Visa Wants to Buy Plaid, and With It, Transaction Data for Millions of People


This post is by Bennett Cyphers from Deeplinks

Visa, the credit card network, is trying to buy financial technology company Plaid for $5.3 billion. The merger is bad for a number of reasons. First and foremost, it would allow a giant company with a controlling market share and a history of anticompetitive practices to snap up its fast-growing competition in the market for payment apps. But Plaid is more than a potential disruptor, it’s also sitting on a massive amount of financial data acquired through questionable means. By buying Plaid, Visa is buying all of its data. And Plaid’s users—even those protected by California’s new privacy law—can’t do anything about it.

Since mergers and acquisitions often fall outside the purview of privacy laws, only a pointed intervention by government authorities can stop the sale. Thankfully, this month, the US Department of Justice filed a lawsuit to do just that. This merger is about more than just competition in the financial technology (fintech) space; it’s about the exploitation of sensitive data from hundreds of millions of people. Courts should stop the merger to protect both competition and privacy.

Visa’s Monopolistic Hedge

The Department of Justice lawsuit outlines a very simple motive for the acquisition. Visa, it says, already controls around 70% of the digital debit card payment market, from which it earned approximately $2 billion last year. (Mastercard, at 25% market share, is Visa’s only significant competitor.) Thanks to network effects with merchants and consumers, plus exclusivity clauses in its agreements with banks, Visa is comfortably insulated from threats by traditional competitors. But apps like Venmo have started—just barely—to eat away at the digital transaction market. And Plaid sits at the center of that new wave, providing the infrastructure that Venmo and hundreds of other apps use to send money around the world.

According to the DoJ, a Visa executive predicted that Plaid would undercut its debit card processing business eventually, and that buying Plaid would be an “insurance policy” to protect Visa’s dominant market share. The lawsuit alleges that Plaid already had plans to leverage its relationships with banks and consumers to launch a new debit service. Seen through this lens, the acquisition is a simple preemptive strike against an emerging threat in one of Visa’s core markets. Challenging the purchase of a smaller company by a giant one, under the theory that the purchase eliminates future competition rather than creating a monopoly in the short term, is a strong step for the DoJ, and one we hope to see repeated in technology markets.

But users’ interest in the Visa-Plaid merger should extend beyond fears of market concentration. Both companies are deeply involved in the collection and monetization of personal data. And as the DoJ’s lawsuit underscores, “Acquiring Plaid would also give Visa access to Plaid’s enormous trove of consumer data, including real-time sensitive information about merchants and Visa’s rivals.”

Plaid, Yodlee, and the sorry state of fintech privacy

Plaid is what’s known as a “data aggregator” in the fintech space. It provides the infrastructure that connects banks to financial apps like Venmo and Coinbase, and its customers are usually apps that need programmatic access to a bank account.

It works like this: first, an app developer installs code from Plaid. When a user downloads the app, Plaid asks the user for their bank credentials, then logs in on their behalf. Plaid then has access to all the information the bank would normally share with the user, including balances, assets, transaction history, and debt. It collects data from the bank and passes it along to the app developer. From then on, the app can use Plaid’s services to initiate electronic transfers to and from the bank account, or to collect new information about the user’s activity.

In a shadowy industry, Plaid has tried to cultivate a reputation as the “trustworthy” data aggregator. Envestnet/Yodlee, a direct competitor, has long sold consumer behavior data to marketers and hedge funds. The company claims the data are “anonymous,” but reporters have discovered that that’s not always the case. And Finicity, another financial data aggregator, uses its access to moonlight as a credit reporting agency. A glance at data broker listings shows a thriving marketplace for individually-identified transactions data, with dozens of sellers and untold numbers of buyers. But Plaid is adamant that it doesn’t sell or monetize user data beyond its core business proposition. Until recently, Plaid has often been mentioned alongside Yodlee in order to contrast the two companies’ approaches, when it’s been mentioned at all.

Now, in the wake of the Visa announcement, two new lawsuits (Cottle et al v. Plaid Inc and Evans v. Plaid Inc) claim that Plaid has exploited users all along. Chief among the accusations is that Plaid’s interface misleads users into sharing their bank passwords with the company, a practice that plaintiffs allege runs afoul of California’s anti-phishing law. The lawsuits also claim that Plaid collected much more data than was necessary, deceived users about what it was doing, and made money by selling that data back to the apps which used it.

EFF is not involved in either lawsuit against Visa/Plaid, nor are we taking any position on the validity of the legal claims. We’re not privy to any information that hasn’t been reported publicly. But many of the facts presented by the lawsuits are relatively straightforward, and can be verified with Plaid’s own documentation. For example, at the time of writing, https://plaid.com/demo/ still hosts example sign-in flow with Plaid. Plaid does not dispute that it collects users’ real bank credentials in order to log in on their behalf. You can see for yourself what that looks like: the interface puts the bank’s logo front and center, and looks for all the world like a secure OAuth page. Try to think about whether, seeing this for the first time, you’d really understand who’s getting what information.

A series of mobile application screenshots showing how a user would log in to their Citi bank account with Plaid.

Who’s getting your credentials? Not just Citi.

Many users might not realize the scope of the data that Plaid receives. Plaid’s Transactions API gives both Plaid and app developers access to a user’s entire transaction and balance history, including a geolocation and category for each purchase made. Plaid’s other APIs grant access to users’ liabilities, including credit card debt and student loans; their investments, including individual stocks and bonds; and identity information, including name, address, email, and phone number.

A screenshot from a mobile application, stating "Plaid Demo uses Plaid to link your bank," with a button labeled "continue" at the bottom.

A screenshot from Plaid’s demo. What, exactly, does “link” mean?

For some products, Plaid’s demo will throw up a dialog box asking users to “Allow” the app to access certain kinds of data. (It doesn’t explain that Plaid will have access as well.) When we tested it, access to the “transactions,” “auth,” “identity,” and “investments” products didn’t trigger any prompts beyond the default “X uses Plaid to link to your bank” screen. It’s unclear how users are supposed to know what information an app will actually get, much less what they’ll do with it. And once a user enters their password, the data starts flowing.

Users can view the data they’re sharing through Plaid, and revoke access, after creating an account at my.plaid.com. This tool, which was apparently introduced in mid-2018 (after GDPR went into effect in Europe), is useful—for users who know where to look. But nothing in the standard “sign in with Plaid” flow directs users to the tool, or even lets them know it exists.

On the whole, it’s clear that Plaid was using questionable design practices to “nudge” people into sharing sensitive information.

What’s in it for Visa?

Whatever Plaid has been doing with its data until now, things are about to change.

Plaid is a hot fintech startup, but Visa thinks it can squeeze more out of Plaid than the company is making on its own. Visa is paying approximately 50 times Plaid’s annual revenue to acquire the company—a “very steep” sum by traditional metrics.

A huge part of Plaid’s value is its data. Like a canal on a major trade route, it sits at a key point between users and their banks, observing and directing flows of personal information both into and out of the financial system. Plaid currently makes money by charging apps for access to its system, like levying tariffs on those who pass through its port. But Visa is positioned to do much more.

For one, Visa already runs a targeted-advertising wing using customer transaction data, and thus has a straightforward way to monetize Plaid’s data stream. Visa aggregates transaction data from its own customers to create “audiences” based on their behavior, which it sells to marketers. It offers over two hundred pre-configured categories of users, including “recently engaged,” “international traveler – Mexico,” and “likely to have recently shifted spend from gasoline to public transportation services.” It also lets clients create custom audiences based on what people bought, where they bought it, and how much they spent.

A page from a Visa brochure for advertisers, inviting the reader to "discuss the best data points for your needs," including "category and brand spending," "time filters," "spend filters," and "travel filters."

Source: https://web.archive.org/web/20201125173340/https://usa.visa.com/dam/VCOM/global/run-your-business/documents/vsa218-08-visa-catalog-digital-may-2019-v2.pdf

Plaid’s wealth of transaction, liability, and identity information is good for more than selling ads. It can also be used to build financial profiles for credit underwriting, an obviously attractive application for credit-card magnate Visa, and to perform “identity matching” and other useful services for advertisers and lenders. Documents uncovered by the DoJ show that Visa is well aware of the value in Plaid’s data.

A sketch of a volcano partially submerged underwater. The words "bank connections, account validation, asset confirmation" are written on the volcano above the waterline and "fraud tools, identity matching, credit decisioning/underwriting, payment rails and delivery, advertising and marketing, financial management" are below the waterline.

Illustration by a Visa executive of Plaid’s untapped potential, included in Department of Justice filings. The executive “analogized Plaid to an island ‘volcano’ whose current capabilities are just ‘the tip showing above the water’ and warned that ‘what lies beneath, though, is a massive opportunity – one that threatens Visa.’” Note “identity matching,” “credit decisioning,” and “advertising and marketing”—all data-based businesses.

Through Plaid, Visa is about to acquire transaction data from millions of users of its competitors: banks, other credit and debit cards, and fintech apps. As TechCrunch has reported, “Buying Plaid is insurance against disruption for Visa, and also a way to know who to buy.” The DoJ went deeper into the data grab’s anticompetitive effects: “With this insight into which fintechs are more likely to develop competitive alternative payments methods, Visa could take steps to partner with, buy out, or otherwise disadvantage these up-and coming competitors,” positioning Visa to “insulate itself from competition.”

