‘The Edge’ Is on Edge As D.C. Drills Down

WASHINGTON — Calls from the nation’s capital to break up, shake up or simply regulate edge providers have been building at a fever pitch, but the Justice Department has been taking some of the edge off those rhetorical thrusts.

NCTA–The Internet & Television Association and Federal Communications Commission chairman Ajit Pai are both in the “time to regulate” camp, though neither party has pushed for breakups.

Sen. Elizabeth Warren (D-Mass.)

Sen. Elizabeth Warren (D-Mass.)

Lawmakers are understandably exercised over the combined power of the so-called FAANG companies — Facebook, Apple, Amazon, Netflix and Google — and their tendency, in some cases calculated, to play fast and loose with user data.

Behind it all is the Federal Trade Commission’s new role as the enforcer and backstop of both internet access and internet content privacy.

Warren: Act ‘Right Now’

Presidential aspirant Sen. Elizabeth Warren (D-Mass.), for example, has said that the edge needs both government oversight and market discipline over issues of aggregating and monetizing data without accountability, issues Washington needs to wrestle with “right now.”

While Warren initially left some room for companies to be big without being bad — her suggestion that edge platforms can’t buy up other companies in other parts of the internet ecosystem without raising some flags — she has since said the biggest firms need to be broken up.

Warren said Amazon is both providing the marketplace for products and scraping information about those buying patterns. Amazon then uses that “special information advantage” to sell its own products in competition with others in the marketplace it provides, she has argued, effectively “wiping out” competitors’ businesses.

That practice, per Warren, is “a serious problem” and one that should require Amazon to make a choice.

“You’ve got to pick one business or the other,” either platform provider or product competitor, she said. “If you are getting a huge comparative advantage from the information you can collect as the platform provider, we no longer have competition going on.”

FAANG data collection and sharing; privacy protection, or the lack of it; allegations of censoring conservative content; and the use of social media for anti-social behavior like sex and drug trafficking, terrorism and election meddling have combined to put edge providers in the sights of legislators on both sides of the aisle.

Responses could include rethinking the legal liability carveout that social media sites currently enjoy for content posted by third parties.

The desire to cut Amazon down to size makes strange bedfellows of Warren and the man whose job she’s seeking, President Donald Trump, who has also taken aim at the edge giant, as he did again last week, echoing the charges of anti-conservative bias.

Justice Department antitrust chief Makan Delrahim also has his eye on the edge. But he has used public forums to do a little pushing back on the notion that monopolies — even big virtual monopolies — are necessarily bad. He’s also focused on how they use their power.

Keynoting at the annual Silicon Flatirons tech policy conference at the University of Colorado Law School, Delrahim spent some time pointing out that web users have been found to prefer giving up their data for targeted advertising to paying for internet content and services.

“For now, consumers seem to be willing to provide information about themselves so that they receive the product for free, even recognizing that their information will be sold to advertisers in exchange for a zero price,” he said. “Some consumers even may prefer receiving targeted advertisements that are more likely to be relevant to their needs.” Those arguments are ones Silicon Valley keeps making as well.

“The fact that successful companies can reap the benefits of their hard work encourages the next generation of innovators and entrepreneurs and inserts the dynamic competition that best benefits consumers,” Delrahim said. “Therefore, as the Supreme Court explained [in Verizon vs. Trinko], ‘[t]o safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.’ ”

The shakeup-but-not-breakup philosophy appears to be the approach of choice for the public at large, at least according to a new poll released by CNN.

Big Tech Breakup Not Needed: Survey

Asked if Google, Facebook and the like should be broken up, only 11% of survey respondents said yes. Among the subset of those who thought the edge needed more regulating (42% of those surveyed), 64% said that regulation should stop short of breaking up the companies.

One potential target of increased regulation could be the Section 202 carveout from liability over social-media posts by third parties. The carveout was adopted to keep the net a neutral platform and allow social media to flourish. But Silicon Valley has come under fire from Republicans for what they see as attempts to label conservative speech as inappropriate content — either as hate speech or comments that make their online communities uncomfortable.

No less an expert than Facebook CEO Mark Zuckerberg added fuel to the fire by saying in a Hill hearing that concerns about a liberal bias in Silicon Valley were legitimate, though he hastened to add his company had no policy of suppressing conservative voices.

Add some liberal Democrats to those calling for rethinking the liability exception, and edge providers could find themselves facing the kind of regulatory pressure that has been reserved for ISPs.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.