Public networks instead of social networks?

We need state-owned, interoperable, democratically governed online public networks. From the people for the people.

posted by Julia Rone

The conversation so far

The following comments on Trump being banned from Twitter/ the removal of Parler from Android and iOS stores were, somewhat aptly, inspired by two threads on Twitter itself: the first by the British-Canadian blogger Cory Doctorow and the other by Canadian scholar Blayne Haggart. The point of this post ideally is to start the conversation from where Doctorow and Haggart have left it and involve more people from our team. Ideally, nobody will be censored in the process :p

Doctorow insists that the big problem with Apple and Android removing Parler is not so much censorship – ultimately different app stores can have different rules and this should be the case – but rather the fact that there are no alternative app stores. Thus, the core of his argument is that the US needs to enforce anti-trust laws that would allow for a fair competition between a number of competitors. The same argument can be extended to breaking up social media monopolists such as Facebook and Twitter. What we need is more competition.

Haggart attacks this argument in three ways:

First, he reminds that “market regulation of the type that @doctorow wants requires perfect competition. This is unlikely to happen for a number of reasons (e.g, low consumer understanding of platform issues, tendency to natural monopoly)”. Thus, the most likely outcome becomes the establishment of “a few more corporate oligarchs”. This basically leaves the state as a key regulator – much to the disappointment of cyber-libertarians who have argued against state regulation for decades.

The problem is, and this is Haggart’s second key point, that “as a non-American, it’s beyond frustrating that this debate (like so many internet policy debates) basically amounts to Americans arguing with other Americans about how to run the world. Other countries need to assert their standing in this debate” . This point had been made years ago also in Martin Hardie’s great paper “Foreigner in a free land” in which he noticed how most debates about copyright law focused on the US. Even progressive people such as Larry Lessig built their whole argumentation on the basis of references to the US constitution. But what about all of us – the poor souls from the rest of the world who don’t live in the US?

Of course, Facebook, Twitter, Alphabet, Amazon, etc. are all US tech companies. But they do operate globally. So even if the US states interferes in regulating them, the regulation it imposes might not chime well with people in France or Germany, let’s say. The famous American prudence with nudity is the oft quoted example of different standards when it comes to content regulation. No French person would be horrified by the sight of a bare breast (at least if we believe stereotypes) so why should nude photos be removed from the French social media. If we want platform governance to be truly democratic, the people affected by it should “have a say in that decision”. But as Haggart notes “This cannot happen so long as platforms are global, or decisions about them are made only in DC”.

So what does Haggart offer? Simple: break social media giants not along market lines but along national lines. Well, maybe not that simple…

If we take the idea of breaking up monopolies along national lines seriously…

This post starts from Haggart’s proposal to break up social media along national lines, assuming it is a good proposal. In fact I do this not for rhetorical purposes or for the sake of setting a straw man but because I actually think it is a good proposal. So the following lines aim to take the proposal seriously and consider different aspects of it discussing what potential drawbacks/problems should we keep in mind.

How to do this??

The first key problem is: who on Earth, can convince companies such as Facebook/Twitter to “break along national lines”. These companies spend fortunes on lobbying the US government and they are US national champions. Why would the US support breaking them up along national lines? (As a matter of fact, the question of how is also a notable problem in Deibert’s “Reset” – his idea that hacktivism, civil disobedience, and whistleblowers’ pressure can make private monopolists exercise restraint is very much wishful thinking). There are historical precedents for nationalization of companies but they seem to have involved either a violent revolution or a massive indebtedness of these companies making it necessary for the state to step in and save them with public money. Are there any precedents for nationalizing a company and then revealing how it operates to other states in order to make these states create their respective national versions of it? Maybe. But it seems highly unlikely that anyone in the US would want to do this.

Which leaves us with the rather utopian option two: all big democratic states get together and develop interoperable social media. The project is such a success that people fed up with Facebook and Google decide to join and the undue influence of private monopolists finally comes to an end. But this utopian vision itself opens up a series of new questions.

Okay, assuming we can have state platforms operating along national lines..

Inscribing values in design is not always as straight-forward as it seems, as discussed in the fascinating conversation between Solon Barocas, Seda Gurses, Arvind Narayanan and Vincent Toubiana on decentralized personal data architectures. But, assuming that states can build and maintain (or hire someone to build and maintain) such platforms that don’t crash, are not easy to hack and are user friendly, the next question is: who is going to own the infrastructure and the data?

Who will own the infrastructure and the data?

