Marcio Jose Sanchez/AP Photo
The Federal Trade Commission announced a $5 billion settlement with Facebook, which represents about a month of revenue for the company.
With public attention directed to the Mueller hearings, the nation's antitrust authorities have quietly declared their continued abandonment of the American public this week, allowing giant corporations to accrue power and dodge responsibility for significant and serious harm. These actions make the allegedly tough announcement on Tuesday of an antitrust inquiry into the dominant tech platforms ring hollow; results matter, not sharp words. And on the results, the Trump antitrust apparatus has continued a 40-year legacy of failure.
First, the Federal Trade Commission (FTC) announced a $5 billion settlement with Facebook, for violations of a 2011 consent decree on privacy standards. Or at least that’s the theory: Facebook did not have to admit guilt in the matter, and none of their executives, up to and including CEO Mark Zuckerberg, have to face any personal sanction. Zuckerberg was not even brought in to the FTC for an interview.
The $5 billion price tag represents about a month of revenue for Facebook, and it releases the company from liability far beyond the Cambridge Analytica scandal, where up to 87 million users had their data stolen by the third-party analyst. The order covers Facebook using phone numbers given for security reasons in advertising, applying facial recognition technology without an opt-out setting, ignoring third-party app privacy violations, harvesting of email passwords for other services, storing passwords without encryption, and several other actions. It’s almost a blanket immunity grant for Facebook’s privacy practices. And it resolves all potential violations of the consent order up to June 12, 2019, an unknown number of them unspecified.
While Facebook has to certify compliance with safeguarding of consumer privacy, the settlement makes no structural changes to the company's business model of targeted advertising, without which there would be no violations. Neither Democrat on the FTC voted for this abomination, and commissioner Rohit Chopra's dissent explains why adequately. “The order allows Facebook to decide for itself how much information it can harvest from users and what it can do with that information, as long as it creates a paper trail,” Chopra writes. “These illegal data practices were tools to lock in and advance the company’s digital advertising dominance. … Global regulators and policymakers need to confront the dangers associated with mass surveillance and the resulting ability to control and influence us.”
That wasn't the only corporate giveaway from federal regulators today. The Justice Department let slip that it would approve the Sprint/T-Mobile merger, dropping the number of major national cell phone service providers from four to three. The order includes a divestment of some assets to Dish Network so that it can build its own cellular network. But this makes no sense on several levels.
Sprint's argument was that it would wither without the support of T-Mobile; why would Dish, starting from scratch save for a paltry nine million prepaid customers, be expected to do any better? If Sprint was too small to effectively compete, why would creating a smaller fourth carrier with no retail stores improve the situation? Dish already has possession of lots of wireless spectrum, yet never built out its own cellular network; that it would do so now seems unlikely. It would make more business sense for Dish to hold out and sell off spectrum to the highest bidder down the road, shrinking customer choice for cell phones.
Only if Dish decides to leverage its satellite TV subscribers into bundling a cell phone package would competition be preserved, but at the cost of consolidating the telecom space and putting consumers at the whim of a single company for all of its communications.
It's almost unconscionable that this consolidation would be waved through, just a few years after the Justice Department, under Obama, rejected AT&T's purchase of T-Mobile. The hoop-jumping to preserve competition could have been accomplished to better effect by simply rejecting the merger and letting Sprint sell its business on its own. Fortunately, 14 state attorneys general have sued to block the deal, an example of the ability for states to pick up the slack when the federal government walks away from corporate consolidation. That trial starts in October.
These failures are the lens through which to consider Tuesday's Justice Department commencement of a review of the practices of digital platforms’ market power, and whether they “are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.” The antitrust division has simply given no reason to believe that this review will be in any way useful.
Some dupes in the media continue to fall for Donald Trump’s rhetoric and meaningless announcements like the DOJ’s, against all evidence. Matthew Buck and Sandeep Vaheesan dealt with the yawning gap between Trump’s words and the actions of his administration in March in The New York Times. In theory, Donald Trump is concerned about the tech giants' power, and accuses them of bias; in practice, Big Tech in the Trump era has enjoyed huge corporate tax windfalls and the benefits of antitrust enforcers intervening on their behalf in a series of cases. In its first few years, the Trump Justice Department has sided with Apple, Comcast, Uber, and Lyft.
Even if we're just going by Trump's statements, his press conference rant last week about the squad castigated Representative Alexandria Ocasio-Cortez (D-NY) for “keeping Amazon out of New York,” referring to the company's walking away from an alternate headquarters in Long Island City in exchange for billions of dollars in subsidies. “Would have been a great thing … tens of thousands of jobs, and New York has not been the same since that happened.” Putting aside this being not true—Long Island City is thriving without Amazon—Trump showed that his rhetoric veers wildly from moment to moment, and therefore means essentially nothing. In all things Trump, watch what he does, not what he tweets. And with Amazon hiring a prominent Trump bundler as a lobbyist, the gulf between actions and words will likely only widen.
Until the antitrust authorities prove that they aren't in the pocket of large corporations, we have to simply assume they are. There is real scrutiny being brought upon the Big Tech firms, but it's coming from House Democrats in Congress. There is real scrutiny being brought upon Big Telecom, but it’s coming from Democratic state attorneys general. The Justice Department and the FTC have been almost entirely useless. Until they prove otherwise, don’t mistake saber rattling for actual use of the saber.
