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The opening panel of the Stigler Center’s annual antitrust conference discussed the source of digital platforms’ power and what, if anything, can be done to address the numerous challenges their ability to shape opinions and outcomes present. 

Google CEO Sundar Pichai caused a worldwide sensation earlier this week when he unveiled Duplex, an AI-driven digital assistant able to mimic human speech patterns (complete with vocal tics) to such a convincing degree that it managed to have real conversations with ordinary people without them realizing they were actually talking to a robot.   While Google presented Duplex as an exciting technological breakthrough, others saw something else: a system able to deceive people into believing they were talking to a human being, an ethical red flag (and a surefire way to get to robocall hell). Following the backlash, Google announced on Thursday that the new service will be designed “with disclosure built-in.” Nevertheless, the episode created the impression that ethical concerns were an “after-the-fact consideration” for Google, despite the fierce public scrutiny it and other tech giants faced over the past two months. “Silicon Valley is ethically lost, rudderless and has not learned a thing,” tweeted Zeynep Tufekci, a professor at the University of North Carolina at Chapel Hill and a prominent critic of tech firms.   The controversial demonstration was not the only sign that the global outrage has yet to inspire the profound rethinking critics hoped it would bring to Silicon Valley firms. In Pichai’s speech at Google’s annual I/O developer conference, the ethical concerns regarding the company’s data mining, business model, and political influence were briefly addressed with a general, laconic statement: “The path ahead needs to be navigated carefully and deliberately and we feel a deep sense of responsibility to get this right.”

Google’s fellow FAANGs also seem eager to put the “techlash” of the past two years behind them. Facebook, its shares now fully recovered from the Cambridge Analytica scandal, is already charging full-steam ahead into new areas like dating and blockchain.   But the techlash likely isn’t going away soon. The rise of digital platforms has had profound political, economic, and social effects, many of which are only now becoming apparent, and their sheer size and power makes it virtually impossible to exist on the Internet without using their services. As Stratechery’s Ben Thompson noted in the opening panel of the Stigler Center’s annual antitrust conference last month, Google and Facebook—already dominating search and social media and enjoying a duopoly in digital advertising—own many of the world’s top mobile apps. Amazon has more than 100 million Prime members, for whom it is usually the first and last stop for shopping online.   Many of the mechanisms that allowed for this growth are opaque and rooted in manipulation. What are those mechanisms, and how should policymakers and antitrust enforcers address them? These questions, and others, were the focus of the Stigler Center panel, which was moderated by the Economist’s New York bureau chief, Patrick Foulis.

One of the few positive things in the ill-named USA FREEDOM Act, enacted in 2015 after the Snowden revelations on NSA domestic spying, is that it required the Director of National Intelligence to regularly report on its domestic surveillance activities. On Friday, the latest report was released on just how much our own government is spying on us. The news is not good at all if you value freedom over tyranny.According to the annual report, named the Statistical Transparency Report Regarding Use of National Security Authorities, the US government intercepted and stored information from more than a half-billion of our telephone calls and text messages in 2017. That is a 300 percent increase from 2016. All of these intercepts were “legal” under the Foreign Intelligence Surveillance Act (FISA), which is ironic because FISA was enacted to curtail the Nixon-era abuse of surveillance on American citizens.Has the US government intercepted your phone calls and/or text messages? You don’t know, which is why the surveillance state is so evil. Instead of assuming your privacy is protected by the US Constitution, you must assume that the US government is listening in to your communications. The difference between these is the difference between freedom and tyranny. The ultimate triumph of totalitarian states was not to punish citizens for opposing its tyranny, but to successfully cause them to censor themselves before even expressing “subversive” thoughts.

The Supreme Court on Friday handed down what is arguably the most consequential privacy decision of the digital age, ruling that police need a warrant before they can seize people’s sensitive location information stored by cellphone companies. The case specifically concerns the privacy of cellphone location data, but the ruling has broad implications for government access to all manner of information collected about people and stored by the purveyors of popular technologies. In its decision, the court rejects the government’s expansive argument that people lose their privacy rights merely by using those technologies. Carpenter v. U.S., which was argued by the ACLU, involves Timothy Carpenter, who was convicted in 2013 of a string of burglaries in Detroit. To tie Carpenter to the burglaries, FBI agents obtained — without seeking a warrant — months’ worth of his location information from Carpenter’s cellphone company. They got almost 13,000 data points tracking Carpenter’s whereabouts during that period, revealing where he slept, when he attended church, and much more. Indeed, as Chief Justice John Roberts wrote in Friday’s decision, “when the Government tracks the location of a cell phone it achieves near perfect surveillance, as if it had attached an ankle monitor to the phone’s user.”.