One option would be for each individual citizen to own their data but this might be too risky and unpractical. Another option would be to treat the data as public data – the same way we treat data from surveys and national statistics. The personal data from current social media platforms is used for online advertising/ training machine learning. If states own their citizens’ data, we might go back to a stage in which the best research was done by state bodies and universities rather than what we have now – the most cutting edge research is done in private companies, often in secret from the public. Mike Savage described this process of increased privatization of research in his brilliant piece The Coming Crisis of Empirical sociology. If anything, the recent case with Google firing AI researcher Timnit Gebru reveals the need to have independent public research that is not in-house research by social media giants or funded by them. It would be naive to think such independent academics can do such research in the current situation when the bulk of interesting data to be analysed is privately owned.

How to prevent authoritarian censorship and surveillance?

Finally, if we assume that states will own their own online public networks – fulfilling the same functions such as Facebook, but without the advertising, the one million dollar question is how to prevent censorship, overreach and surveillance. As Ron Deibert discusses in “Reset”, most states are currently involved in some sort of hacking and surveillance operations of foreign but also domestic citizens. What can be done about this? Here Haggart’s argument about the need for democratic accountability reveals its true importance and relevance. State-owned online public networks would have to abide by standards that have been democratically discussed and to be accountable to the public.

But what Hagart means when discussing democratic accountability should be expanded. Democracy and satisfaction with it have been declining in many Western nations with more and more decision-making power delegated to technocratic bodies. Yet, what the protests from 2010s in the US and the EU clearly showed is that people are dissatisfied with democracy not because they want authoritarianism but because they want more democracy, that is democratic deepening. Or in the words of the Spanish Indignados protesters:

“Real democracy, now”

Thus, to bring to conclusion the utopia of state public networks, the decisions about their governance should be made not by technocratic bodies or with “democratic accountability” used as a form of window-dressing which sadly is often the case now. Instead, policy decisions should be discussed broadly through a combination of public consultations, assemblies and in already existing national and regional assemblies in order to ensure people have ownership of the policies decided. State public networks should be not only democratically accountable but also democratically governed. Such a scenario would be one of what I call “democratic digital sovereignty” that goes beyond the arbitrariness of decisions by private CEOs but also escapes the pitfalls of state censorship and authoritarianism.

To sum up: we need state-owned interoperable online public networks. Citizen data gathered from the use of these media would be owned by the state and would be available for public academic research (which would be open access in order to encourage both transparency and innovation). The moderation policies of these public platforms would be democratically discussed and decided. In short, these will be platforms of the people and for the people. Nothing more, nothing less.

Is the UK really going to innovate in regulation of Big Tech?

On Tuesday last week the UK Competition and Markets Authority (CMA) outlined plans for an innovative way of regulating powerful tech firms in a way that overcomes the procedural treacle-wading implicit in competition law that had been designed for an analogue era.

The proposals emerged from an urgent investigation by the Digital Markets Taskforce, an ad-hoc body set up in March and led by the CMA with inputs from the Information Commissioner’s Office and OFCOM, the telecommunications and media regulator. The Taskforce was charged with providing advice to the government on the design and implementation of a pro-competition regime for digital markets. It was set up following the publication of the Treasury’s Furman Review on ‘Unlocking digital competition’ which reported in March 2019 and drew on evidence from the CMA’s previous market study into online platforms and digital advertising.

This is an intriguing development in many ways. First of all it seems genuinely innovative. Hitherto, competition laws have been framed to cover market domination or monopolistic abuse without mentioning any particular company, but the new UK approach for tech companies could set specific rules for named companies — Facebook and Google, say. More importantly, the approach bypasses the sterile arguments we have had for years about whether antique conceptions of ‘monopoly’ actually apply to firms which adroitly argue that they don’t meet the definition — while at the same time patently functioning as monopolies. Witness the disputes about whether Amazon really is a monopoly in retailing.

Rather than being lured down that particular rabbit-hole, the CMA proposes instead to focus attention on firms with what it calls ‘Strategic Market Status’ (SMS), i.e. firms with dominant presences in digital markets where there’s not much actual competition. That is to say, markets where difficulty of entry or expansion by potential rivals is effectively undermined by factors like network effects, economies of scale, consumer passivity (i.e. learned helplessness), the power of default settings, unequal (and possibly illegal) access to user data, lack of transparency, vertical integration and conflicts of interest.

At the heart of the new proposals is the establishment of a powerful, statutory Digital Markets Unit (DMU) located within the Competition and Markets Authority. This would have the power to impose legally-enforceable Codes of Conduct on SMS firms. The codes would, according to the proposals, be based on relatively high-level principles like ‘fair trading’, ‘open choices’ and ‘trust and transparency’ — all of which are novel ideas for tech firms. Possible remedies for specific companies (think Facebook and Google) could include mandated data access and interoperability to address Facebook’s dominance in social media or Google’s market power in general search.