The Data-Sale Loophole

The California Privacy Rights Act, which amends the California Consumer Privacy Act (CCPA), was passed by California voters in early November. It’s the strongest law of its kind in the U.S., and it gives people a general right to opt out of the sale of their data. In addition, the Gramm-Leach-Bliley Act (GLBA), a federal law regulating financial institutions, allows Americans to tell financial institutions not to share their personal financial information. Since the CPRA exempts businesses which are already subject to GLBA, it’s not clear which of the two governs Plaid. But neither law restricts the transfer of data during a merger or acquisition. Plaid’s own privacy policy claims, loudly and clearly, that “We do not sell or rent personal information that we collect.” But elsewhere in the same section, Plaid admits it may share data “in connection with a change in ownership or control of all or a part of our business (such as a merger, acquisition, reorganization, or bankruptcy).” In other words, the data was always for sale under one condition: you had to buy everything.

That’s what Visa is doing. It’s acquiring everything Plaid has ever collected and—more importantly—access to data flows from everyone who uses a Plaid-connected app. It can monetize the data in ways Plaid never could. And the move completely side-steps restrictions on old-fashioned data sales.

Stop the Merger

It’s easy to draw parallels from the Visa/Plaid deal to other recent mergers. Some, like Facebook buying Instagram or Google buying YouTube, gave large companies footholds in new or emerging markets. Others, like Facebook’s purchase of Onavo, gave them data they could use to surveil both users and competitors. Still others, like Google’s acquisitions of Doubleclick and Fitbit, gave them abundant new inflows of personal information that they could fold into their existing databases. Visa’s acquisition of Plaid does all three.

The DoJ’s lawsuit argues that the acquisition would “unlawfully maintain Visa’s monopoly” and “unlawfully extend [Visa’s] advantage” in the U.S. online debit market, violating both the Clayton and Sherman antitrust acts. The courts should block Visa from buying up a nascent competitor and torrents of questionably-acquired data in one move.

Beyond this specific case, Congress should take a hard look at the trend of data-grab mergers taking place across the industry. New privacy laws often regulate the sharing or sale of data across company boundaries. That’s great as far as it goes—but it’s completely sidestepped by mergers and acquisitions. Visa, Google, and Facebook don’t need to buy water by the bucket, they can just buy the well. Moreover, analysts predict that this deal, if allowed to go through, could set off a spree of other fintech acquisitions. It may have already begun: just months after Visa announced its intention to buy Plaid, Mastercard (Visa’s rival in the debit duopoly) began the process of acquiring Plaid competitor Finicity. It’s long past time for better merger review and meaningful, enforceable restrictions on how companies can use our personal information.

Podcast Episode: Control Over Users, Competitors, and Critics


This post is by rainey Reitman from Deeplinks

Episode 004 of EFF’s How to Fix the Internet

Cory Doctorow joins EFF hosts Cindy Cohn and Danny O’Brien as they discuss how large, established tech companies like Apple, Google, and Facebook can block interoperability in order to squelch competition and control their users, and how we can fix this by taking away big companies’ legal right to block new tools that connect to their platforms – tools that would let users control their digital lives.

In this episode you’ll learn about:

  • How the power to leave a platform is one of the most fundamental checks users have on abusive practices by tech companies—and how tech companies have made it harder for their users to leave their services while still participating in our increasingly digital society;
  • How the lack of interoperability in modern tech platforms is often a set of technical choices that are backed by a legal infrastructure for enforcement, including the Digital Millennium Copyright Act (DMCA) and the Computer Fraud and Abuse Act (CFAA). This means that attempting to overcome interoperability barriers can come with legal risks as well as financial risks, making it especially unlikely for new entrants to attempt interoperating with existing technology;
  • How online platforms block interoperability in order to silence their critics, which can have real free speech implications;
  • The “kill zone” that exists around existing tech products, where investors will not back tech startups challenging existing tech monopolies, and even startups that can get a foothold may find themselves bought out by companies like Facebook and Google;
  • How we can fix it: The role of “competitive compatibility,” also known as “adversarial interoperability”  in reviving stagnant tech marketplaces;
  • How we can fix it by amending or interpreting the DMCA, CFAA and contract law to support interoperability rather than threaten it.
  • How we can fix it by supporting the role of free and open source communities as champions of interoperability and offering alternatives to existing technical giants.

Cory Doctorow (craphound.com) is a science fiction author, activist and journalist. He is the author of many books, most recently ATTACK SURFACE, RADICALIZED and WALKAWAY, science fiction for adults, IN REAL LIFE, a graphic novel; INFORMATION DOESN’T WANT TO BE FREE, a book about earning a living in the Internet age, and HOMELAND, a YA sequel to LITTLE BROTHER. His latest book is POESY THE MONSTER SLAYER, a picture book for young readers.

Cory maintains a daily blog at Pluralistic.net. He works for the Electronic Frontier Foundation, is a MIT Media Lab Research Affiliate, is a Visiting Professor of Computer Science at Open University, a Visiting Professor of Practice at the University of North Carolina’s School of Library and Information Science and co-founded the UK Open Rights Group. Born in Toronto, Canada, he now lives in Los Angeles. You can find Cory on Twitter at @doctorow.

Please subscribe to How to Fix the Internet via RSSStitcherTuneInApple PodcastsGoogle PodcastsSpotify or your podcast player of choice. You can also find the Mp3 of this episode on the Internet Archive.  If you have any feedback on this episode, please email podcast@eff.org.

Below, you’ll find legal resources – including links to important cases, books, and briefs discussed in the podcast – as well a full transcript of the audio.

Resources

Anti-Competitive Laws

Anti-Competitive Practices 

Lawsuits Against Anti-Competitive Practices

Competitive Compatibility/Adversarial Interoperability & The Path Forward

State Abuses of Lack of Interoperability

Other

Transcript of Episode 004: Control Over Users, Competitors, and Critics

Danny O’Brien:
Welcome to How to Fix the Internet with the Electronic Frontier Foundation, the podcast that explores some of the biggest problems we face online right now, problems whose source and solution is often buried in the obscure twists of technological development, societal change, and the subtle details of internet law.

Cindy Cohn:
Hello, everyone. I’m Cindy Cohn, I’m the executive director of the Electronic Frontier Foundation. And for our purposes today, I’m also a lawyer.

Danny O’Brien:
And I’m Danny O’Brien, and I work at the EFF too, and I could only dream of going to law school. So, this episode has its roots in a long and ongoing discussion that we have at EFF about competition in tech, or rather, the complete lack of it these days. I think there’s a growing consensus that big tech–Facebook, Google, Amazon, you can make your own list at home–have come to dominate the net and tech more widely and really not in a good way. They stand these days as potentially impregnable monopolies and there doesn’t seem much consensus on how to best fix that.

Cindy Cohn:
Yeah. This problem affects innovation, which is a core EFF value, but it also impacts free speech and privacy. The lack of competition has policymakers pushing companies to censor us more and more, which, as we know, despite a few high-profile exceptions, disproportionately impacts marginalized voices, especially around the world.

Cindy Cohn:
And critically, way too many of these companies have privacy-invasive business models. At this point, I like to say that Facebook doesn’t have users, it has hostages. So, addressing competition empowers users, and today we’re going to focus on one of the ways that we can reintroduce competition into our world. And that’s interoperability. Now this is largely a technical approach, but as you’ll hear, it can work in tandem with legal strategies, and it needs some legal support right now to bring it back to life.

Danny O’Brien:
Interoperability is going to be useful because it accelerates innovation, and right now, the cycle of innovation just seems to be completely stuck. I mean, this may make me sound old, but I do remember when the pre-Facebook and the pre-Google quasi-monopolies just popped up, but grew, lived gloriously, and then died and shriveled like dragonflies.

Danny O’Brien:
We had Friendster, then Myspace, we had Yahoo and Alta Vista, and then they moved away. Nothing seems to be shifting this new generation of oligopolies, in the marketplace at least. I know lawsuits and antitrust investigations take a long time. We think at EFF that there’s a way of speeding things up so we can break these down as quickly as their predecessors.

Cindy Cohn:
Yep. And that’s what’s so good about talking this through with our friend, Cory Doctorow. He comes at this from a deeply technological, economic, and historical perspective, and especially a historical perspective on how we got here in terms of our technology and law.

Cindy Cohn:
Now, I tend to think of it as a legal perspective, because I’m a litigator–I think, what doctrines are getting in the way? How can we address them? And how can we get the legal doctrines out of the way? But Danny, if I may, I had some personal experience here too. I bought an HP printer a while back, and because I wouldn’t sign up for their ink delivery service, the darn thing just bricked. It wouldn’t let me use anybody else’s ink, and ultimately, it just stopped working entirely.

Danny O’Brien:
Interoperability is the ability for other parties to connect and build upon existing hardware and software without asking for permission, or begging for authorization, or being thrown out if they don’t follow all the rules. So, in your printer’s case, Cindy–and I love how when your printer doesn’t work, you recognize it as an indictment of our zaibatsu control prison, rather than me who just thinks I failed to install the right driver. But in your case, your printer in Hewlett-Packard was building an ecosystem that only allowed other Hewlett-Packard projects to connect with it.

Danny O’Brien:
There’s no reason why third-party ink couldn’t work in HP, except that the printer has code in it that specifically rejects cartridges, not based on whether they work or not, but whether they come from the parent company or not. And there’s a legal infrastructure around that too. It’s much harder for third-party companies to interoperate with Hewlett-Packard printers, simply because there’s so much legal risk about doing so.

