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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.

A company by the name of LocationSmart isn't having a particularly good month. The company recently received all the wrong kind of attention when it was caught up in a privacy scandal involving the nation's wireless carriers and our biggest prison phone monopoly. Like countless other companies and governments, LocationSmart buys your wireless location data from cell carriers. It then sells access to that data via a portal that can provide real-time access to a user's location via a tailored graphical interface using just the target's phone number.

Theoretically, this functionality is sold under the pretense that the tool can be used to track things like drug offenders who have skipped out of rehab. And ideally, all the companies involved were supposed to ensure that data lookup requests were accompanied by something vaguely resembling official documentation. But a recent deep dive by the New York Times noted how the system was open to routine abuse by law enforcement, after a Missouri Sherrif used the system to routinely spy on Judges and fellow law enforcement officers without much legitimate justification (or pesky warrants): "The service can find the whereabouts of almost any cellphone in the country within seconds. It does this by going through a system typically used by marketers and other companies to get location data from major cellphone carriers, including AT&T, Sprint, T-Mobile and Verizon, documents show. Between 2014 and 2017, the sheriff, Cory Hutcheson, used the service at least 11 times, prosecutors said. His alleged targets included a judge and members of the State Highway Patrol. Mr. Hutcheson, who was dismissed last year in an unrelated matter, has pleaded not guilty in the surveillance cases." It was yet another example of the way nonexistent to lax consumer privacy laws in the States (especially for wireless carriers) routinely come back to bite us. But then things got worse.

Driven by curiousity in the wake of the Times report, a PhD student at Carnegie Mellon University by the name of Robert Xiao discovered that the "try before you buy" system used by LocationSmart to advertise the cell location tracking system contained a bug, A bug so bad that it exposed the data of roughly 200 million wireless subscribers across the United States and Canada (read: nearly everybody). As we see all too often, the researcher highlighted how the security standards in place to safeguard this data were virtually nonexistent: "Due to a very elementary bug in the website, you can just skip that consent part and go straight to the location," said Robert Xiao, a PhD student at the Human-Computer Interaction Institute at Carnegie Mellon University, in a phone call. "The implication of this is that LocationSmart never required consent in the first place," he said. "There seems to be no security oversight here."

Perhaps it goes without saying that 5G promises to be highly profitable for wireless and tech companies. Some industry analysts have predicted that 5G could generate up to $12.3 trillion in goods and services by 2035, and add 22 million jobs in the U.S. alone. This helps explain why the carriers are so eager for us to share their vision for a better tomorrow — a world in which bandwidth, speed, and growth are virtues in and of themselves. Those “key performance indicators” are then sold to the consumer in the form of efficiency, inclusion, reliability, and convenience. And while these 5G speculations suggest a world of possibility and profit, they elide lots of potential risks and alternative futures. They also, unsurprisingly, fail to ask about the wisdom of entrusting the telecom industry (which has a long history of unscrupulous, monopolistic business practices) and the tech industry (newly under fire for similar reasons) to build what is purportedly the critical infrastructure for a planned global transformation.

If one of the world’s leading smartphone makers, Huawei, turns away from Google’s Android operating system (OS), the US tech giant risks losing a huge number of users, Huawei’s CEO has warned. “[Huawei] will always be on the same line of interest, and if we don’t load Google’s system, Google will lose 700-800 million users in the future,” Ren Zhengfei said in an interview to CNBC.The Chinese telecommunications major was blacklisted last month by the Trump administration after Washington accused the company of spying for Beijing. Google, whose Android OS is used in many of Huawei’s phones, was among the American tech companies prohibited from dealing with Huawei.

Huawei said earlier that it is working on its own mobile operating system called Hongmeng and has already filed a trademark. In his interview, the CEO stressed that Hongmeng will allow the company to protect its growth if it is forced to replace Android, which Huawei does not want to do.

