The Cost of Facebook's Monopoly is User Privacy
BOB GARFIELD This is Bob Garfield with a year-end bit of inconvenient truth. In 2020, 1.2 percent of our listeners donated to On the Media. So this is for the 98.8. We're not money grubbing here - that cash literally keeps this show afloat. And before the Times Square ball falls, we need you please, to bouy us. Go to OntheMedia.org and hit the donate button, or text OTM to 70101. Thank you and happy holidays.
DINA SRINIVASAN Facebook really flipped that switch in June of 2014, the same month that Google exited the social media market.
BOB GARFIELD A new antitrust lawsuit says killing competition enabled Facebook's devouring of user data. From WNYC in New York, this is On the Media, I'm Bob Garfield. What that case can't possibly address, though, is Facebook's responsibility for bodily harm. Even domestic terrorism.
CAROLE CADWALLADR Is the equivalent of the meeting house where the white supremacist met up, swapped notes and advertised for new recruits.
BOB GARFIELD Nor does antitrust protect invasions of our lives tracked everywhere, even by objects. Eventually, to be monetized.
SHOSHANA ZUBOFF It could be your dishwasher. It could be your television set, could actually be the mattress on your bed.
BOB GARFIELD Surveillance capitalism where our future behavior is the product. It's all coming up after this.
BOB GARFIELD From WNYC in New York, this is On the Media, Brooke Gladstone is out this week. I'm Bob Garfield.
It's beginning to look a lot like Sherman, Senator John Sherman, that is, who in 1890 sponsored the antitrust law that bears his name. 130 years ago, he pronounced, quote, 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 necessities of life.
VOICEOVER On February 18th, 1902, without any warning, the president ordered his Justice Department to file suit against one of the trusts in which J.P. Morgan had a major interest: The Northern Securities Company. Its goal was the monopolistic control of all of the railroads between the Great Lakes and the Pacific Ocean. [END CLIP]
BOB GARFIELD Since then, other powerful and repressive kings have been dethroned from Standard Oil to Eastman Kodak to AT&T.
NEWS REPORT AT&T stock was as good as gold. It wasn't dependent on our currency. It was gold. Now it's gone. [END CLIP]
BOB GARFIELD That was 1984, this is now. 20 years into the digital century. Big tech reigns supreme, all but unchecked by law and regulation. The so-called duopoly of Google and Facebook, valued at just under two trillion dollars between them, control 35 percent of the 600 billion dollar global advertising market, not to mention ever more of our personal human lives. This is Harvard Professor Emeritus Shoshana Zuboff in the documentary The Social Dilemma.
SHOSHANA ZUBOFF Facebook to discover that they were able to affect real world behavior and emotions without ever triggering the user's awareness. They are completely clueless. [END CLIP]
BOB GARFIELD Then in the past 10 days came a storm. First, week before last, 48 states and territories, along with the Federal Trade Commission, filed suit against Facebook. That suit alleges that Facebook bought up rivals with the explicit intention of stifling competition.
NEWS REPORT Legal filings include an email from Mark Zuckerberg in 2008 in which he allegedly said, quote, Better to buy than to compete. [END CLIP]
BOB GARFIELD And then this past week, a second thunderclap when Texases attorney general announced new antitrust charges against Google. The suit claims that Google, in a conspiracy with Facebook, abused its market power to chip away at consumer privacy protections and rigged the advertising market. But if you think the trustbusting Senator Sherman has come out from decades of hiding, that's not quite the case. For decades, antitrust doctrine has been fixated to the exclusion of everything else on harm to the consumer, as measured by out of pocket costs. Social media, mind control and the erosion of democracy do not fit into that calculation.
DINA SRINIVASAN That's sort of the traditional metric that we've used to bring antitrust cases and to really understand and measure consumer harm. It's been those price hikes that really hit consumers pockets.
BOB GARFIELD Dina Sreenevasan, author of the 2019 paper The Antitrust Case Against Facebook and a legal consultant in the Texas suit, is on the leading edge of an evolved antitrust doctrine based on harms not necessarily inflicted at the cash register, for example, invasion of privacy on a grand scale.
DINA SRINIVASAN I just found it so interesting. You know, why is it that the communications utility in the 21st century that all consumers use essentially conduct's something similar to surveillance? You sign up for Facebook and Facebook, not only monitors your communications on Facebook, but even, you know, when I go to, for example, The New York Times in the morning, Facebook is making a record of that and it is extracting from consumers the permission to basically track them across the Internet. And it didn't seem obvious to me that consumers would sign up for that proposition as something that they really liked.
BOB GARFIELD It's also a bit ironic because as I understand it, in the beginning, Facebook was favorably compared to, let's say, MySpace an early social network, where your personal profile was at least at one point public. And Facebook was theoretically an antidote to that.
DINA SRINIVASAN That's right. If you go back in history, you see how Facebook entered the market with very firm privacy promises. It got users to choose Facebook over other competitors in the market and only after it gained market power and competitors exited the market, was it finally able to extract this sort of surveillance term from consumers at large.
BOB GARFIELD And you can chart that. Facebook's growth goes up, privacy protections straight down?
DINA SRINIVASAN That's right. And the fascinating thing about the New York attorney general's suit last week is that internal communications confirmed that that's indeed how Facebook internally was considering strategic moves about decreasing users privacy. I don't remember another case that has been brought in a market where the price is zero, and the government is deciding to defend the people based on things like a lack of innovation in the market, a lack of choice. Everybody uses Facebook to stay in contact with their friends and family and then just privacy harms.