It would be odd if, in due course, Amazon, Apple and Microsoft don’t also fall into the SMS category of “strategic”. Indeed it’s inconceivable that Amazon would not, given that it has morphed into critical infrastructure for many locked-down economies.

The government says that it going to consult on these radical proposals early next year and will then legislate to put the DMU on a statutory basis “when Parliamentary time allows”.

Accordingly, we can now look forward to a period of intensive corporate lobbying from Facebook & Co as they seek to derail or emasculate the proposals. Given recent history and the behaviour of which these outfits are capable, it would be prudent for journalists and civil society organisations to keep their guard up until this stuff is on the statute book.

The day after the CMA proposals were published (and after a prolonged legal battle) the Bureau of Investigative Journalists were finally able to publish the Minutes of a secret meeting that Matt Hancock had with the Facebook boss, Mark Zuckerberg, in May 2018. Hancock was at that time Secretary of State for DCMS, the department charged with combating digital harms. According to the Bureau’s report, he had sought “increased dialogue” with Zuckerberg, so he could “bring forward the message that he has support from Facebook at the highest level”. The meeting took place at the VivaTech conference in Paris. It was arranged “after several days of wrangling” by Matthew Gould, the former culture department civil servant that Hancock later made chief executive of NHS X. Civil servants had to give Zuckerberg “explicit assurances” that the meeting would be positive and Hancock would not simply demand that the Facebook boss attend the DCMS Select Committee inquiry into the Cambridge Analytica scandal (which he had refused to do).

The following month Hancock had a follow-up meeting with Elliot Schrage, Facebook’s top lobbyist, who afterwards wrote to the minister thanking him for setting out his thinking on “how we can work together on building a model for sensible co-regulation on online safety issues”.

Now that the UK government is intent on demonstrating its independence from foreign domination, perhaps the time has come to explain to tech companies a couple of novel ideas. Sovereign nations do regulation, not ‘co-regulation’; and companies obey the law.

……………………..

A version of this post was published in the Observer on Sunday, 13 December, 2020.

The political arguments against digital monopolies in the House Judiciary Report

Alina Utrata

         The House Judiciary Committee’s report on digital monopolies (all 449 pages) was a meticulously-researched dossier of why the Big Four tech companies—Google, Apple, Amazon and Facebook—should be considered monopolies. However, leaving the nitty-gritty details aside, it’s worth examining how the report frames the political arguments for why monopolies are bad. 

         It’s important to distinguish economic and political anti-monopoly arguments, although they are related. Economically, the report has very strong reasoning. No doubt this is in part because one of its authors is Lina Khan, the brilliant lawyer whose innovative and compelling case for why Amazon should be considered a monopoly went viral in 2017, and built the legal argument this report was based on. The authors reason that monopolies are fundamentally anti-competitive, not conducive to entrepreneurship and innovation, and inevitably lead to fewer choices for consumers and worse quality in products and services, including a lack of privacy protections. In particular, it draws on Khan’s theory that anti-competitive behavior should not just be defined merely as resulting in high consumer prices (a la Bork), but through firms’ ability to use predatory pricing and reliance on their market infrastructure to harm competitors. 

         However, as former FTC chairman Robert Pitofsky pointed out, “It is bad history, bad policy, and bad law to exclude certain political values in interpreting the antitrust laws.”[1] The report explicitly acknowledges that monopolies do not just threaten the economy, stating, “Our economy and democracy are at stake.”[2] So what, politically, does the report say is the problem?

         Firstly, the affect that these digital platforms have on journalism. The report noted that, “a free and diverse press is essential to a vibrant democracy . . . independent journalism sustains our democracy by facilitating public discourse.” In particular, it points out the death of local news, and the fact that many communities effectively no longer have a fourth estate to hold local government accountable. The report also notes the power imbalance between the platforms and news organizations—the shift to content-aggregation, and the fact that most online traffic to digital publications is meditated through the platforms, means that small tweaks in algorithms can have major consequences for newspapers’ readership. While the report frames this in terms of newspapers’ bargaining power, it stops short of articulating the fundamental political issue at stake: unaccountable, private corporations have the power to determine what content we see and don’t see online.

