Facebook family of apps. We’re working to resolve the issue as soon as possible.
— Facebook (@facebook) March 13, 2019
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RANT AND RAVE
As Facebook, Instagram and Whatsapp experienced outages on Wednesday, people turned to Twitter — one of the only major social networks the company doesn’t own — to talk about it with the hashtag #FacebookDown.
Some called for a return of MySpace:
Facebook AND Instagram are down…
— Troy Osinoff (@yo) March 13, 2019
Others made jokes about a flood of new users to Twitter:
— Semajj the Muse (@SemajjTheMuse) March 14, 2019
Reddit Founder Alexis Ohanian retweeted a reminder to take a walk:
Rep. Alexandria Ocasio-Cortez (D-N.Y.) said the outage might get in the way of her plans to broadcast her search for a chair:
Is Instagram still down? Bc after 2 months almost furnitureless in DC I am trying to take you all on the riveting adventure of getting: a chair 😆
(Also, if you had to start a new apt from scratch, what would be the first 5 pieces of furniture/items you would get? Asking for me)
— Alexandria Ocasio-Cortez (@AOC) March 14, 2019
— Tech news generating buzz around the Web: