Congress is starting to understand how Silicon Valley works

In the runup to yesterday’s landmark antitrust hearing featuring the leaders of Google, Apple, Facebook and Amazon, Dipayan Ghosh wanted to see what “unifying theory” Congress would develop about how these companies work.

He has his own theory. Ghosh worked on privacy issues at Facebook and tech policy at the Obama White House and is now co-director of the Digital Platforms & Democracy project at Harvard. He has been making the argument that tech companies are fundamentally different from the monopolies that antitrust laws have tried to contain in the past. Current regulators have not been equipped to keep the Big Four accountable or conceptualize their market power accurately. Like some others, he believes this requires a new framework for thinking about them.

This includes the idea that data and attention are the “new digital currency” — not just dollars. What we ‘spend’ on free services like Gmail and Instagram is our time and personal information, which data-driven firms commoditize as ad revenue. And the ‘rates’ we’re being charged — the endless infringements on our privacy — are rising.

At yesterday’s five-and-a-half hour subcommittee hearing, there was partisan questioning on alleged bias towards conservatives, chatter about competing with China and occasional discussion of anti-competitive behavior.

But Ghosh felt enough lawmakers had begun to grasp the notion of a new digital economy. "I think what is clear is that Congress does have some understanding of the business models that are at play here," Ghosh told Engadget. "Congress understands very well that these companies have tremendous power over important markets and they're not hesitating to use that market power in ways that shut down competition."

For decades, courts and regulators have examined price as the key factor for whether a consumer is being exploited, and therefore whether companies are anti-competitive. But consumers can still be harmed even if a tech service is free, should data collection or harmful algorithms run unfettered.

A company like Facebook may not just monopolize social media as a market, nor Amazon control e-commerce — they both have power to monopolize our personal information, too. With advances in data gathering and storage, tech companies now compete on who has the most data.

While not all of these issues were addressed directly, pointed questions from Congress members indicated how they were thinking ahead of the final report, said Ghosh. The results of this 13-month investigation could be released as early as August. (Despite over 20 instances of “I’ll get back to you,” recall 2018’s hearings involving Facebook and Google where certain members of Congress clearly needed technical support before they could hope to interrogate titans of tech.)

For instance, lawmakers hammered the way these companies squeeze smaller rivals — through acquisitions or by controlling the platform they need to survive. Representative Joe Neguse of Colorado said he was concerned about the resultant “innovation kill-zone”; Representative Pramila Jayapal of Washington questioned Amazon’s use of third party seller data to inform its own products, which CEO Jeff Bezos could not wholly deny.

Together with Representative Val Demings of Florida calling out the apparent degradation of user privacy standards at Google when they reneged on a pledge not to combine DoubleClick’s data with its own after an acquisition, the understanding that data is power took shape.

But it was the chair of the subcommittee, Representative David Cicilline of Rhode Island, who was most blunt. Big Tech can “extract valuable data from the people and businesses that rely on them,” he said in his opening statement. “When everyday Americans learn how much of their data is being mined, they can’t run away fast enough. But in many cases, there is no escape from this surveillance because there is no alternative. People are stuck with bad options.”

Later, Cicilline cited a Breitbart video from Monday with false information about COVID-19 that garnered 20 million views before Facebook took it down. "Doesn’t that suggest, Mr. Zuckerberg, that your platform is so big that even with the right policies in place you can’t contain deadly content?" he said to the Facebook CEO. Zuckerberg denied the claim.

Cicilline connected this with his characterization of Facebook and Google’s business models: that they’re designed to maximize engagement even if it’s detrimental to society. On misinformation, he said: “Frankly, I believe it strikes at the very heart of American democracy.” Antitrust law needs to be updated, Cicilline said in closing. And of the companies being questioned: “This hearing has made one fact clear to me: These companies as exist today have monopoly power. Some need to be broken up, all need to be properly regulated and held accountable.”

The hearing implied that the committee is considering new legislation more than an antitrust inquiry, said Ghosh. The issues Cicilline raised went beyond harm to small businesses, and struck at the political and societal consequences of leaving Big Tech unchecked — disinformation, hate speech, algorithmic discrimination — which current antitrust regulation doesn’t cover.

“We need a swift, thorough, comprehensive regulatory reform to address the digital sector because it's wholly different from any other industry — now or of the past,” Ghosh said.

The dominance these companies have extends to a “monopolization of our intellectual power,” he added — a control over our ability to communicate. “When all the speech in a democratic country is moving through one company, that one company tends to have tremendous power. And I think it goes without saying we need to think about how to curb that power through earnest regulatory reform."