         The second argument is that monopoly corporations infringe on the “economic liberty” of citizens. The report, both implicitly and explicitly, references the 1890 Congressional debates on anti-trust, in which US Senator Sherman proclaimed, “If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade.”[3] This reasoning asserts that monopoly corporations exert a tyrannical power over individuals’ economic lives, directly analogous to the type of tyranny states exert over individuals’ political lives. Khan pointed out in a previous publication, in the 1890 debates, “what was at stake in keeping markets open—and keeping them free from industrial monarchs—was freedom.”[4]

         Repeatedly, the report notes that the committee had encountered a “prevalence of fear among market participants who depend on the dominant platforms.” It maintains that this was because of the economic dependence their monopoly power had created. For example, 37% of third-party sellers on Amazon—about 850,000 businesses—rely on Amazon as their sole source of income. Because of Amazon’s position as the gateway to e-commerce—Amazon controls about 65 to 70% of all U.S. online marketplace sales—it has the power to force sellers (or “internal competitors”) into arbitration. Amazon can kick sellers off the site, or lower the rankings of their products, or lengthen their shipping times—or, as happened to one third-party seller, refuse to release the products stored in Amazon warehouses, while still charging rent. Amazon forces sellers to give up their right to make a complaint in court as a condition for using its platform. Because of Amazon’s dominance, sellers cannot walk away. The report explicitly compares this marketplace power to the power of the state: 

“Because of the severe financial repercussions associated with suspension or delisting, many Amazon third-party sellers live in fear of the company. For sellers, Amazon functions as a “quasi-state,” and many “[s]ellers are more worried about a case being opened on Amazon than in actual court.” This is because Amazon’s internal dispute resolution system is characterized by uncertainty, unresponsiveness, and opaque decision-making processes.”[5]

          In this argument, monopolies are a threat to the economic liberty of individuals because they can use their dominance to subject those who depend on their markets to their own private law, as well as being able to pick “winners and losers.” The rise of this type of corporate law has been discussed before, specifically in reference to technology corporations. Frank Pasquale has predicted a shift from territorial to functional sovereignty, explaining, “in functional arenas from room-letting to transportation to commerce, persons will be increasingly subject to corporate, rather than democratic, control. For example: Who needs city housing regulators when AirBnB can use data-driven methods to effectively regulate room-letting, then house-letting, and eventually urban planning generally?”[6] Rory Van Loo wrote about the phenomenon more generally in Corporations as Courthousethe marketplace for dispute resolutions ranging from credit card companies to the Apple app store.[7]

         Finally, the report repeats Supreme Court Justice Louis Brandeis’s famous quote that, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” (Funnily enough, there is no documentation that Brandeis ever actually said that, although he certainly would have agreed with the sentiment.) It points out that “the growth in the platforms’ market power has coincided with an increase in their influence over the policymaking process.” The authors explicitly noted the corporations’ use of political lobbyists and their investments in think-tanks and non-profit advocacy groups to steer policy discussions. (Notably, Mohamed Abdalla and Moustafa Abdalla have just published a new paper entitled “The Grey Hoodie Project” about how Big Tech uses the strategies of Big Tobacco in order to influence academic research.) However, it’s not clear why monopolists’ power to influence the political process is any different from the ability of any wealthy individual or corporation. In fact, political theorist Rob Reich wrote a book Just Giving, arguing that philanthropy can subvert democratic processes. (An interesting real world example is when Facebook has donated $11 million dollars to the city of Menlo Park with the understanding that it would be used to establish and maintain a new police unit near Facebook’s headquarters.)

         A final political argument, not included in the report, comes from an unlikely source: Mark Zuckerberg (and, given his new role at Facebook, possibly former UK deputy prime minister Nick Clegg too).[8]  Zuckerberg argued during the committee hearings that breaking up companies like Facebook would allow other competitors, especially companies from China, to dominate the market in Facebook’s place. These companies, Zuckerberg claimed, don’t have the same values as the US—including democracy, competition, inclusion and free expression. Along with a dose of protectionism, the implicit argument is that it is better for private American corporations like Facebook to make decisions about who is allowed to say what online—and how to prioritize distributing that content—than it is to cede that power to authoritarian states. 

         The interesting thing is that Zuckerberg’s argument taps into a second strain of anti-monopoly political reasoning: that the state is scarier than corporations. Take the discourse around monopolies in 1950 during the debate on the Celler–Kefauver Act. As journalist Marquis Childs wrote, big corporations are “in reality collectivism—a kind of private socialism. . . [and] private socialism will sooner or later in a democracy become public socialism.”[9] In the shadow of the Cold War, the argument went that Big Firms will inevitably create a Big Government to regulate them, and Big Government will inevitably become fascism, communism, or other authoritarian forms of centralized state control. As Robert Pitofsky summed up, the argument asserts that “monopolies create economic conditions conducive to totalitarianism.”[10]  It’s the all-dominant state that citizens should be worried about, not necessarily the all-dominant corporation. (Tim Wu has written about this in the history of anti-monopoly in the US in his book, The Curse of Bigness: Antitrust in the New Gilded Age.