Hong said Apple dropped to fourth place in global smartphone sales, shipping 35.3 million iPhones in 2Q19 compared to the 36.2 million units shipped by Oppo, 58.7 million units by Huawei, and 75.1 million units by Samsung. "Apple continues to face challenges in terms of unit shipments -- a trend that is unlikely to be fixed soon," Hong said. While Apple has been marketing overpriced iPhones, Samsung, Huawei, and Oppo have been quickly building market share, taking some of it away from Apple, by offering reasonably priced smartphones.

The Ninth Circuit reversed the district court's denial of defendant's motion to suppress evidence obtained from warrantless searches of his cell phone by a Customs and Border Patrol official. Applying United States v. Cotterman, 709 F.3d 952 (9th Cir. 2013) (en banc), the panel held that manual cell phone searches may be conducted by border officials without reasonable suspicion but that forensic cell phone searches require reasonable suspicion. The panel clarified Cotterman by holding that "reasonable suspicion" in this context means that officials must reasonably suspect that the cell phone contains digital contraband. Furthermore, cell phone searches at the border, whether manual or forensic, must be limited in scope to a search for digital contraband. In this case, the panel held that the officials violated the Fourth Amendment when their warrantless searches exceeded the permissible scope of a border search. Therefore, most of the evidence from the searches of defendant's cell phone should have been suppressed. Finally, the panel held that defendant's Brady claims were unpersuasive. Because the panel vacated defendant's conviction, the panel did not reach his claim of prosecutorial misconduct.

Vowing to take on the telecom giants that have monopolized the web for private profit, Sen. Bernie Sanders on Friday unveiled a $150 billion plan to make the internet a public utility, break up and tightly regulate corporate behemoths like Verizon and AT&T, and provide high-speed broadband for everyone in the United States.

It is outrageous that across the country millions of Americans and so many of our communities do not have access to affordable high-speed internet," Sanders, a 2020 Democratic presidential candidate, said in a statement. "Access to the internet is a necessity in today's economy, and it should be available for all." Sanders vowed that, if elected president in 2020, he will ensure that every American household has affordable and high-speed internet by the end of his first term.

Sanders' plan, posted on his website, would provide $150 billion in federal funding through the Green New Deal to help states and municipalities "build publicly owned and democratically controlled, co-operative, or open access broadband networks." The proposal also calls for: Reinstating the net neutrality protections that President Donald Trump's telecom-friendly FCC repealed in 2017; Using anti-trust laws to break up internet and cable monopolies; Ensuring that all public housing in the U.S. offers free broadband; Requiring all providers to "offer a Basic Internet Plan that provides quality broadband speeds at an affordable price"; and Guaranteeing that all new broadband infrastructure is "resilient to the effects of climate change" and "capable of managing high amounts of renewable energy."

Wedbush analyst Daniel Ives called the decline of iPhone sales in China a "doomsday type" like decline. Ives said the fall was an "unprecedented" drop and was "not surprising given the essential lockdown that most of China saw" in February. Wedbush expects Chinese demand to come back online in the second half of the year. * * * We've explained that economic paralysis in China started in early February and continues to this day. Alternative data first showed us the incoming economic crash developing in early February, only to be confirmed weeks later. Twin shocks plague the Chinese economy, which is a supply shock with manufacturers operating at less than full capacity, along with a demand shock, where consumers have been confined to their homes in forced quarantine, unable to spend.  So, on Monday morning, when new data from the China Academy of Information and Communications Technology (CAICT) reveals Apple smartphone sales in China were halved in February, this really shouldn't surprise ZeroHedge readers, considering they've been well informed about what would happen next. 

And it wasn't just Apple with plunging activity, all mobile phone brands operating in China saw shipments halved over the month.  CAICT said 6.34 million devices were shipped last month, down 54.7% from 14 million in the same month the previous year. This was the lowest level of February shipments since 2012, when the CAICT data first became available.  Android brands, including Huawei and Xiaomi, accounted for most of the drop, collectively saw shipments at 5.85 million units for the month, compared to 12.72 million units last year. Apple shipped 494,000 last month, down from 1.27 million in February 2019.