BOB GARFIELD So let's talk about that suit. New York and 47 other attorneys general along with the FTC. Now, it's not just this new doctrine authored by you and others. The case is obviously built on particular Facebook alleged anti-competitive behavior. And there are some smoking guns. What are they?
DINA SRINIVASAN The New York attorney general's suit touched upon internal communications where Facebook was wanting to decrease user privacy. But executives internally said, you know what, we have a lot of competition from Google right now, so let's hold off and let's wait for competition to exit. How did Facebook get to the point where it can monitor communications, what you read, what you research, what you buy across the web? And the thing that I track and the research is that Facebook really flipped that switch in June of 2014, was the same month that Google exited the social media market. The other thing is that the cases both from the states and from the FTC challenge at their core, Facebook's acquisitions of WhatsApp and Instagram. And if we go back in history, one of the interesting things about, for example, WhatsApp is that things were said at the time of that merger that allowed people and the public to believe that their WhatsApp communications were going to remain very private.
BOB GARFIELD And that was the whole point of WhatsApp to begin with, right? That your messages would, if I recall correctly, expire after a certain amount of time in order to protect your privacy.
DINA SRINIVASAN That's right. After Facebook acquired WhatsApp, Facebook got consumers to agree to having Facebook use WhatsApp metadata. It's not the contents of what you and I communicate about, but it's the timestamp, the fact that we talked, how long we talk for and where we were when we had that conversation. Metadata can reveal a lot about what people are talking about and the contents of those communications. For example, if I go to the San Francisco Golden Gate Bridge and I'm standing on the edge of the bridge at ten, fifty, nine p.m. and I make a call to a suicide hotline, you don't really need to know the contents of that communication. You already know exactly what's going on. I would argue that that is a degradation of privacy when it comes to, for example, WhatsApp communications.
BOB GARFIELD Now, on the subject of the acquisitions of Instagram and WhatsApp, which is very much at the heart of this case. Facebook has said now just wait one second here. We sought approval for these deals years ago and the FTC gave it. Now, it's pretty funny to have that accusation from a company that for its entire history has made promises to users and advertisers and media and government and then unilaterally reneged. But still, it is a compelling point. How do the plaintiffs justify revisiting those approvals?
DINA SRINIVASAN There's a journalist at Wired, Gilad Edelman, who I think put it best. You know, we don't have a no-backsies rule in antitrust. We don't have a situation where these agencies are precluded from going back and challenging the acquisitions, you know, based on a current and more robust understanding of how these acquisitions affected competition in the market.
BOB GARFIELD On Wednesday, Texas Attorney General Ken Paxton, he announced another suit against Google and Facebook with a video on Twitter.
KEN PAXTON Google repeatedly used its monopolistic power to control pricing, engage in market collusion to rig auctions in a tremendous violation of justice. Let me put it this way, if the free market were a baseball game, Google positioned itself as the pitcher, the batter and the umpire. [END CLIP]
BOB GARFIELD Dina you actually helped in this investigation, which alleges that Google struck an unlawful agreement with Facebook in order to stave off competition in the advertising market. Collusion, in other words. It says Facebook granted Google access to millions of Americans, end to end encrypted WhatsApp messages, photos, videos an audio files.
DINA SRINIVASAN Google and Facebook make all of their money from online advertising. And when you understand that and you understand that a company can make so much more money and online advertising, if they have access to users personal information, it shouldn't come as a surprise that that's how these companies operate.
BOB GARFIELD Not the typical price fixing, but so-called privacy fixing.
DINA SRINIVASAN Yeah, it's a great term of art. The example I like to give here is, you know, just like two chicken farms can't get together and set the prices of chickens in the market. They also can't get together and fix the quality of anything else. You know, OK, let's only sell white chicken meat and let's not sell dark chicken meat. That sort of fits in the same bucket of prohibited behavior. And the suit sort of makes this analogy when it comes to privacy.
BOB GARFIELD Tell me if this is an oversimplification of the business model, get people in your platform and keep them there, get as much personal data from them as you possibly can, and then use that personal data or abuse it to squeeze the greatest amount of profit from every single ad transaction and along the way get an unfair advantage as a participant on both ends of those transactions.
DINA SRINIVASAN You've hit it on all fronts, exactly.
BOB GARFIELD Well, gosh, that makes the old AT&T seem like a bunch of do gooders.
DINA SRINIVASAN You see a lot of parallels between the problems we had in telecom markets and the problems that we have when it comes to Facebook and in the new social media markets. Back in the day, it used to be that you could use Facebook Messenger and I could use AOL ICQ and you could send me a message. There was sort of network interoperability between Facebook and other platforms, which is what we have with telephones today, right. You can use Sprint, I can use AT&T and they have to patch a call through. But we have all these examples when it comes to Facebook where they gain market power and then shut down interoperability. And now it's a closed platform. And so what is everybody going to do? They're going to sign up for Facebook and everybody is going to get stuck in that platform.
BOB GARFIELD So let's put these suits in context of how big a deal are they?
DINA SRINIVASAN They're a huge deal. I mean, look, these are some of the biggest market cap companies that we have in America right now. These are also our Silicon Valley darlings. They're the bastions of innovation and tech, so the I think it's a big deal. On multiple fronts, from a competition perspective, from a privacy perspective, from a civil liberties perspective.
BOB GARFIELD This is the big kahuna.
DINA SRINIVASAN This is the big kahuna!
BOB GARFIELD Dina, I want to thank you very much.
DINA SRINIVASAN Thanks for having me on. It's been my pleasure.
BOB GARFIELD Dina Srinivasan is a leading researcher in the field of antitrust and a fellow with the Thurmon Arnold project at Yale. Coming up, a very skeptical David versus a big bully of a Goliath. This is On the Media.
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