FCC

A Case Study of Alphabet-Google’s 2004-2018 Privacy Track Record of Evident Unfair and Deceptive Over-collection of Consumers’ Personal Data Exposes an Evident Gap in the FTC’s Remedial Authority to Protect Consumers

Submitted as a public comment for the FTC’s fall 2018 “Competition and Consumer Protection in the 21^st Century Hearings.” Topic #5: “The Commission’s remedial authority to deter unfair and deceptive conduct in privacy and data security matters” FTC Project Number: P181201; (PDF FTC submission here)

July 30, 2018; By Scott Cleland; President, Precursor® LLC  info@precursor.com & Chairman, NetCompetition®

Conclusion

This case study of Alphabet-Google’s track record of unfair and deceptive privacy and data security practices provides a compelling body of evidence of 17 major business practice examples over a fifteen-year period that indicate the FTC evidently does not have enough remedial enforcement authority to deter Google, or other Internet platforms, from engaging in unfair and deceptive conduct in privacy and data security matters.

It is also evident from Google’s words and actions chronicled below that it legally does not believe its users have a “legitimate expectation of privacy” concerning the information they provide to Google.

It is a matter of when, not if, Congress will pass national privacy and data protection law for the 21^st century.

It’s inevitable, because the U.S. privacy policy to date is operating as predictably as a pendulum swinging. Consider the evident big picture, pendulum dynamic at work here.

Much bigger change is afoot at the FTC than many may appreciate. An awakened and reinvigorated Simons-FTC lies ahead as do eventual new FTC calls for 21^st century privacy and data protection legislation. Don’t be fooled by the glacial pace of the 2017-18 FTC appointment/confirmation process for a near clean slate of FTC leadership.

We now have strong official directional evidence from FTC Chairman Simons that the next two-and-a-half years are going to be very different from the last five years, 2013-17.

Below is the executive summary of my new white paper, “Internet Market Failure to Protect Consumer Welfare,” which can be accessed here.

It is a timely and relevant submission to two different and current U.S. Department of Justice efforts to learn more about the impact of Internet-related issues.

1.      Submission for: the U.S. DOJ Cyber-Digital Task Force June 2018 Report to the Attorney General
 Tasked to “…ensure that Internet-based technologies remain sources of enrichment, rather than becoming forces of destruction and vectors of chaos;” and

In 2003, Professor Tim Wu coined the term “net neutrality.”

Fifteen years later, it’s now time for a network reality check. That’s because net neutrality is back in the news with a quixotic Senate vote that proposes what a majority of the House and the FCC, and the President all oppose, all while rejecting real legislative proposals to enshrine net neutrality consumer protections permanently into law.   

How is network reality today different from 2003?

When net neutrality was conceived in 2003, Amazon was a company with ~$5b in revenues, Google just started generating revenues, and Facebook didn’t exist. Now America’s largest network company by annualized revenues is Amazon at $193b, not AT&T, at $160b.

The annualized revenues of the three largest edge-networks, Amazon, Google, and Facebook will likely surpass the collective revenues of the three largest ISP networks, AT&T, Verizon, and Comcast, sometime this fall.

If current revenue growth rates continue, expect Amazon, Google, and Facebook’s collective revenues to be twice that of AT&T, Verizon, and Comcast in less than three years.

That is network reality.

Note: This analysis is a response to DOJ Antitrust Chief Makan Delrahim’s public call last month for “fresh thinking” on antitrust approaches to digital platforms. He said: “…we should encourage fresh thinking on how our legal tools apply to new digital platforms. We need more thinking—diverse thinking—about these questions. And, we need a civil discourse on this topic.” “I believe that, as enforcers, we should be open and receptive to empirical evidence that companies in digital markets may be engaging in predatory pricing or other exclusionary conduct to drive out competition and cause long-run harm to consumers.”

Summary: Fresh Thinking on the Unfair Competition Problem of Google, Amazon, and Facebook.

Will protecting the process of fair competition be a priority of the new Simons-FTC?

“The Responsibility Reckoning” that everyone has been witnessing over the last year evidently is finally coming to the FTC -- the Federal Government’s main Internet accountability agency in “The Era of Internet Irresponsibility” -- with the Senate confirmation of a clean slate of FTC commissioners -- Joe Simons (Chairman), Rohit Chopra, Christine Wilson, Rebecca Slaughter and Noah Phillips.

Close observers of the FTC appreciate that since Google politically shut down all five FTC antitrust probes of itself January 3, 2013, FTC antitrust and privacy accountability of Google, Facebook, and Amazon, evidently ceased, and remained dormant until yesterday’s Senate confirmation of the new FTC sheriff and deputies that will be sworn in soonest.

The facts of this de facto, 2013-2017, FTC political pardon of Internet platforms -- are overwhelming (see below.) 

Sadly, potential complainants against Google, Facebook and Amazon, got the tacit message over the last five years that the FTC’s leadership was more concerned with protecting Internet platforms’ welfare than consumer welfare, so they reasonably took their complaints to the EU.

This post introduces a new white paper here with a first-of-its-kind, cost-estimation model of the cumulative hidden public costs of U.S. Internet industrial policy* entitled: “Internet Platform Corporate Welfare and Leechonomics.” *U.S. Internet-first, industrial policy in the 1996 Telecom Act, effectively exempted only Internet companies from: all U.S. communications law, regulation, and public responsibilities; normal non-communications Federal/State regulation; and normal civil liability for what happens via their platforms and business models.

Nutshell Summary: Sweeping Government exemptions and immunities from risks and costs overwhelmingly favor zero-sum, parasitic policy arbitrage and corporate welfare, which perversely fosters unproductive “leechonomics.” U.S. Internet policy most incents platform business that maximizes arbitrage spreads, i.e. taking maximal societal risk that un-immunized competitors can’t take, where the benefits can be capitalized by platforms, and the costs socialized to the public (>$1.5T), because the government has only exempted and immunized platforms from normal accountability and responsibility for consumer welfare. 

Americans want their right to privacy restored.

Prior to 1996, Americans had a well-established, offline right to privacy based on the Fourth Amendment of the U.S. Constitution and several strong federal privacy statutes passed in 1974, 1974, 1978, 1984, 1986, 1988, 1994, and 1996.

One gets what one rewards and tolerates.

U.S. Internet law and policy, which exempts and immunizes Internet platforms from most normal social responsibility and government accountability, has created a de facto anti-social contract with the American people; a cheaters charter for Internet platforms; and an increasingly corrosive culture of unaccountability.

Inputs drive outputs. Favoring unaccountability, favors irresponsibility.

This latest Facebook fiasco is just the latest in a long series of Internet-unaccountability wake-up calls for Congress.

The problem here is not tech, technology, the Internet, or a business model. They are mere tools that can be used for good or for bad.

The problem here is Congress predicated 1996 U.S. Internet law and policy on the implicit utopian ideal and naïve presumption that Internet technologies and businesses would only be forces for social good and not harm.