Privacy protections may form the basis of antitrust actions against internet giants
By using a web service, you implicitly accept the company's terms of service -- which you almost certainly never bothered to read. The agreement gives the services nearly unfettered rights to collect and use your private information. The value of that personal data is evident by the tremendous profits and revenue recorded by Google and Facebook, which dominate the online advertising industry.
The German antitrust agency Bundeskartellamt is currently investigating whether Facebook "abused its dominance as a social network by forcing customers to agree to unfair terms," according to Wired's Nitasha Tiku in a June 4, 2017, article. Since the goal of all antitrust laws is to ensure competitive markets, the German government is acknowledging that privacy is a "market" that must be regulated. That is a milestone.
The April 5, 2017, Weekly explained how the focus of antitrust regulation shifted in the Reagan era from preventing the centralization of power to promoting "consumer welfare." The new "Chicago school" approach allowed consolidation in markets so long as the end result was good for consumers -- primarily whether prices didn't go up. As the Economist reported in an April 12, 2017, article, a new consensus is forming that competition is weakening in all markets: "The pendulum has swung heavily in favour of incumbent businesses," it states.
A 2016 analysis by the Economist found that half of the "abnormally high profits" of those dominant incumbent businesses are in the tech sector. Alphabet (Google's parent), Amazon, Apple, Facebook, and Microsoft stifle competition by acquiring potential rivals, often shutting them down. Meanwhile, "[t]he data they gather can lock customers into their products."
The Economist points out that "popular anger" about the unfair business practices of monopolies in the 1890s were the impetus for the reforms of the early 20th century. The newspaper concludes that "America must rediscover the virtues of competition." That is especially true when it comes to what the Economist calls "the world's most valuable resource": data.
Dangers of 'digital cartels' slowly coming into focus
Wired's Tiku cites two trends that are changing the way people look at the lack of competition in tech industries: The number of new companies is at a 40-year low, according to recent U.S. Census data; and some U.S. companies' profits are "abnormally high" when compared to GDP. The challenge for antitrust regulators is to see data as the new currency, particularly when dealing with companies who claim to offer "free" services.
As with so many other important matters these days, Europe has taken the lead in reining in out-of-control tech companies. In addition to Germany's investigations of Facebook for antitrust violations, the European Union is in the midst of an antitrust case against Amazon over ebook contracts with publishers, and Facebook was fined $122 million by the EU for "misleading privacy statements" relating to the company's acquisition of the WhatsApp messaging system.
One possible reason for the U.S. government's reluctance to investigate unfair business practices by tech companies is the belief that any kind of regulation would slow the pace of tech innovation, which continues to drive the entire economy. Lina Khan, a researcher at the New America think tank, calls this viewpoint "misguided" because the dominant platforms are "so entrenched and have been for awhile."
Amazon, Apple, Google, Microsoft, and Facebook are no longer players in the marketplace -- they are the marketplace. Nearly all new companies rely on them for their success. Tiku quotes Silicon Valley attorney Gary Reback as saying the size and breadth of these companies "not only enabled them to squelch competition, it has enabled them to control markets." Reback adds that while there's nothing new about companies collecting data about their customers, "[t]hat data was never used to profile you in terms of how you'd vote in an election."
An "idealogical shift" is underway, according to Tiku, that alters consumers' perception of the five Tech Titans from benevolent forces to malevolent "industrial machine[s]" that suffocate "the very entrepreneurs who look up to their hero, Zuck." The comparisons to Standard Oil's John D. Rockefeller are just too obvious.
Flash: Rich are even richer than we thought: When economists got a good look at the data leaked from global bank HSBC's Swiss operations, and from the Panama Papers lawfirm Mossack Fonseca, they determined that the ultrarich are actually ultraricher than stiffed tax collectors could've guessed. BuzzFeed's Matthew Zeitlin reports in a June 2, 2017, article that rich people all over the world are stashing more loot than ever in untraceable accounts to avoid taxes, among other reasons.
For example, the researchers state that the overall rate of personal tax evasion in Scandinavia is 3 percent, but for the wealthiest .01 percent of the region's population, the tax-evasion rate is 30 percent. Another finding of the researchers is that the more money you're hiding from the tax collectors in overseas accounts, the less likely you are to get caught.
Busting the myth of 45's 'working class' supporters: On a related note, those pundits who credited "working-class whites" for swinging the 2016 Presidential election are flat-out wrong. In a June 5, 2017, article, AlterNet's Celisa Calacal cites a Washington Post study indicating middle- and upper-income voters as 45's base. Also, an American National Election Study found that only 35 percent of 45's supporters have annual household incomes under $50,000. Have no doubt: This guy's base is the wealthy, and they're all laughing, all the way to the bank.
Phone apps behaving badly: Think of all the stuff you do on your phone or tablet. Now think of a record of all that stuff being collected and shared with the highest bidder -- probably without your knowledge or informed consent. Researchers Narseo Vallina-Rodriguez and Srikanth Sundaresan report in a May 29, 2017, article on the Conversation that more than 70 percent of smartphone apps sell the data they collect about their customers to third-party ad trackers (pdf).
While much of the data collected by the apps is required for them to function, the apps are frequently built using pre-coded components found in popular third-party libraries. The authors of these libraries collect the data reported from the apps that incorporate their code. This private data crosses national boundaries, so it loses any protections that applied in the users' home countries. The researchers are even more disturbed by the prevalence of trackers in the apps that target children. They point out that such tracking potentially violates the Federal Trade Commission's regulations for protecting children's privacy.
Speaking of protecting children's privacy...: Last Weekly included information on keeping children safe from the prying eyes of online trackers. The Education Privacy Resource Center recently announced the FERPA/Sherpa, which is named after the Family Educational Rights and Privacy Act of 1974. The FERPA/Sherpa's resources search page makes it easy to search by type of user, type of resource, and topic. Among the resources provided are infographics, case studies, videos, surveys, and reports.
Quick preview of an upcoming Weekly topic: The Supreme Court will review Carpenter v. United States, which turned on the use of location data from a person's cell phone to track them. As the Electronic Frontier Foundation's Andrew Crocker and Jennifer Lynch write in a June 5, 2017, article, the court's decision is expected to answer whether Fourth Amendment search protections apply to "sensitive digital data."
Also expected is a reevaluation by the Supreme Court of the Third Party Doctrine that the government uses "to justify warrantless tracking and surveillance in a variety of contexts," according to the EFF. The Third Party Doctrine states that when you agree to share your data with one party, you've also agreed to share it with third parties. So if you share your bank account number with your bank, or you share your phone number with your carrier, you can't expect the third party to keep the information secret. You have no expectation of privacy and the Fourth Amendment protections don't apply to the data.
As with so many legal principals, the Third Party Doctrine is an anachronism in the age of constant, ubiquitous data sharing, according to the EFF and others.
Save the planet by trading your beef for beans: One simple dietary switch could by itself allow the U.S. to reach its goal of a 75 percent reduction in greenhouse gas emissions by 2020. All we have to do is substitute the beef in our diets with beans. That's according to the results of a study conducted by researchers at Loma Linda University and reported by AlterNet's Susan Levin in a June 6, 2017, article.
According to Levin, only 1 percent of the calories consumed by cattle translates into human-edible calories. Researchers claim that it takes 660 gallons of water to cook a single hamburger, while growing the same amount of protein in lima beans requires one-tenth the amount of water. Beans are cheaper and healthier than beef, and beans are a great source of fiber, which is "an important nutrient 97 percent of Americans fall short on," according to Levin.
Yep, the future is bright for beans.