Citing Big Tech Data Dominance, FTC’s Chopra Warns of Regulatory Capture
FTC Commissioner Rohit Chopra warned Congress about the threat of regulatory capture Friday, contending data-rich tech companies wield excessive power. “All too often, the government is too captured by those incumbents who use their power to dictate their preferred policies,” he told the House Antitrust Subcommittee.
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Chairman David Cicilline, D-R.I., told reporters the Democratic commissioner’s concerns are “serious, and I share them.” The worry is tech companies have “disproportionate influence over the regulatory process,” he said. The House Judiciary Committee bipartisan investigation involves major tech companies, and FTC enforcement and other practices, he said. “I wouldn’t say [the FTC is] under investigation. It’s not a prosecution, but … they’re part of our review in this comprehensive investigation.” Cicilline said the committee is expecting more material later after collecting tens of thousands of documents in initial responses from Alphabet, Amazon, Apple and Facebook last Monday.
Chopra suggests a corporate royalty controls the economy, but the reality is a regulatory royalty controls politics, said American Enterprise Institute Visiting Scholar Roslyn Layton. After 18 months under EU’s general data protection regulation, the largest tech platforms gained market share in the EU, while fledgling rivals have lost ground, she said, noting that online trust is at its lowest since 2006.
The FTC could use more resources and tools, Chopra said, but the biggest thing is to energetically examine and use existing tools. Reconsider its antitrust presumptions and maybe shift the burden onto tech companies to prove their acquisitions aren’t harmful, he recommended. Chopra again aired frustration about the agency’s $5 billion privacy settlement with Facebook, criticizing that CEO Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg weren’t deposed. Deterrence isn’t adequate without executive accountability, he said.
In the past decade, five of the largest tech platforms have acquired more than 400 companies without any real challenge from antitrust enforcers, said Judiciary Chairman Jerry Nadler, D-N.Y. Subcommittee ranking member Jim Sensenbrenner, R-Wis., warned against punishing success. Antitrust laws exist to promote success, he said. He blamed the GDPR and the California Consumer Privacy Act for “collateral damage.”
Lawmakers and witnesses agreed privacy and competition are increasingly intersecting. “The relationship between competition and privacy is not either/or,” Cicilline said. They’re related “concepts that must be at the forefront as we consider proposals to restore the internet to its full promise.” Policymakers can’t silo privacy from competition, testified Harvard economist Jason Furman. Privacy is at the core of the economics of digital markets, and it shapes competition, said Imperial College Business School economist Tommaso Valletti. He also blamed large tech companies for not providing the data needed to properly assess competition concerns.
Competition for markets, like the social media market Facebook dominates, will be difficult absent significant policy changes, said Furman. Tech acquisitions are repeatedly approved without scrutiny, he said. Citing a tech sector antitrust immunity, Valletti suggested lowering thresholds for what triggers deal review. Chopra often wonders what the world would look like if Google hadn’t bought YouTube, for instance, and small competitors could grow on their own.
Hidden privacy policy terms are a “price hike” that needs to be considered when looking at competition, Chopra said. He argued Facebook unseated MySpace partially through its claims about privacy and control. Facebook says users would “be able to control who sees your information," he recalled. "We should want firms to compete on terms of privacy." Chopra declined to answer reporter questions after the hearing.