Danny O’Brien:
This is the sort of thing that Cory excels at explaining, and I’m so glad we managed to grab him between, oh my god, all the million things he does. For those of you who don’t know him, Cory works as a special advisor to EFF, but he’s also a best-selling science fiction author. He has his own daily newsletter, at pluralistic.net, and a podcast of his own at craphound.com/podcast.

Danny O’Brien:
We caught him between publicizing his new kid’s book Poesy the Monster Slayer, and promoting his new sequel to his classic “Little Brother” called “Attack Surface”. And also curing world hunger, I’m pretty sure.

Cindy Cohn:
Hey, Cory.

Cory Doctorow:
It’s always a pleasure to talk to you, and it’s an honor to be on the EFF podcast.

Cindy Cohn:
So, let’s get to it. What is interoperability? And why do we need to fix it?

Cory Doctorow:
Well, I like to start with an interoperability view that’s pretty broad, right? Let’s start with the fact that the company that sells you your shoes doesn’t get to tell you whose socks you can wear, or that the company that makes your breakfast cereal doesn’t get to tell you which dairy you have to go to. And that stuff is … We just take it for granted, but it’s a really important bedrock principle, and we see what happens when people lose interoperability: they also lose all agency and self-determination.

Cory Doctorow:
If you’ve ever heard those old stories about company mining towns where you were paid in company scrip that you could only spend at the company store, that was like non-interoperable money, right? The only way you could convert your company scrip into dollars would be to buy corn at the company store and take it down to the local moonshiner and hope he’d give you greenbacks, right?

Cory Doctorow:
And so, to the extent that you can be stuck in someone else’s walled garden, it can turn, instead of, from a walled garden into a feedlot, where you become the fodder. And the tech industry has always had a weird relationship with interoperability,. On the one hand, computers have this amazing interoperable characteristic just kind of built into them. The underlying idea of things like von Neumann architectures, and Turing completeness really says that all computers can run all programs, and that you can’t really make a computer that just, like, only uses one app store.

Cory Doctorow:
Instead, what you have to do is make a computer that refuses to use other app stores. You know, that tablet or that console you have, it’s perfectly capable of using any app store that you tell it to. It just won’t let you, and there’s a really important difference, right? Like, I can’t use a kitchen mixer to apply mascara, because the kitchen mixer is totally unsuited to applying mascara and if I tried, I would maim myself. But you can install any app on any device, provided that the manufacturer doesn’t take steps to stop you.

Cory Doctorow:
And while manufacturers–tech manufacturers especially–have for a long time tried to take measures to stop use so they could increase their profits, what really changed the world was the passage of a series of laws, laws that we’re very familiar with at the EFF: the Computer Fraud and Abuse Act, the Digital Millennium Copyright Act, and so on, that started to allow companies to actually make it illegal–both civilly and criminally–for you to take steps to add interoperability to the products that you use, and especially for rivals to take steps.

Cory Doctorow:
I often say that the goal of companies who want to block interoperability is to control their critics, their customers, and their competitors, so that you have to arrange your affairs to benefit their shareholders. And if you don’t, you end up committing an offense that our friend Saurok from the Cydia Project calls a felony contemptive business model.

Cindy Cohn:
This is something we care about in general at the EFF, because we worry a lot about the pattern of innovation, but I think it also has spillover effects on censorship and on surveillance. And I know you’ve thought about that a little bit, Cory, and I’d love to kind of just bring those out, because I think that it’s important … I mean, we all care, I think, about having functioning tools that really work. But there are effects on our rights as well, and that kind of old-school definition of rights, like what’s in the constitution.

Cory Doctorow:
Yeah. Well, a lot of people are trusting of the firms that handle their communications. And that’s okay, right? You might really think that Tim Cook is always going to exercise his judgment wisely, or that Mark Zuckerberg is a truly benevolent dictator and so on. But one of the things that keeps firms honest when they regulate your communications is the possibility that you might take your business elsewhere. And when firms don’t face that possibility, they have less of an incentive to put your needs ahead of the needs of their shareholders. Or sometimes there’s a kind of bank shot shareholder interest where, say, a state comes in and says, “We demand that you do something that is harmful to your users.” And you weigh in the balance how many users you’ll lose if you do it, versus how much it’s going to cost you to resist the state.

Cory Doctorow:
And the more users you lose in those circumstances, the more you’re apt to decide that the profitable thing to do is to resist state incursions. And there’s another really important dimension, which is a kind of invitation to mischief that arises when you lock your users up, which is that states observe the fact that you can control the conduct of your users. And they show up and they say, “Great, we have some things your users aren’t allowed to do.” And you are now deputized to ensure that they don’t do it, because you gave yourself that capability.

Cory Doctorow:
So, the best example of this … I don’t mean to pick on Apple, but the best example of this is Apple in China, where Apple is very dependent on the Chinese market, not just to manufacture its devices, but to buy and use its devices. Certainly, with President Trump’s TikTok order, a lot of people have noted that some of the real fallout is going to be for Apple if they can’t do business with Chinese firms and have Chinese apps and so on. And the Chinese government showed up at Apple’s door and said, “You have to block working VPNs from your app store. We need to be able to spy on everyone who uses an iPhone. And so, the easiest way for us to accomplish that is to just tell you to evict any VPN that doesn’t have a backdoor for us.”

Danny O’Brien:
Just to connect those two things together, Cory, so what you’re saying here is that because Apple phones don’t have … Apple has sort of exclusive control over them, and you can’t just install your own choice of program on the iPhone. That means that Apple is this sort of choke point that bad actors can use, because they’ve got all this control for themselves, and then they can be pressured to impose that control on their customers.

Cory Doctorow:
They installed it so they could extract a 30% vig from Epic and other independent software vendors. But the day at which a government would knock on their door and demand that they use the facility that they developed to lock-in users to a store, to also lock-in users to authoritarian software, that day was completely predictable. You don’t have to be a science fiction writer to say, “Oh, well, if you have a capability and it will be useful to a totalitarian state, and you put yourself in reach of that totalitarian states authority, they will deputize you to be part of their authoritarian project.”

Cindy Cohn:
Yeah. And that’s local as well as international. I mean, the pressure for the big platforms to be censors, to decide to be the omnipotent and always-correct deciders of what people get to say, is very strong right now. And that’s a double-edged sword. Sometimes that can work well when there are bad actors on that, but really, we know how power works. And once you empower somebody to be the censor, they’re going to be beholden to everybody who comes along who’s got power over them to censor the people they don’t like.

Cindy Cohn:
And it also then, I think, feeds this surveillance business model, this business model where tracking everything you do, and pay and trying to monetize that gets fed by the fact that you can’t leave.

Danny O’Brien:
I want to try and channel the ghost of Steve Jobs here and present the other argument that lots of companies give for locking down their systems, which is that it prevents other smaller bad actors, it prevents malware, it means that Apple can control… But by controlling all of these avenues, it can build a securer, more consumer-friendly tool.

Cory Doctorow:
Yeah. I hear that argument, and I think there’s some merit to it. Certainly, like, I don’t have either the technical chops or the patience and attention to do a full security audit of every app I install. So, I like the idea of deputizing someone to figure out whether or not I should install an app, I just want to choose that person. I had a call recently with one of our colleagues from EFF, Mitch, who said that argument is a bit like the argument about the Berlin Wall, where the former East German government claimed that the Berlin Wall wasn’t there to keep people in who wanted out, it was to stop people from breaking into the worker’s paradise.

Cory Doctorow:
And if Apple was demonstrably only blocking things that harmed users, one would expect that those users would just never tick the box that says, “Let me try something else.” And indeed, if that box was there, it would be much less likely that the Chinese state would show up and say, “Give us a means to spy on all your users,” because Apple could say, “I will give you that means, but you have to understand that as soon as that’s well understood, everyone who wants to evade your surveillance just ticks the box that says, ‘Let me get a VPN somewhere else.'”

Cory Doctorow:
And so, it actually gives Apple some power to resist it. In that way, it’s a bit like the warrant canaries that we’re very fond of, where you have these national security letters that firms cannot disclose when they get them. And so, firms as they launch a new product say, “The number of national security letters we have received in respect to this product is zero,” and they reissue that on a regular basis. And then they remove that line if they get a national security letter.

Cory Doctorow:
Jessamyn West, the librarian after the Patriot Act was passed, put a sign up in her library that said, “The FBI has not been here this week, watch for this sign to disappear,” because she wasn’t allowed to disclose that the FBI had been there, but she could take down the sign, and in the same way… And so, the idea here is that states are disincentivized to get up to this kind of mischief, where it relies on them keeping the existence of the mischief a secret, if that secrecy vanishes the instant they embark upon the mischief.

Cory Doctorow:
In the same way, if you have a lock-in model that disappears the instant you cease to act as a good proxy for your users’ interests, then people who might want to force you to stop being a good proxy for your users’ interest, have a different calculus that they make.

Cindy Cohn:
I just want to, sorry, put my lawyer hat on here. Warrant canaries are a really cute hack that are not likely to be something the FBI is just going to shrug its shoulders and say, “Oh, gosh, I guess you got us there, folks.” So, I just, sorry…

Cory Doctorow:
Fair enough.

Cindy Cohn:
Sometimes I have to come in and actually make sure people aren’t taking legal advice from Cory.

Danny O’Brien:
When we were kicking around ideas for the name of this podcast, one of them was, “This is not legal advice.”