The ACLU argued the agents had violated Carpenter’s Fourth Amendment rights when they obtained such detailed records without a warrant based on probable cause. In a decision written by Chief Justice John Roberts, the Supreme Court agreed, recognizing that the Fourth Amendment must apply to records of such unprecedented breadth and sensitivity: Mapping a cell phone’s location over the course of 127 days provides an all-encompassing record of the holder’s whereabouts. As with GPS information, the timestamped data provides an intimate window into a person’s life, revealing not only his particular movements, but through them his ‘familial, political, professional, religious, and sexual associations.’

The government’s argument that it needed no warrant for these records extends far beyond cellphone location information, to any data generated by modern technologies and held by private companies rather than in our own homes or pockets. To make their case, government lawyers relied on an outdated, 1970s-era legal doctrine that says that once someone shares information with a “third party” — in Carpenter’s case, a cellphone company — that data is no longer protected by the Fourth Amendment. The Supreme Court made abundantly clear that this doctrine has its limits and cannot serve as a carte blanche for the government seizure of any data of its choosing without judicial oversight.

National plaintiffs’ law firm Keller Lenkner LLC and global business litigation firm Quinn Emanuel Urquhart & Sullivan, LLP filed a class-action lawsuit against Facebook, Inc. alleging violations of federal antitrust laws and California law on behalf of Facebook users.ADVERTISEMENTFiled in the U.S. District Court for the Northern District of California, the complaint alleges that Facebook obtained and maintained a social network and social media monopoly by consistently deceiving consumers about the data-privacy protections it provided to users, and by exploiting the data it extracted from users to target smaller startup companies for destruction or acquisition.The lawsuit seeks to put an end to Facebook’s misrepresentations about its privacy practices and its anticompetitive acquisition conduct; to require Facebook to engage in third-party auditing of its conduct; and to require Facebook to divest assets, such as Instagram and WhatsApp, that entrench its market power.

According to the complaint, which was filed on behalf of named plaintiffs Sarah Grabert and Maximilian Klein, Facebook did not achieve its Big Tech monopoly through innovation or vigorous competition. Despite its public pledge to protect user privacy, Facebook lied to users and violated their trust in a scheme to build a technology empire. Facebook also acquired technology from smaller firms that it used to track consumer activity across the internet so that it could identify and target competitors.ADVERTISEMENTThe complaint further alleges that in a strategic, intentional ploy for market domination, Facebook engaged in its scheme to destroy all competition without a care for the ultimate harm it would inflict on consumers. By the time Facebook’s deception about its lackluster privacy protections became public knowledge, Facebook had already achieved dominance, making it difficult for any firm to challenge its social media and social network monopoly.

The complaint notes that Facebook derives enormous economic value from the data it harvests from consumers on its platform. In fact, Facebook itself has described how it generates massive earnings per user from the data it collects. The complaint details how Facebook’s destruction of competition has caused consumers substantial economic injury. Consumers who sign up for Facebook agree to give up their valuable data and attention in exchange for using Facebook’s platform. That information and attention is then sold in measurable units to advertisers in exchange for money. The complaint alleges that consumers were harmed by Facebook’s anticompetitive conduct, as they did not receive the benefit of their bargain with Facebook.The lawsuit includes claims for violations of federal antitrust laws and California common law. It also seeks an order enjoining Facebook from continuing to engage in the alleged wrongful acts, requiring Facebook to engage third-party auditors to evaluate and correct problems with Facebook’s conduct, and requiring Facebook to divest assets like Instagram and WhatsApp. The lawsuit also seeks monetary damages, restitution and/or disgorgement of Facebook’s wrongful gains, attorneys’ fees, and costs.

Facebook's thousands of employees are reportedly unable to use the company's internal iOS apps after it was caught running a data-gathering research app that violated Apple's developer policies. Apple said on Wednesday that it had revoked Facebook's certificates giving it access to a special enterprise program that companies can use to distribute internal apps and tools outside the public App Store. The move has caused internal Facebook apps to stop working, creating a chaotic situation that the company has deemed a critical problem, The Verge reported. Facebook employees reportedly can't open company apps for transportation and the lunch menu, along with beta versions of Facebook apps like Messenger and Instagram.