The UK government is secretly planning to force technology companies to build backdoors into their products, to enable intelligence agencies to read people’s private messages. A draft document leaked by the Open Rights Group details extreme new surveillance proposals, which would enable government agencies to spy on one in 10,000 citizens – around 6,500 people – at any one time.  The document, which follows the controversial Investigatory Powers Act, reveals government plans to force mobile operators and internet service providers to provide real-time communications of customers to the government “in an intelligible form”, and within one working day.

This would effectively ban encryption, an important security measure used by a wide range of companies, including WhatsApp and major banks, to keep people’s private data private and to protect them from hackers and cyber criminals. 

Google ultimately caved to Russia’s Federal Antimonopoly Service, agreeing to pay $7.8 million (438 million rubles) for violating antitrust laws. The corporate Colossus will also pay two other fines totaling an additional $18,000 (1 million rubles) for failing to comply with past orders issued by state regulators. Last year Google caved to similar demands by the European Union.

In August 2016 Russia’s Federal Antimonopoly Service responded to a complaint by Russian search engine operator Yandex and fined the U.S.-based Google 438 million rubles for abusing its dominant market position to force manufacturers to make Google applications the default services on devices using Android. Regulators set the fine at 9 percent of Google’s reported profits on the Russian market in 2014, plus inflation. Similar to the case against the European Union Google challenged the penalty in several appellate courts before finally agreeing this week to meet the government’s demands. The corporation also agreed to stop requiring manufacturers to install Google services as the default applications on Android-powered devices. The agreement is valid for six years and nine months, Russia’s Antimonopoly Service reported. Last year Google, after a protracted battle, caved to similar antitrust regulations by the European Union, but the internet giant has also come under fire elsewhere. In 2015 Australian treasurer Joe Hockey implied Google in his list of corporate tax thieves. In January 2016 British lawmakers decided to fry Google over tax evasion. Google and taxes were compared to the Bermuda Triangle. One year ago the dispute between the European Union’s competition watchdog and Google, culminated in the European Commission formally charging Google with abusing the dominant position of its Android mobile phone operating system, having launched an investigation in April 2015.

India is the world’s largest democracy and is home to 13.5 percent of the world’s internet users. So the Indian Supreme Court’s August ruling that privacy is a fundamental, constitutional right for all of the country’s 1.32 billion citizens was momentous. But now, close to three months later, it’s still unclear exactly how the decision will be implemented. Will it change everything for internet users? Or will the status quo remain? The most immediate consequence of the ruling is that tech companies such as Facebook, Twitter, Google, and Alibaba will be required to rein in their collection, utilization, and sharing of Indian user data. But the changes could go well beyond technology. If implemented properly, the decision could affect national politics, business, free speech, and society. It could encourage the country to continue to make large strides toward increased corporate and governmental transparency, stronger consumer confidence, and the establishment and growth of the Indian “individual” as opposed to the Indian collective identity. But that’s a pretty big if. Advertisement The privacy debate in India was in many ways sparked by a controversy that has shaken up the landscape of national politics for several months. It began in 2016 as a debate around a social security program that requires participating citizens to obtain biometric, or Aadhaar, cards. Each card has a unique 12-digit number and records an individual’s fingerprints and irises in order to confirm his or her identity. The program was devised to increase the ease with which citizens could receive social benefits and avoid instances of fraud. Over time, Aadhaar cards have become mandatory for integral tasks such as opening bank accounts, buying and selling property, and filing tax returns, much to the chagrin of citizens who are uncomfortable about handing over their personal data. Before the ruling, India had weak privacy protections in place, enabling unchecked data collection on citizens by private companies and the government. Over the past year, a number of large-scale data leaks and breaches that have impacted major Indian corporations, as well as the Aadhaar program itself, have prompted users to start asking questions about the security and uses of their personal data.

n order to bolster the ruling the government will also be introducing a set of data protection laws that are to be developed by a committee led by retired Supreme Court judge B.N. Srikrishna. The committee will study the data protection landscape, develop a draft Data Protection Bill, and identify how, and whether, the Aadhaar Act should be amended based on the privacy ruling.