Cory Doctorow:
Well, okay, so instead, let’s say binary transparency, where you just… automatically built into the app is a thing that just checks to see whether you got the same update as everyone else. And so that way, you can tell if you’ve been pushed to a different update from everyone else, and that’s in the app when the app ships. And so, the only way to turn it off is to ship an update that turns it off, and if they only ship that to one user, it happens automatically. It’s this idea of Ulysses pact, where you take some step before you’re under coercion, or before you’re in a position of weakness, to protect you from a future moment. It’s equivalent of throwing away the Oreos than you go on a diet.

Cindy Cohn:
So, let’s talk just a little bit more specifically about what are the things that we think are getting in the way of interoperability? And then, let’s pivot to what we really want to do, which is fix it. So, what I’ve heard from you so far, Cory, is that we see law getting in the way, whether that’s the Digital Millennium Copyright Act, Section 12, or one of the CFAA, or contract law–these kind of tools that get used by companies to stop interoperability. What are some of the other things that get in the way of us having our dream future where everything plugs into everything else?

Cory Doctorow:
I’d say that there’s two different mechanisms that are used to block interop and that they interact with each other. There’s law and there’s tech, right? So, we have these technical countermeasures: the sealed vaults, chips, the TPMS inside of our computers, and our phones, and our other devices, which are dual-use technologies that have some positive uses, but they can be used to block interop.

Cory Doctorow:
As we move to more of a software-as-a-service model were some key element of the process happens in the cloud, it gives firms that control, that cloud, a gateway where they can surveil how users are using them and try and head off people who are adding interoperability–what we call competitive compatibility to a service, that’s when you add a new interoperable feature without permission from the original manufacturer, and so on.

Cory Doctorow:
And those amount to a kind of cold war between different technologists working for different firms. So, on the one hand, you have companies trying to stop you from writing little scrapers that go into their website, and scrape their users waiting inboxes, and put them in a rival service on behalf of those users. And on the other hand, you have the people who are writing the scrapers, and we haven’t seen a lot of evidence about who would win that fight, at least if it were a fair fight, because of the law–because between the Computer Fraud and Abuse Act, the Digital Millennium Copyright Act, and a lot of other laws that kind of pop up as they are repurposed by firms with a lot of money to spend on legal entrepreneurship.

Danny O’Brien:
I want to drill down just a little bit with this because I loved your series that you wrote on competitive compatibility, which talked about the old age of the Internet, where we did have a far faster pace of innovation and the life and death of tech giants was far shorter, because they were kind of in this tooth and claw competitive mode, where … I mean, just to plug an example, right? You would have, sort of, Facebook building on the contact lists that telephones and Google had by adversarially interoperating with them, right?

Danny O’Brien:
You would go to Facebook, and it would say, “Hey, tell us your friends.” And it would be able to do that by connecting to their systems. Now, you can’t do that with Facebook now, and you can’t write an app that competes with Apple’s software business, because neither of them will let you. And they’re able to do that, I think what we’re both saying, because… Not so much because of technical restrictions, but because of the laws that prevent you from doing that. You will get sued rather than out-innovated.

Cory Doctorow:
Well, yes. So, I think that’s true. We don’t know, right? I’m being careful here, because I have people who I trust as technologists who say, “No, it’s really hard, they’ve got great engineers.” I’m skeptical of that claim because we’ve had about a decade or more of companies being very afraid to try their hand at adversarial interoperability. And one of the things that we know is that well-capitalized firms can do a lot that firms that lack capital can’t, and our investor friends tell us that what big tech has more than anything else is a kill zone–that even though Facebook, Apple, Google, and the other big firms have double-digit year-on-year growth with billions of dollars in clear profit every year, no one will invest in competitors of theirs.

Cory Doctorow:
So, I think that when technologists say, “Well, look, we beat our brains out on trying to write a bot that Facebook couldn’t detect, or make an ad blocker that … I don’t know, the Washington Post couldn’t stop or whatever, or write an app store and install it on iPhones and we couldn’t do it.” The part that they haven’t tested is, well, what if an investor said, “Oh, I’m happy to get 10% of Facebook’s total global profit, and I will capitalize you to reflect that expected return and let you spend that money on whatever it takes to do that”?

Cory Doctorow:
What if they didn’t have the law on their side? What if they just had engineers versus engineers? But I want to get to this last piece, which is where all this law and these new legal interpretations come from, which is this legal entrepreneurship piece. So as I say, Facebook and its rivals, they have double-digit growth, billions of dollars in revenue every year, in profit, clear profit every year.

Cory Doctorow:
And some of that money is diverted to legal entrepreneurship. Instead of being sent to the shareholders, or being spent on engineering, or product design, it’s spent on law. And that spend is only possible because there’s just so much money sloshing around in those firms, and that spend is particularly effective, because they’re all gunning for the same thing. They’re a small number of firms that dominate the sector, and they have all used competitive compatibility to ascend to the top, and they are all committed to kicking away the ladder. And the thing that makes Oracle/Google so exceptional, is because it’s an instance in which the two major firms actually have divergent interests.

Cory Doctorow:
Far more often, we see their industry associations and the executives from the firm’s asking for the same things. And so, one of the things that we know about competition is when you lose competition, the firms that remain, find it easier to emerge a collusion. They don’t have to actually all sit down and say, “This is what we all want.” It’s just easy for them to end up in the same place. Think about the kinds of offers you get for mobile phone plans, right? It’s not that the executives all sat down and cooked up what those plans would be, it’s just that they copy each other, and they all end up in the same place. Or publishing contracts, or record contracts.

Cory Doctorow:
Any super-concentrated industry is going to have a unified vision for what it wants in its lobbying efforts, and it’s going to have a lot of money to spend on it.

Cindy Cohn:
So, let’s shift because our focus here is fixing it. And my journey in this podcast is to have a vision of what a better future would look like, what does the world look like if we get this right? Because at the EFF and we spend a lot of time articulating all the ways in which things are broken, and that’s a fine and awesome thing to do, but we need to fix them.

Cindy Cohn:
So, Cory, what would the world look like if we fixed interoperability? Give us the vision of this world.

Cory Doctorow:
I had my big kind of “road to Damascus” moment about this, when I gave a talk for the 15th anniversary of the computer science program at the University of Waterloo. They call themselves the MIT of Canada. I’m a proud University of Waterloo dropout. And I went back to give this speech and all of these super bright computer scientists were in the audience, grad students, undergrads, professors, and after I talked about compatibility, and so on, someone said, “How do we convince everyone to stop using Facebook and start using something else?”

Cory Doctorow:
And I had this, just this moment where I was like, “Why would you think that that was how you will get rid of Facebook?” Like, “When was it ever the case that if you decided you wanted to get a new pair of shoes, you throw away all your socks?” Why wouldn’t we just give people the tool to use Facebook at the same time as something else, until enough of their friends have moved to the something else, that they’re ready to quit Facebook?

Cory Doctorow:
And that, to me is the core of the vision, right? That rather than having this model that’s a bit like the model that my grandmother lived through–my grandmother was a Soviet refugee. So, she left the Soviet Union, cut off all contact, didn’t speak to her mother for 15 years, and was completely separated from her, it was a big momentous decision to leave the Soviet Union. We leave that, right? Where we tell people, “You either use Twitter or use Mastodon, but you don’t read Twitter through Mastodon and have a different experience, and have different moderation rules,” and so on. You’re just either on Mastodon or you’re on Twitter, they’re on either sides of the iron curtain.

Cory Doctorow:
And instead, we have an experienced a lot more like the one I had when I moved to Los Angeles from London five years ago, where we not only got to take along the appliances that we liked and just fit them with adapters, we also get to hang out with our family back home by video call and visit them when we want to, and so on–that you let people take the parts of the offer that they like and stick with them, and leave behind the parts they don’t like and go to a competitor. And that competitor might be another firm, it might be a co-op, it might be a thing just started by a tinkerer in their garage, it might be a thing started by a bright kid in a Harvard dorm room the way that Zuck did with Facebook.

Cory Doctorow:
And when those companies do stuff that makes you angry or sad, you take the parts of their service that you like, and you go somewhere else where people will treat you better. And you remain in contact with the people, and the hardware, and the services that you still enjoy, and you block the parts that you don’t. So, you have technological self-determination, you have agency, and companies have to fight to keep your business because you are not a hostage, you’re a customer.

Cindy Cohn:
Yeah. I think that that’s exactly it, and well put. I think that we’ve gotten used to this idea of, what we called back in the days about the Apple app store–I don’t know why Apple keeps coming up, because they’re only one of the actors we’re concerned about–but we used to call it the crystal prison, right? You buy an Apple device, and then it’s really hard to get out of the Apple universe. It used to be that it was hard to use Microsoft Word unless you used a Windows machine. But we managed to pressure, and some of that was antitrust litigation, but we managed to make pressure so that that didn’t work.

Cindy Cohn:
We want browsers that can take you to anywhere on the web, not just the ones that have made deals with the browsers. We want ISPs that offer you the entire web, just not the ones that pay for it. It really is an extension of network neutrality, this idea that we as users get to go where we want and get to dictate the terms of how we go there, at least to the extent of being able to interoperate.