         To me, the most interesting thing to note is that the report did not mention the state’s reliance on these Big Tech corporations—particularly in new areas, like cloud computing. As the report documents, Amazon Web Services (AWS) dominates the cloud computing market, making up about half of global spending on cloud infrastructure services (and three times the market share of its closest competitor, Microsoft). An estimated 6,500 government agencies use AWS—including NASA and the CIA. If Target and Netflix are worried about using AWS, should the US government be worried about their dependency on Amazon Web Services? Does this type of consolidated infrastructure risk creating fragility in the system by becoming too big to fail?

         This question will continue to have relevance, especially as AWS and Microsoft’s Azure continue their battle for the Pentagon’s $10 billion cloud computing contract. Notably, US President Elect Joe Biden has appointed Mark Schwartz, an Enterprise Strategist at Amazon Web Services, to the Agency Review team for the critical and important Office of Management and Budget (along with a number of other individuals connected to Big Tech). Anti-trust and digital monopolies will certainly be a major issue for the future Biden Administration.


[1] Pitofsky, Robert. “Political Content of Antitrust.” University of Pennsylvania Law Review 127, no. 4 (January 1, 1979): 1051. 

[2] Emphasis added.

[3] 21 CONG. REC. 2459. Pitofsky, Robert. “Political Content of Antitrust.” University of Pennsylvania Law Review 127, no. 4 (January 1, 1979): 1051. 

[4] Khan, Lina. “Amazon’s Antitrust Paradox.” Yale Law Journal 126, no. 3 (January 1, 2016). https://digitalcommons.law.yale.edu/ylj/vol126/iss3/3.

[5] Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary. “Investigation of Competition in Digital Markets: Majority Staff Report and Recommendations.” US House of Representatives, October 6, 2020. Emphasis added.

[6] Pasquale, Frank. “From Territorial to Functional Sovereignty: The Case of Amazon.” Open Democracy. January 5, 2018.

[7] Loo, Rory Van. “The Corporation as Courthouse.” Yale Journal on Regulation 33 (2016): 56.

[8] Many thanks to John Naughton for pointing this out to me.

[10] Pitofsky, Robert. “Political Content of Antitrust.” University of Pennsylvania Law Review 127, no. 4 (January 1, 1979): 1051. 

 

Market definitions and tech monopolies

John Naughton

The tech analyst Ben Evans has an interesting essay on his Blog about the difficulties of defining ‘monopoly’ in the context of the industry. This is one of his hobby-horses, but he’s always provocative. For example:

One of the basic building blocks of any competition case is market definition. If you’re claiming that a company has market dominance, and that it’s abusing that dominance, what market are we talking about? Very obviously, the company being prosecuted tries to draw the definition as widely as possible – ‘we compete with the entire planet!’ – and the prosecutor tries to draw it as narrowly as possible – ‘Ferrari has a monopoly of rear-engined Italian sport cars with horse logos!’

The fun part of this is that both of these definitions are true, and so you have dig rather deeper and work out what problem you’re trying to solve to work out what definition to use, because very often, picking the definition decides the outcome of the case, before it’s even started.

These questions come up a lot in talking about Amazon. If you read the accounts and do the numbers, you can work out that it has about 40% of US ecommerce (I wrote about this here). But US ecommerce is only part of total US retail – it was about 16% in 2019 and this year, with lockdown, it’s spiked to a bit over 20%.

So, does Amazon have ~40% of ecommerce or ~10% of retail? Amazon’s lawyers would argue, entirely reasonably, that Amazon competes with Walmart, Costco, Macy’s and Safeway – that it competes with other large retailers, not just ‘online’ retailers. Indeed, many people who argue most strongly for antitrust intervention against Amazon do so because it competes with physical retail – because they worry what Amazon will do not just to Costco but to their neighbourhood stores. On that basis, Amazon’s market is ‘retail’ and its market share in the USA is between 5% and 10%. 

On the other hand, if you’re a book publisher, you don’t care what Amazon’s share of shoe sales is. Amazon has well over half of US book sales, and probably three quarters of ebook sales. So if we’re arguing about how Amazon runs its books business, it unquestionably has market dominance. You have to pull out a segment, not the whole company. Of course, this works both ways – if you’re pulling out segments, then Amazon has 1% of US grocery sales (even Walmart only has 20%), and you can’t complain about it buying Whole Foods. 

You get the picture: he’s great at asking questions. But he doesn’t have the answers. And, at the moment, does anyone?