Should the data protection laws be implemented in an enforceable manner, the ruling will significantly impact the business landscape in India. Since the election of Prime Minister Narendra Modi in May 2014, the government has made fostering and expanding the technology and startup sector a top priority. The startup scene has grown, giving rise to several promising e-commerce companies, but in 2014, only 12 percent of India’s internet users were online consumers. If the new data protection laws are truly impactful, companies will have to accept responsibility for collecting, utilizing, and protecting user data safely and fairly. Users would also have a stronger form of redress when their newly recognized rights are violated, which could transform how they engage with technology. This has the potential to not only increase consumer confidence but revitalize the Indian business sector, as it makes it more amenable and friendly to outside investors, users, and collaborators.

Google on Wednesday was hit by a lawsuit from a group of state attorneys over alleged violation of antitrust laws by its Android app store.

Attorneys general for 36 states and the District of Columbia sued the Big Tech company in a 144-page complaint filed in a Northern California federal court. The group alleges that Google’s Play store for Android apps violates antitrust laws.The complaint centers on the control Google is able to exert on its Play store, allowing it to collect commissions of up to 30 percent on digital transactions within apps installed on Android-powered smartphones. Those devices represent more than 80 percent of the worldwide smartphone market.Led by Utah, North Carolina, Tennessee, New York, Arizona, Colorado, Iowa, and Nebraska, it marks the fourth major antitrust lawsuit filed by U.S. government agencies against the company since October 2020.Other lawsuits filed against Google include a complaint filed by a bipartisan coalition of states, and one filed by the Department of Justice. It echoes allegations made against the company by mobile game maker Epic Games in August 2020. That case is awaiting trial.The complaint contends that Google has deployed various tactics and set up anticompetitive barriers to ensure it distributes more than 90 percent of the apps on Android devices—a market share that the attorneys general argue represents an illegal monopoly. It also alleges Google has been abusing that power to reap billions of dollars in profit at the expense of consumers, who wind up paying higher prices to subsidize the commissions, and the makers of apps who have less money and incentive to innovate.

French privacy watchdog, the Commission Nationale de l’Informatique et des Libertés (CNIL), has hit Google with a 150 million euro fine and Facebook with a 60 million euro fine, because their websites—google.fr, youtube.com, and facebook.com—don’t make refusing cookies as easy as accepting them. The CNIL carried out an online investigation after receiving complaints from users about the way cookies were handled on these sites. It found that while the sites offered buttons for allowing immediate acceptance of cookies, the sites didn’t implement an equivalent solution to let users refuse them. Several clicks were required to refuse all cookies, against a single one to accept them. In addition to the fines, the companies have been given three months to provide Internet users in France with a way to refuse cookies that’s as simple as accepting them. If they don’t, the companies will have to pay a penalty of 100,000 euros for each day they delay.

EU data protection regulators’ powers have increased significantly since the General Data Protection Regulation (GDPR) took effect in May 2018. This EU law allows watchdogs to levy penalties of as much as 4% of a company’s annual global sales. The restricted committee, the body in charge of sanctions, considered that the process regarding cookies affects the freedom of consent of Internet users and constitutes an infringement of the French Data Protection Act, which demands that it should be as easy to refuse cookies as to accept them. Since March 31, 2021, when the deadline set for websites and mobile applications to comply with the new rules on cookies expired, the CNIL has adopted nearly 100 corrective measures (orders and sanctions) related to non-compliance with the legislation on cookies.

A Moscow court on Friday slapped Google with a nearly US$100 million fine and also fined Facebook Inc’s parent company Meta Platforms Inc US$27 million over their failure to delete content banned by local law, as Russia seeks to step up pressure on technology giants. The Tagansky District Court ruled that Google repeatedly neglected to remove the banned content, and ordered the company to pay an administrative fine of 7.2 billion rubles (US$97.7 million).

Later on Friday, the court also slapped a fine of nearly 2 billion rubles on Meta for failure to remove banned content. Russian courts had this year imposed smaller fines on Google, Facebook and Twitter Inc, and Friday’s rulings were the first time that the size of the fines were calculated based on revenue. Russian state communications watchdog Roskomnadzor said that Google and Meta were specifically accused of contravening a ban on distributing content that promotes extremist ideology, insults religious beliefs and encourages dangerous behavior by minors, among other things.