Cory Doctorow:
I mean apropos of Apple, I don’t want to pick on them either, because Apple are fantastic champions of interoperability when it suits them, right? As you say that, the document wars were won in part by the iWork suite, where Apple took some really talented engineers, reversed engineer the gnarly, weird hairball that is Microsoft Office formats, and made backwards compatible new office suites that were super innovative but could also save out to Word and Excel, even though you’re writing into Numbers or Pages, and that part’s great. And just like Amazon broke the DRM on music monopoly that Apple had when it launched the MP3 store, but now will not release its audiobooks from DRM through its Audible program.

Cory Doctorow:
Apple was really in favor of interoperability without permission when it came to document formats–it benefited–but doesn’t like it when it comes to, say, rival app stores. Google is 100% all over interoperability when it comes to APIs, but not so much when it comes to the other areas where they enjoy lock-in. And I think that the lesson here is that we as users want interoperability irrespective of the effect that it has on a company’s shareholders.

Cory Doctorow:
The companies have a much more instrumental view of interoperability: that they want interoperability when it benefits them, and they don’t want it when it harms them. And I’m always reminded, Cindy, of the thing you used to say, when we were in the early days of the copyright wars around Napster. And we would talk to these lobbyists from the entertainment industry, and they would say, “Well, we are free speech organizations, that’s where we cut our teeth.” And you would say, “We know you love the First Amendment, we just wish you’d share.”

Cindy Cohn:
Yeah, absolutely. Absolutely, and one of the things that we’ve done recently is, we started off talking about this as interoperability, then we called it adversarial interoperability to make it clear that you don’t need to go on bended knee for permission. And recently, we started rebranding it to competitive compatibility. And Cory, you’ve used both of those terms in this conversation, and I just want to make sure our listeners get what we’re doing. We’re trying to really think about this. I mean, all of them are correct, but I think competitive compatibility, the reason we ended up there is not only is it fewer syllables, and we can call it ComCom, which we all like, but it’s the idea that it’s compatibility, it’s competitive compatibility, it’s being compatible with a competitive market-based environment, a place where users get to decide because people are competing for their interest and for their time.

Cindy Cohn:
And I really love the vision that if you’re the old … This was the product that Power Ventures tried to put out, was a service where it didn’t matter whether you had a friend on LinkedIn, or you had a friend on Orkut–it’s an old tool–or Facebook. You just knew you had a friend, and you just typed in, “Send the message to Cory,” and the software just figured out where you were connected with them and sent the message through it.

Cindy Cohn:
I mean, that’s just the kind of thing that should be easy, that isn’t easy anymore. Because everybody is stuck in this platform mentality, where you’re in one crystal prison or you’re in the other, and you might be able to switch from one to the other, but you can’t take anything with you in the way that you go.

Cindy Cohn:
The other tool that Power had that I thought was awesome was being able to look at all your social feeds in one screen. So, rather than switching in between them all the time, and trying to remember–which I spend a lot of time on right now, trying to remember whether I learned something on Twitter, or I learned it here on Facebook, or I learned it somewhere else–you have one interface, you have your own cockpit for your social media feeds, and you get to decide how it looks, instead of having to log into each of them separately and switch between them.

Cindy Cohn:
And those are just two ideas of how this world could serve you better. I think there are probably a dozen more. And I’d like for us to … If there’s other ones that you could think of like, how would my life be different if we fix this in ways that we can think about right now? And then of course, I think as with all tech and all innovation, the really cool things are going to be the things that we don’t think about that show up anyway, because that’s how it works.

Cory Doctorow:
Yeah, sure. I mean, a really good example right now is you’d be able to install Fortnite on your iPhone or your Android device, which is the thing you can’t do as of the day that we record this. And again, that’s what the app store lock-in is for, it’s to take a bite out of Fortnite and other independent software vendors. But if you decided that you wanted to keep using the security system that your cable provider Comcast gave to you but then decided it wouldn’t support anymore, which is the thing Comcast did last year, you could plug its cameras into a different control system.

Cory Doctorow:
If you decided that you liked the camera that Canary sent you and that you paid for, but you didn’t like the fact that it’s an unencrypted video–or rather, video that was an end-to-end encrypted to your phone and instead decrypted it in its data center so it could look at the video (and it does so for non-nefarious reasons, it wants to make sure it doesn’t send you a motion control alert just because your cat walked by the motion sensor)–but you may decide that having a camera in your house that’s always on, and that’s sending video that third parties can look at, is not a thing you like, but you like the hardware, so you just plug that into something else too.

Danny O’Brien:
I love the Catalog of Missing Devices. This is the thing that Cory co-wrote, which was just a list of devices that we cannot see right now, because of some of the laws that prevent people confidently being able to innovate in this space. And I sort of concede, because we plod about this all the time, like, EFF’s role in this, right? We’re continuing to sort of lobby and also in the courts as well work out ways that we can challenge and redefine the legal environment here. But what’s the message here if you’re someone who’s an open-source developer, or an entrepreneur, or a user? What’s going to move the needle? What’s going to take us into this future? And what can individuals do?

Cory Doctorow:
So, this is an iterative process, there isn’t a path from A to Z. There is a heuristic for how we climb the hill towards a better future. And the way to understand this, as I tried to get at with this sort of technology and law and monopoly, is that our current situation is the result of companies having these monopoly rents, laws being bad because they got to spend them on it, companies being able to collude because their sectors are concentrated, and technology that works against users being in the marketplace.

Cory Doctorow:
And each one of those affects the other. So for example, if we had, say merger scrutiny, right? Say we said that firms were no longer allowed to buy nascent competitors, either to crush them or to acquire something that they couldn’t do internally, the way you say Google has with most of its successful products. Really it’s got search, and to a lesser extent Android, that was mostly an acquisition, and … What’s the other one? Search … Oh, and Gmail are the really successful in-house products. Maybe Google Photos, although that’s probably just successful because every Android device ships with it. But if we just say Google can’t buy Fitbit, Google, a company that has tried repeatedly and failed to make a wearable, isn’t allowed to buy Fitbit. In order to acquire that, then Google starts to lose some of its stranglehold on data, especially if you stop its rivals from buying Fitbit too. And that makes it weaker, so that it’s harder for it to spend on legal entrepreneurship.

Cory Doctorow:
If we make devices that compete with Google, or tools that compete with Google–ad blockers, tracker blockers, and so on–then that also weakens them. And if they are weaker, they have fewer legal resources to deploy against these competitors as well. If we convince people that they can want more, right? If we can have a normative intervention, to say, “No one came down off a mount with two stone tablets,” saying, ‘Only the company that made your car can fix it,’ or ‘Only the company that made your phone can fix it,'” and we got them to understand that the right to repair has been stolen from them, then, when laws are contemplated that either improve our right to repair or take away our right to repair, there’s a constituency to fight those laws.

Cory Doctorow:
So the norms, and the markets, and the technology, and the law, all work together with each other. And I’m not one of nature’s drivers, I have very bad spatial sense, and when I moved to Los Angeles and became perforce a driver, I find myself spending a lot of time trying to parallel park. And the way that I parallel park is, I turn the wheel as far as I can, and then get a quarter of an inch of space, and then I turn it in the other direction, and I get a quarter of an inch of space. And I think as we try to climb this hill towards a more competitive market, we’re going to have to see which direction we can pull in from moment to moment, to get a little bit more policy space that we can leverage to get a little bit more policy space.

Cory Doctorow:
And the four directions we can go in are: norms, conversations about what’s right and wrong; laws, that tell you what’s legal and not legal; markets, things that are available for sale; and tech, things that are technologically possible. And our listeners, our constituents, the people in Washington, the people in Brussels, they have different skill sets that they can use here, but everyone can do one of these things, right? If you’re helping with the norm conversation, you are creating the market for the people who want to start the businesses, and you are creating the constituency for the lawmakers who want to make the laws.

Cory Doctorow:
So, everybody has a role to play in this fight, but there isn’t a map from A to Z. That kind of plotting is for novelists, not political struggles.

Cindy Cohn:
I think this is so important. One of the things that … And I want to close with this, because I think it’s true for almost all of the things that we’re talking about fixing, is that the answer to, “Should we do X or Y?” is “yes,” right? We are in some ways, the kind of scrappy, underfunded side of almost every fight we’re in around these kinds of things. And so, anybody who’s going to force you to choose between strategies is undermining the whole cause.

Cindy Cohn:
These are multi-strategic questions. Should we break up big tech? Or should we create interoperability? The answer is, yes, we need to aim towards doing a bit of all of these things. There might be times when they conflict, but most of the time, they don’t. And it’s a false choice if somebody is telling you that you have to pick one strategy, and that’s the only thing you can do.

Cindy Cohn:
Every big change that we have done has been a result of a whole bunch of different strategies, and you don’t know which one is going to give way, which is going to pave the way faster. You just keep pushing on all things. So, we’re finally moving on the Fourth Amendment on privacy, and we’re moving in the courts. But we could have passed a privacy law, but the legislation got stuck. We got to do all of these things. They feed each other, they don’t take away each other if we do it right.

Cory Doctorow:
Yeah, yeah. And I want to close by just saying, EFF’s 30 years old, which is amazing. I’ve been with the organization nearly 20 years, which is baffling, and the thing that I’ve learned on the way is that these are all questions of movements and not individuals. Like as an individual, the best thing you can do is join a movement, right? If you’re worried about climate change, it doesn’t really … How well you recycle is way less important than what you do with your neighbors to change the way that we think about our relationship to the climate.

Cory Doctorow:
And if you’re worried about our technological environment, then your individual tech choices do matter. But they don’t matter nearly so much as the choices that you make when you get together with other people to make this part of a bigger, wider struggle.

