Policing Facebook Under a Biden Administration

Policing Facebook Under a Biden Administration

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The beginning of Joe Biden’s presidency is coinciding with a legal and cultural reckoning over the power of big tech. But actually ensuring that companies like Facebook and Amazon are held accountable requires something that has often been lacking in Washington: aggressive government oversight. On the latest episode of the Pivot podcast, Kara Swisher and Scott Galloway speak with Federal Trade Commissioner Rebecca Slaughter about how her agency has harnessed an understaffed and overworked government work force to rein in hugely powerful companies, and what the regulatory future holds. Below, a segment of that conversation.

Kara Swisher: Scott, we have someone who I really have a lot of regard for, and someone I know a little bit: Federal Trade Commissioner Rebecca Slaughter. Rebecca is on the Democratic side, but the FTC, even with the Republicans in charge, has a pretty good commissioner — they’ve been pretty strong, they’re just overwhelmed and under-resourced. Rebecca, welcome to Pivot.

Rebecca Slaughter: Thanks so much for having me. I’m thrilled to be here.

Swisher: Last month, the FTC initiated an antitrust lawsuit against Facebook. When you’re looking at all that’s happened right now — you live in Washington, you’re seeing what’s going on at the Capitol, it looks like a fortress — a lot of it has to do with the hate speech that goes on in these platforms. Then, of course, there are the antitrust issues. Where are we going to go from here with the Federal Trade Commission and the federal government in regard to tech companies?

Twice weekly, Scott Galloway and Kara Swisher host Pivot, a New York Magazine podcast about business, technology, and politics.

Slaughter: It’s a great question. I think we’re seeing the intersection right now of a lot of really important and really difficult issues, and there are a few things on our agenda. Obviously, we filed one big antitrust case that will proceed through the courts. We will do other investigations and file other cases as appropriate. I think we take the very big and very real questions we’ve heard about outsized monopoly power by large tech platforms really seriously. A lot of them present novel legal issues, and we have to work our way through those.

The second area is we have a lot of large tech companies under order right now with the Federal Trade Commission for different kinds of violations — privacy, for example. We need to make sure that those orders are being complied with. We need to be following up with enforcement actions where they’re not, and that needs to be a top priority.

The third thing is that with the new investigations, we need to make sure that our enforcement strategy focuses on effective deterrence. We just shouldn’t keep coming back to the same table with the same companies again, and again, and again, and that means maybe taking companies to court rather than settling on inadequate terms. It may mean partnering at other levels of government, as we did with the state AGs in the Facebook case. I think you were about to reference, Kara, the fact that we’re pretty dramatically under-resourced, and that’s true. That means that we need to be really smart about our enforcement strategy and make sure that each federal dollar we spend goes as far as it can.

Swisher: Scott will have a question there, but talk about being under-resourced, because one of the things is —  you had a commissioner that pushed through this Facebook thing, and it wasn’t as politicized as at other places. It’s more an issue of resources, correct?

Slaughter: Yeah. As you were referencing, our Republican chairman, Joe Simons, was one of the votes in favor of the Facebook case, and his motto, since he got to the agency, has been vigorous enforcement, and I think he’s taken that seriously. We don’t agree on everything, but we’ve brought a lot of cases in a lot of different areas, and that’s important. But the resource question is real and material and impacts every decision we make. One statistic I like to talk about a lot is the fact that, at the beginning of the Reagan administration, we had 50 percent more employees at the Federal Trade Commission than we do today.

Another thing to think about: Over the past ten years, the number of merger filings that we’ve gotten, mergers that we could potentially investigate, has doubled. I haven’t done the math on our latest budget round, but before this point, as the filings had doubled, our budget had increased about 10 percent. The budget is not keeping pace with the workload.

Swisher: They’re swamping you.

Slaughter: Yes. Yeah, they’re flooding the zone. I don’t think the under-resourcing is accidental. I think it’s important that we make clear that we need more money. Now, let me pause with a plug of appreciation for the outgoing last Congress that gave us two budget bumps two years in a row at a time when that wasn’t happening everywhere. That’s real and material and important, and has allowed us to basically keep treading water rather than having to cut back even further. That counts for a lot, and we are enormously, enormously grateful, but it isn’t enough to let us jump forward in enforcement the way I think we need to, to keep pace with the demands of the market.

Galloway: First off, Commissioner Slaughter, I just feel safer knowing that CEOs of media companies occasionally might get a call from someone saying “Commissioner Slaughter is on the line.” That is so badass. Seriously, that is well done.

Slaughter: Thanks. I like to take credit for it.

Galloway: We were talking about the algebra of deterrence. When Michael Milken broke the law, he was a billionaire, but basically, my understanding is his lawyer said, “You’re up against the DOJ and they have more resources than we do.” And now that’s flipped, and effectively the smart thing to do is to break the law because — I’ll point to one of your cases. You fine Facebook $5 billion, and my understanding is that this has indemnified them for any misdoings along those lines, up until that point. If someone showed up at my door and offered me an insurance policy that indemnifies me for one percent of my market cap … it strikes me that these agencies have unwittingly become a co-conspirator versus a countervailing force. Haven’t we become flaccid, anemic? Isn’t a smart thing to do to break the law?

Slaughter: Well, that was exactly my concern with the Facebook settlement.

Swisher: Which you voted against.