Meta Platforms Inc (META.O) reached a $37.5 million settlement of a lawsuit accusing the parent of Facebook of violating users' privacy by tracking their movements through their smartphones without permission.A preliminary settlement of the proposed class action was filed on Monday in San Francisco federal court, and requires a judge's approval.It resolved claims that Facebook violated California law and its own privacy policy by gathering data from users who turned off Location Services on their mobile devices.Register now for FREE unlimited access to Reuters.comRegisterAdvertisement · Scroll to continueThe users said that while they did not want to share their locations with Facebook, the company nevertheless inferred where they were from their IP (internet protocol) addresses, and used that information to send them targeted advertising.Monday's settlement covers people in the United States who used Facebook after Jan. 30, 2015.Meta denied wrongdoing in agreeing to settle. It did not immediately respond on Tuesday to requests for comment.Advertisement · Scroll to continueIn June 2018, Facebook and Chief Executive Mark Zuckerberg told the U.S. Congress that the Menlo Park, California-based company uses location data "to help advertisers reach people in particular areas."As an example, it said users who dined at particular restaurants might receive posts from friends who also ate there, or ads from businesses that wanted to provide services nearby.The lawsuit began in November 2018. Lawyers for the plaintiffs may seek up to 30% of Monday's settlement for legal fees, settlement papers show.Advertisement · Scroll to continueThe cases is Lundy et al v Facebook Inc, U.S. District Court, Northern District of California, No. 18-06793.

The Senate Judiciary Committee is set to deliberate on the American Innovation and Choice Online Act, which some experts consider to have the most realistic chance of becoming law out of broad slate of reforms, while creating major change in the industry. The committee schedule also lists a markup of the Open App Markets Act, another bipartisan competition bill.Both bills would prevent certain dominant tech platforms from favoring their own products or services over others that rely on their marketplaces to do business. But the Open App Markets Act’s impact would primarily be limited to those that run app stores, like Apple and Google, while the American Innovation and Choice Online Act would be more expansive, potentially preventing a company like Amazon from giving its own private label products a better ranking in its search than a third-party competitor.Apple and Google could similarly be barred from unfairly ranking their own apps above competitors’ in their mobile app stores, and for Google, the same principle would apply to its general search engine as well

At the request of CEO Mark Zuckerberg, Facebook officials developed a program called In-App Action Panel (IAAP) that they deployed in 2016 and which was in use through mid-2019, according to the documents, which include internal emails.The program utilized cyberattacks to intercept information from Snapchat, YouTube, and Amazon. The program then decrypted the information.“Facebook’s IAAP Program used nation-state-level hacking technology developed by the company’s Onavo team, in which Facebook paid contractors (including teens) to designate Facebook a trusted ‘root’ certificate authority on their mobile devices, then generated fake digital certificates to redirect secure Snapchat analytics traffic (and later, analytics from YouTube and Amazon) from Snapchat’s servers to Onavo’s; decrypted these analytics and used them for competitive gain, including to inform Facebook’s product strategy; reencrypted them; and sent them up to Snapchat’s servers as though it came straight from Snapchat’s app, with Facebook’s Social Advertising competitor none the wiser,” lawyers said in one of the documents.The lawyers, representing plaintiffs in a lawsuit that accuses Facebook of anti-competitive behavior, were describing emails they obtained through discovery.

wo leading US lawmakers have reached a bipartisan deal that could, for the first time, grant all Americans a basic right to digital privacy and create a national law regulating how companies can collect, share and use Americans’ online data. If it succeeds, the proposal could establish the US equivalent of the European Union’s landmark privacy law known as the General Data Protection Regulation (GDPR), and rein in what privacy advocates say is a lawless and unregulated space where Americans’ personal data can too easily be shared and sold to the highest bidder. The proposed agreement would create an unprecedented, single federal standard governing digital privacy in the United States and reflects a significant breakthrough after years of stalled negotiations between Republicans and Democrats. But it could also override some of the toughest state-based privacy laws in the nation, such as in California.