Cindy Cohn:
I think that’s so right. And even those who are out there in their garages, innovating right now, they need all the rest of the conversation to work. Nobody just put something out there in the world and it magically caught fire and changed the world. I mean, we like that narrative, but that’s not how it works. And so, even if you’re one of those people–and there are many of them who are EFF fans and we love them–who are out there thinking about the next big idea, this whole movement has to move forward, so that that big idea finds the fertile ground it needs, take seed and grows, and then gives all the rest of us the really cool stuff in our fixed future.

Cindy Cohn:
So, thank you so much, Cory, for taking time with us. You never fail to bring exciting ideas. And I think that you also are really willing to talk to a sophisticated audience and not talk down to people and bring in complicated ideas without having … And expect and get the audience to come up to the level of the conversation, so I certainly always learn from talking with you.

Cory Doctorow:
I was going to say, I learned it all from you guys, so thank you very much. And I miss you guys, I can’t wait to see you in person again.

Danny O’Brien:
Cory is this little ball of pure idea concentrate, and I was madly scribbling notes through all of that discussion. But one of the phrases that stuck with me was that, he said the companies are blocking interoperability to control critics, customers, and competitors.

Cindy Cohn:
Yeah. I thought that was really good too, and obviously, the most important part of all of this is control. I mean, that’s what the companies have. Of course, the part about critics is what especially triggers the First Amendment concerns, but control is the thing and I think that the ultimate power that we should have, the ultimate amount of control we should have is the ability to leave.

Cindy Cohn:
The ultimate power is the power to leave. That’s the core thing that is needed to get companies to concentrate on their users. The conflict here is really between companies’ desire to control users and users having the right to choose where they want to be.

Danny O’Brien:
One of the other things that I think comes out of this discussion is when you realize that companies, by blocking interoperability, can have exclusive power of censorship or control over their users. There’s always someone else more powerful who has influenced itself over the companies and is ultimately going to take and use that power, right? And that’s, generally speaking, governments.

Danny O’Brien:
We notice that when you have this capability to influence, or to censor, or to manipulate your users, governments and states ultimately would like access to that power also.

Cindy Cohn:
Yeah. We’re seeing this all over the place, there’s always a bigger fish. Right now, we see politicians in the United States, in very different directions, jockeying to force companies like Facebook to obey their preferences or agendas. And again, we have high-profile counter-examples, but where we live, EFF, in the trenches, we see that this power of censorship is most often used against those with the least voice in the political arena.

Cindy Cohn:
That kind of branches out to why we care about censorship and the First Amendment. I think that sometimes people forget this. We don’t care about the First Amendment and free speech because we think it’s okay for anybody to be able to say whatever they want, no matter how awful it is. The First Amendment isn’t in our Constitution because we think it’s really great to be an asshole. It’s because the power to censor is so strong, and so easily misused.

Cindy Cohn:
As we’ve seen, once somebody has that power, everybody wants to control them. The other thing I think Cory really has a good grasp on is how we got here. We talked a little bit about the kill zone, that venture capitalists won’t fund startups that attempt to compete. I think that’s really right, and it’s a piece that we’re going to have to fix.

Danny O’Brien:
Yeah. I think one of the subtleties about the current VC environment that powers so much of current tech investment, at least, is the nature of the exit strategy. These days, a venture capitalist won’t give … expects to get their return, not by a company IPOing, or successfully overturning one of these monopolies, but actually by being bought out by those monopolies. And that really constrains and influences what new innovators or entrepreneurs plan on doing in the next few years. And I think that’s one of the things that sticks in this current, less-than-useful cycle.

Danny O’Brien:
And usually, in these situations, I think that the community that I most expect to provide adversarial interoperability is, at least in theory, free of those financial incentives. And that’s the free and open-source software community. So much of the history of open-source has been using interoperability to build and escape from existing proprietary systems, from the early days of Unix, to LibreOffice being a competitor, to Microsoft’s word processing monopoly and so on.

Danny O’Brien:
And I think where these two things interact, is that these days a lot of open-source and free software gets its funding from the big companies themselves, because they don’t necessarily want to fund interoperability. So, that means that the stuff that doesn’t cater to interoperability gets a lot of rewards, and other communities who are fighting to shake off the shackles of proprietary software and dominant monopolies struggle without financial support.

Danny O’Brien:
And of course, there’s legal liability there too. We just watched the youtube-dl case with GitHub throwing that off their service, because it’s an attempt to interoperate with one of these big tech magnets.

Cindy Cohn:
Yeah. Free and open-source world is vital. They have those muscles, and it’s always been how they work. They’ve always had to make sure that they can play on whatever hardware you have, as well as with other software. So, I think that this is a key to getting us into a place where we can make interoperability the norm, not the exception.

Cindy Cohn:
I also, am really pleased about the Internet Archive’s work in really supporting the idea of a more distributed web. I think they really get the censorship possibilities, and are really supporting a lot of little companies, or little developers, or innovators who are trying to build a community to really get this done. And yes, the youtube-dl case, this is a situation in which you see the lack of protection for interoperability really meaning that the first thing that happened was this tool that so many people rely on went away as opposed to any other step. The first thing that happens is we lose the tool. That’s because the legal system isn’t set up to be really even or handle these kinds of situations, but rather just move to censorship first.

Cindy Cohn:
So in this, we’ve gone over what Cory talked about as the four levers of change. These four levers are things that were originated by Larry Lessig in the 90s. And those four levers are: law, like the DMCA, which is used in the YouTube case, the Computer Fraud and Abuse Act, and antitrust; norms; technology; and markets.

Cindy Cohn:
They all work together, and you can’t just pick one. And there’s a lot of efforts to try to say, “Well, you just have to pick one and let the others go.” But in my experience, you really can’t tell which one will create change, they all reinforce each other. And so, to really fix the Internet, we have to push on all four together.

Danny O’Brien:
But at least now we have four levers rather than no levers at all. On that note, I think we’ll wrap up for today. Join us next time.

Danny O’Brien:
Thanks again for joining us. If you’d like to support the Electronic Frontier Foundation, here are three things you can do today. One: you can hit subscribe in your podcast player of choice. And if you have time, please leave a review. It helps more people find us. Two: please share on social media and with your friends and family. Three: please visit eff.org/podcasts, where you will find more episodes, learn about these issues, you can donate to become a member, and lots more.

Danny O’Brien:
Members are the only reason we can do this work, plus you can get cool stuff like an EEF hat, or a EFF hoodie, or even a camera cover for your laptop. Thanks once again for joining us, and if you have any feedback on this episode, please email podcast@eff.org. We do read every email. This podcast was produced by the Electronic Frontier Foundation with the help from Stuga Studios. Music by Nat Keefe of BeatMower.

The FCC’s Independence and Mission Are at Stake with Trump Nominee


This post is by Ernesto Falcon from Deeplinks

When there are only five people in charge of a major federal agency, the personal agenda of even one of them can have a profound impact. That’s why EFF is closely watching the nomination of Nathan Simington to the Federal Communications Commission (FCC).

Simington’s nomination appears to be the culmination of a several-month project to transform the FCC and expand its purview in ways that threaten our civil liberties online. The Senate should not confirm him without asking some crucial questions about whether and how he will help ensure that the FCC does the public interest job Congress gave it, which is to expand broadband access, manage the public’s wireless spectrum to their benefit, and protect consumers when they use telecommunications services.

There’s good reason to worry: Simington was reportedly one of the legal architects behind the president’s recent executive order seeking to have the FCC issue “clarifying” regulations for social media platforms. The executive order purports to give the FCC authority to create rules to which social media platforms must adhere in order to enjoy liability protections under Section 230, the most important law protecting our free speech online. Section 230 protects online platforms from liability for the speech of their users, while protecting their flexibility to develop their own speech moderation policies. The Trump executive order would upend that flexibility. 

As we’ve explained at length, this executive order was based on a legal fiction. The FCC’s role is not to enforce or interpret Section 230; its job is to regulate the United States’ telecommunications infrastructure: broadband, telephone, cable television, satellite, and all the various infrastructural means of delivering information to and from homes and businesses in the U.S. Throughout the Trump administration, the FCC has often shirked that duty—most dramatically, by abandoning any meaningful defense of net neutrality. Simington’s nomination seems to be an at-the-buzzer shot by an administration that’s been focused on undermining our protections for free speech online, instead of upholding the FCC’s traditional role of ensuring affordable access to the Internet and other communications technologies, and ensuring that those technologies don’t unfairly discriminate against specific users or uses.

The FCC Is Not the Speech Police—And Shouldn’t Be

Let’s take a look at the events leading up to Simington’s nomination. Twitter first applied a fact-check label to a tweet of President Trump’s in May, in response to his claims that mail-in ballots were part of a campaign of systemic voter fraud. As a private company, Twitter has the First Amendment right to implement such fact-checks, or even to choose not to carry someone’s speech for any reason.

The White House responded with its executive order that, among other things, directed the FCC to draft regulations that would narrow the Section 230 liability shield. As a result, it perverted the FCC’s role: it’s supposed to be a telecom regulator, not the social media police.