Slaughter: Yeah. I voted against it, and I wrote a pretty long dissent that I could have said in as few words as you just said right there, but it was basically that while $5 billion may sound like a lot of money, and it certainly sounds like a lot of money to me, the individual, it was not in this case enough to make the cost of lawbreaking not worth doing — and particularly when it comes to what you refer to as the indemnification. I think that’s something I’m really, really concerned about. I said in my dissent that I would have rather we took them to court, if that was the best deal that we could get from the company. It’s important to understand that we, as an agency, don’t have the ability to just issue a fine, even where we think that the company has violated the law. We have to either take them to court and get a judge to determine an appropriate fine, or negotiate with them what fine they’re willing to pay.

But it’s fair to stipulate in this case that few companies are willing to pay a fine that is not profitable for them. It’s important for us to think about what the actions we take are and what message that it sends, not only to the specific company, but to the market in general. I think you’re right that a lot of companies think it might be worth it to dare us to take them to court. But I will point out, in the last couple of months of 2020, we filed at least three merger challenges where we said to companies who were trying to merge: no, we think this merger is illegal and we will take you to court.

They sort of dared us to do that, and when we did, they walked away from the mergers. They said, oh, wait, we don’t think we’re going to win on the law. We don’t want to go through this process in court, and they walked away. So, our willingness to go to court and make those demands publicly, I think is an important part of our ability to be deterrent.

Swisher: Talk about the Facebook lawsuit. They have not walked away or done anything yet. What is the theory behind it?

Slaughter: We’re still pretty early in that case, and there are public complaints out there, but the general theory that it articulates, which you could read in the complaints, is that Facebook engaged in a practice of monopolization where they took the perspective that it was better to buy or bury potential competitors than to actually compete with them. Two of the acquisitions that the suits highlight are Instagram and WhatsApp, but those are not the only acquisitions.

Swisher: Right, so you’re looking at some of the small acquisitions too, correct? That’s fascinating to me — the killer acquisitions, essentially.

Slaughter: Yeah. The lawsuit talks about, basically a pattern of behavior ongoing over many years, that includes not just these big well-known acquisitions, but the general approach of the company that, rather than competing, they would rather buy competition and take it off the marketplace. That’s not what our antitrust laws want companies to do. We want companies to go out there and vigorously crush their competition by providing a better product and better services for consumers.

Swisher: Does Biden’s election change the FTC? There are five commissioners — what happens next?

Slaughter: Sure. The FTC is an independent commission, which is a sort of odd creature of government. Rather than having a single head who’s a part of the executive branch, we have five commissioners who are all presidentially appointed and Senate confirmed. By tradition, three of them come from the party of the president and two of them come from the opposition party. So, Rohit Chopra and I were the Democratic commissioners over the past several years, obviously appointed by Trump, but representing a different party. Then there were three Republican commissioners, including the chairman.

The chairman hasn’t made any announcements about his plans, but traditionally, they step down when their parties lose, in part because the incoming president can designate anyone else as the chairman. If that happens, as has happened traditionally, then there would be two Republican commissioners left and a Democratic seat to fill with either a chairman or an additional commissioner, depending on who the president wants to put in charge.

Swisher: Mr. Chopra has gone to the Consumer Financial Protection Bureau.

Slaughter: Yes, we’re very happy for my colleague, commissioner Chopra, who was nominated this morning, or his nomination was announced this morning to lead the Consumer Financial Protection Bureau, where I think he will do a terrific job, although he will be sorely missed at the FTC. When he is confirmed over there, there will be an additional vacancy on the Democratic side at the FTC. My hope is that those things happen in pretty close order so that the Democrats don’t become the minority party at the FTC, even as they have the presidency.

The timeline for that is anybody’s guess. In the Trump administration, we didn’t get the new slate of commissioners until almost 18 months into the administration, and I was part of that group. I would expect and hope that we’d move a lot faster now.

Galloway: Commissioner, a lot of the controversy has been over how we distinguish — and I don’t know if they’re real distinctions or ones that we have just made up in the abstract — but that we regulate and think of interactive platforms and traditional media companies differently, and we regulate them differently. Do you think that they should be regulated differently?

Slaughter: It’s an interesting question. I think what you’re referring to, Scott, and you tell me if you’re pointing at something different is, for example, we have lots of regulations over broadcast and newspaper ownership and things like that, and we don’t have similar regulations when it comes to edge providers who are involved in news and media dissemination. That’s what you’re referring to?

Galloway: Yeah, everything from cable companies being regulated to libel law. It just sounds like they get to play by a different set of rules.

Slaughter: Yeah. Well, I think that a lot of rules and regulations that apply today were developed before these platforms and the edge providers even existed, much less had the kind of market power that they have today.

Galloway: When they were nascent technologies. Wasn’t that the wording?

Slaughter: Yeah, if they were even nascent technologies, right? Sometimes some of the telecom laws we operate under date back to the 1930s. They go pretty far back, and it’s true that they have not been adequately updated. There is clearly a robust, I was going to say healthy, but I will start with a robust — debate in Congress about how and when and where those laws should be changed and what they should do to protect it. But my general view is yes, we should update our laws to keep pace with our markets. When the laws don’t reflect market realities, that’s a problem. It’s a problem.

Pivot is produced by Rebecca Sananes. Erica Anderson is the executive producer. 

This transcript has been edited for length and clarity. 



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