The White House executive order reflects a long-running (and unproven) claim in conservative circles that social media platforms are biased against conservative users. Some lawmakers and commentators have even claimed that their biased moderation practices somehow strip social media platforms of their liability protections under Section 230. As early as 2018, Sen. Ted Cruz incorrectly told Facebook CEO Mark Zuckerberg that in order to be shielded by 230, a platform had to be a “neutral public forum.” In the years since then, members of Congress have introduced multiple bills purporting to condition platforms’ 230 immunity on “neutral” moderation policies. As we’ve explained to Congress, a law demanding that platforms moderate speech in a certain way would be unconstitutional. The misguided executive order has the same inherent flaw as the bills: the government cannot dictate online platforms’ speech policies.

It’s not the FCC’s job to police social media, and it’s also not the president’s job to tell it to. By design, the FCC is an independent agency and not subject to the president’s demands. But when Republican FCC commissioner Michael O’Rielly correctly pointed out that government efforts to control private actor speech were unconstitutional, he was quickly punished. O’Rielly wrote [pdf], “the First Amendment protects us from limits on speech imposed by the government – not private actors – and we should all reject demands, in the name of the First Amendment, for private actors to curate or publish speech in a certain way.” The White House responded by withdrawing O’Rielly’s nomination and nominating Simington, one of the drafters of the executive order.

During a transition of power, it’s customary for independent agencies like the FCC to pause on controversial actions. The current FCC has so far adhered to that tradition, only moving forward items that have unanimous support. Every item the FCC has voted on since the election had the support of the Chair, the other four commissioners, and industry and consumer groups. For example, the FCC has moved forward on freeing up of 5.9 Ghz spectrum for unlicensed uses, a move applauded by EFF and most experts. But we worry that in nominating Simington, the administration is attempting to pave the way for a future FCC to go far beyond its traditional mandate and move into policing social media platforms’ policies. We’re glad to see Fight for the Future, Demand Progress, and several other groups rightfully calling on the Senate to not move forward on Nate Simington’s nomination.

The FCC’s Real Job Is More Important Than Ever 

There’s no shortage of work to do within FCC’s traditional role and statutory mandate. The FCC must begin to address the pressure test that the COVID-19 pandemic has posed to the U.S. telecommunications infrastructure. Much of the U.S. population must now rely on home Internet subscriptions for work, education, and socializing. Millions of families either have no home Internet access at all or lack sufficient access to meet this new demand. The new FCC has a monumental task in front of itself. 

During his Senate confirmation hearing, Simington gave no real indication on how he plans to work on the real issues facing the agency: broadband access, remote school challenges, spectrum management, improving competition, and public safety rules, for example. The only things we learned from the hearing are that he plans to continue the Trump-era policy of refusing to regulate large ISPs and that he refuses to recuse himself from decisions on the misguided executive order that he helped write. Before the Simington confirmation hearing started, Trump again urged Republicans to quickly confirm his nominee on a partisan basis.

In response, Senator Richard Blumenthal called for a hold on Simington’s nomination, indicating real concern for the FCC’s independence from the White House. That means the Senate would need to bypass his filibuster if it truly wanted to confirm Trump’s nominee.

Sen. Blumenthal’s concerns are real and important. President Trump effectively fired his own commissioner (O’Rielly) for expressing basic First Amendment principles. Before it confirms Simington, the Senate ought to consider what the nomination means for the future of the FCC. As the pandemic continues to worsen, there are too many mission critical issues for the FCC to tackle for it to continue with Trump’s misguided war on Section 230.

Don’t Blame Section 230 for Big Tech’s Failures. Blame Big Tech.


This post is curated by Keith Teare. It was written by Elliot Harmon. The original is [linked here]

Next time you hear someone blame Section 230 for a problem with social media platforms, ask yourself two questions: first, was this problem actually caused by Section 230? Second, would weakening Section 230 solve the problem? Politicians and commentators on both sides of the aisle frequently blame Section 230 for big tech companies’ failures, but their reform proposals wouldn’t actually address the problems they attribute to Big Tech. If lawmakers are concerned about large social media platforms’ outsized influence on the world of online speech, they ought to confront the lack of meaningful competition among those platforms and the ways in which those platforms fail to let users control or even see how they’re using our data. Undermining Section 230 won’t fix Twitter and Facebook; in fact, it risks making matters worse by further insulating big players from competition and disruption.

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today.

Section 230 says that if you break the law online, you should be the one held responsible, not the website, app, or forum where you said it. Similarly, if you forward an email or even retweet a tweet, you’re protected by Section 230 in the event that that material is found unlawful. It has some exceptions—most notably, that it doesn’t shield platforms from liability under federal criminal law—but at its heart, Section 230 is just common sense: you should be held responsible for your speech online, not the platform that hosted your speech or another party.

Without Section 230, the Internet would be a very different place, one with fewer spaces where we’re all free to speak out and share our opinions. Social media wouldn’t exist—at least in its current form—and neither would important educational and cultural platforms like Wikipedia and the Internet Archive. The legal risk associated with operating such a service would deter any entrepreneur from starting one, let alone a nonprofit.

As commentators of all political stripes have targeted large Internet companies with their ire, it’s become fashionable to blame Section 230 for those companies’ failings. But Section 230 isn’t why five companies dominate the market for speech online, or why the marketing and behavior analysis decisions that guide Big Tech’s practices are so often opaque to users.

The Problem with Social Media Isn’t Politics; It’s Power

A recent Congressional hearing with the heads of Facebook, Twitter, and Google demonstrated the highly politicized nature of today’s criticisms of Big Tech. Republicans scolded the companies for “censoring” and fact-checking conservative speakers while Democrats demanded that they do more to curb misleading and harmful statements.

There’s a nugget of truth in both parties’ criticisms: it’s a problem that just a few tech companies wield immense control over what speakers and messages are allowed online. It’s a problem that those same companies fail to enforce their own policies consistently or offer users meaningful opportunity to appeal bad moderation decisions. There’s little hope of a competitor with fairer speech moderation practices taking hold given the big players’ practice of acquiring would-be competitors before they can ever threaten the status quo.

Unfortunately, trying to legislate that platforms moderate “neutrally” would create immense legal risk for any new social media platform—raising, rather than lowering, the barrier to entry for new platforms. Can a platform filter out spam while still maintaining its “neutrality”? What if that spam has a political message? Twitter and Facebook would have the large legal budgets and financial cushions to litigate those questions, but smaller platforms wouldn’t.

We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Likewise, if Twitter and Facebook faced serious competition, then the decisions they make about how to handle (or not handle) hateful speech or disinformation wouldn’t have nearly the influence they have today on online discourse. If there were twenty major social media platforms, then the decisions that any one of them makes to host, remove, or factcheck the latest misleading post about the election results wouldn’t have the same effect on the public discourse. The Internet is a better place when multiple moderation philosophies can coexist, some more restrictive and some more permissive.

The hearing showed Congress’ shortsightedness when it comes to regulation of large Internet companies. In their drive to use the hearing for their political ends, both parties ignored the factors that led to Twitter, Facebook, and Google’s outsized power and remedies to bring competition and choice into the social media space.

Ironically, though calls to reform Section 230 are frequently motivated by disappointment in Big Tech’s speech moderation policies, evidence shows that further reforms to Section 230 would make it more difficult for new entrants to compete with Facebook or Twitter. It shouldn’t escape our attention that Facebook was one of the first tech companies to endorse SESTA/FOSTA, the 2018 law that significantly undermined Section 230’s protections for free speech online, or that Facebook is now leading the charge for further reforms to Section 230 (PDF). Any law that makes it more difficult for a platform to maintain Section 230’s liability shield will also make it more difficult for new startups to compete with Big Tech. (Just weeks after SESTA/FOSTA passed and put multiple dating sites out of business, Facebook announced that it was entering the online dating world.) We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Remember, speech moderation at scale is hard. It’s one thing for platforms to come to a decision about how to handle divisive posts by a few public figures; it’s quite another for them to create rules affecting everyone’s speech and enforce them consistently and transparently. When platforms err on the side of censorship, marginalized communities are silenced disproportionately. Congress should not try to pass laws dictating how Internet companies should moderate their platforms. Such laws would not pass Constitutional scrutiny, would harden the market for social media platforms from new entrants, and would almost certainly censor innocent people unfairly.

Then How Should Congress Keep Platforms in Check? Some Ideas You Won’t Hear from Big Tech

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today. That’s why EFF recommends that Congress update antitrust law to stop the flood of mergers and acquisitions that have made competition in Big Tech an illusion. Before the government approves a merger, the companies should have to prove that the merger would not increase their monopoly power or unduly harm competition.

But even updating antitrust policy is not enough: big tech companies will stop at nothing to protect their black box of behavioral targeting from even a shred of transparency. Facebook recently demonstrated this when it threatened the Ad Observatory, an NYU project to shed light on how the platform was showing different political advertising messages to different segments of its user base. Major social media platforms’ business models thrive on practices that keep users in the dark about what information they collect on us and how it’s used. Decisions about what material (including advertising) to deliver to users are informed by a web of inferences about users, inferences that are usually impossible for users even to see, let alone correct.

Because of the link between social media’s speech moderation policies and its irresponsible management of user data, Congress can’t improve Big Tech’s practices without addressing its surveillance-based business models. And although large tech companies have endorsed changes to Section 230 and may endorse further changes to Section 230 in the future, they will probably never endorse real, comprehensive privacy-protective legislation.

That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Any federal privacy bill must have a private right of action: if a company breaks the law and infringes on our privacy rights, it’s not enough to put a government agency in charge of enforcing the law. Users should have the right to sue the companies, and it should be impossible to sign away those rights in a terms-of-service agreement. The law must also forbid companies from selling privacy as a service: all users must enjoy the same privacy rights regardless of what we’re paying—or being paid—for the service.

The recent fights over the California Consumer Privacy Act serve as a useful example of how tech companies can give lip service to the idea of privacy-protecting legislation while actually insulating themselves from it. After the law passed in 2018, the Internet Association—a trade group representing Big Tech powerhouses like Facebook, Twitter, and Google—spent nearly $176,000 lobbying the California legislature to weaken the law. Most damningly, the IA tried to pass a bill exempting surveillance-based advertising from the practices from which the law protects consumers. That’s right: big tech companies tried to pass a law protecting their own invasive advertising practices that helped cement their dominance in the first place. That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Section 230 has become a hot topic for politicians and commentators on both sides of the aisle. Whether it’s Republicans criticizing Big Tech for allegedly censoring conservatives or Democrats alleging that online platforms don’t do enough to fight harmful speech online, both sides seem increasingly convinced that they can change Big Tech’s social media practices by undermining Section 230. But history has shown that making it more difficult for platforms to maintain Section 230 protections will further isolate a few large tech companies from meaningful competition. If Congress wants to keep Big Tech in check, it must address the real problems head-on, passing legislation that will bring competition to Internet platforms and curb the unchecked, opaque user data practices at the heart of social media’s business models.

You’ll never hear Big Tech advocate that.

Don’t Blame Section 230 for Big Tech’s Failures. Blame Big Tech.


This post is by Elliot Harmon from Deeplinks

Next time you hear someone blame Section 230 for a problem with social media platforms, ask yourself two questions: first, was this problem actually caused by Section 230? Second, would weakening Section 230 solve the problem? Politicians and commentators on both sides of the aisle frequently blame Section 230 for big tech companies’ failures, but their reform proposals wouldn’t actually address the problems they attribute to Big Tech. If lawmakers are concerned about large social media platforms’ outsized influence on the world of online speech, they ought to confront the lack of meaningful competition among those platforms and the ways in which those platforms fail to let users control or even see how they’re using our data. Undermining Section 230 won’t fix Twitter and Facebook; in fact, it risks making matters worse by further insulating big players from competition and disruption.

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today.

Section 230 says that if you break the law online, you should be the one held responsible, not the website, app, or forum where you said it. Similarly, if you forward an email or even retweet a tweet, you’re protected by Section 230 in the event that that material is found unlawful. It has some exceptions—most notably, that it doesn’t shield platforms from liability under federal criminal law—but at its heart, Section 230 is just common sense: you should be held responsible for your speech online, not the platform that hosted your speech or another party.

Without Section 230, the Internet would be a very different place, one with fewer spaces where we’re all free to speak out and share our opinions. Social media wouldn’t exist—at least in its current form—and neither would important educational and cultural platforms like Wikipedia and the Internet Archive. The legal risk associated with operating such a service would deter any entrepreneur from starting one, let alone a nonprofit.

As commentators of all political stripes have targeted large Internet companies with their ire, it’s become fashionable to blame Section 230 for those companies’ failings. But Section 230 isn’t why five companies dominate the market for speech online, or why the marketing and behavior analysis decisions that guide Big Tech’s practices are so often opaque to users.

The Problem with Social Media Isn’t Politics; It’s Power

A recent Congressional hearing with the heads of Facebook, Twitter, and Google demonstrated the highly politicized nature of today’s criticisms of Big Tech. Republicans scolded the companies for “censoring” and fact-checking conservative speakers while Democrats demanded that they do more to curb misleading and harmful statements.

There’s a nugget of truth in both parties’ criticisms: it’s a problem that just a few tech companies wield immense control over what speakers and messages are allowed online. It’s a problem that those same companies fail to enforce their own policies consistently or offer users meaningful opportunity to appeal bad moderation decisions. There’s little hope of a competitor with fairer speech moderation practices taking hold given the big players’ practice of acquiring would-be competitors before they can ever threaten the status quo.

Unfortunately, trying to legislate that platforms moderate “neutrally” would create immense legal risk for any new social media platform—raising, rather than lowering, the barrier to entry for new platforms. Can a platform filter out spam while still maintaining its “neutrality”? What if that spam has a political message? Twitter and Facebook would have the large legal budgets and financial cushions to litigate those questions, but smaller platforms wouldn’t.

We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Likewise, if Twitter and Facebook faced serious competition, then the decisions they make about how to handle (or not handle) hateful speech or disinformation wouldn’t have nearly the influence they have today on online discourse. If there were twenty major social media platforms, then the decisions that any one of them makes to host, remove, or factcheck the latest misleading post about the election results wouldn’t have the same effect on the public discourse. The Internet is a better place when multiple moderation philosophies can coexist, some more restrictive and some more permissive.

The hearing showed Congress’ shortsightedness when it comes to regulation of large Internet companies. In their drive to use the hearing for their political ends, both parties ignored the factors that led to Twitter, Facebook, and Google’s outsized power and remedies to bring competition and choice into the social media space.

Ironically, though calls to reform Section 230 are frequently motivated by disappointment in Big Tech’s speech moderation policies, evidence shows that further reforms to Section 230 would make it more difficult for new entrants to compete with Facebook or Twitter. It shouldn’t escape our attention that Facebook was one of the first tech companies to endorse SESTA/FOSTA, the 2018 law that significantly undermined Section 230’s protections for free speech online, or that Facebook is now leading the charge for further reforms to Section 230 (PDF). Any law that makes it more difficult for a platform to maintain Section 230’s liability shield will also make it more difficult for new startups to compete with Big Tech. (Just weeks after SESTA/FOSTA passed and put multiple dating sites out of business, Facebook announced that it was entering the online dating world.) We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Remember, speech moderation at scale is hard. It’s one thing for platforms to come to a decision about how to handle divisive posts by a few public figures; it’s quite another for them to create rules affecting everyone’s speech and enforce them consistently and transparently. When platforms err on the side of censorship, marginalized communities are silenced disproportionately. Congress should not try to pass laws dictating how Internet companies should moderate their platforms. Such laws would not pass Constitutional scrutiny, would harden the market for social media platforms from new entrants, and would almost certainly censor innocent people unfairly.

Then How Should Congress Keep Platforms in Check? Some Ideas You Won’t Hear from Big Tech

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today. That’s why EFF recommends that Congress update antitrust law to stop the flood of mergers and acquisitions that have made competition in Big Tech an illusion. Before the government approves a merger, the companies should have to prove that the merger would not increase their monopoly power or unduly harm competition.

But even updating antitrust policy is not enough: big tech companies will stop at nothing to protect their black box of behavioral targeting from even a shred of transparency. Facebook recently demonstrated this when it threatened the Ad Observatory, an NYU project to shed light on how the platform was showing different political advertising messages to different segments of its user base. Major social media platforms’ business models thrive on practices that keep users in the dark about what information they collect on us and how it’s used. Decisions about what material (including advertising) to deliver to users are informed by a web of inferences about users, inferences that are usually impossible for users even to see, let alone correct.

Because of the link between social media’s speech moderation policies and its irresponsible management of user data, Congress can’t improve Big Tech’s practices without addressing its surveillance-based business models. And although large tech companies have endorsed changes to Section 230 and may endorse further changes to Section 230 in the future, they will probably never endorse real, comprehensive privacy-protective legislation.

That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Any federal privacy bill must have a private right of action: if a company breaks the law and infringes on our privacy rights, it’s not enough to put a government agency in charge of enforcing the law. Users should have the right to sue the companies, and it should be impossible to sign away those rights in a terms-of-service agreement. The law must also forbid companies from selling privacy as a service: all users must enjoy the same privacy rights regardless of what we’re paying—or being paid—for the service.

The recent fights over the California Consumer Privacy Act serve as a useful example of how tech companies can give lip service to the idea of privacy-protecting legislation while actually insulating themselves from it. After the law passed in 2018, the Internet Association—a trade group representing Big Tech powerhouses like Facebook, Twitter, and Google—spent nearly $176,000 lobbying the California legislature to weaken the law. Most damningly, the IA tried to pass a bill exempting surveillance-based advertising from the practices from which the law protects consumers. That’s right: big tech companies tried to pass a law protecting their own invasive advertising practices that helped cement their dominance in the first place. That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Section 230 has become a hot topic for politicians and commentators on both sides of the aisle. Whether it’s Republicans criticizing Big Tech for allegedly censoring conservatives or Democrats alleging that online platforms don’t do enough to fight harmful speech online, both sides seem increasingly convinced that they can change Big Tech’s social media practices by undermining Section 230. But history has shown that making it more difficult for platforms to maintain Section 230 protections will further isolate a few large tech companies from meaningful competition. If Congress wants to keep Big Tech in check, it must address the real problems head-on, passing legislation that will bring competition to Internet platforms and curb the unchecked, opaque user data practices at the heart of social media’s business models.

You’ll never hear Big Tech advocate that.

Don’t Blame Section 230 for Big Tech’s Failures. Blame Big Tech.


This post is by Elliot Harmon from Deeplinks

Next time you hear someone blame Section 230 for a problem with social media platforms, ask yourself two questions: first, was this problem actually caused by Section 230? Second, would weakening Section 230 solve the problem? Politicians and commentators on both sides of the aisle frequently blame Section 230 for big tech companies’ failures, but their reform proposals wouldn’t actually address the problems they attribute to Big Tech. If lawmakers are concerned about large social media platforms’ outsized influence on the world of online speech, they ought to confront the lack of meaningful competition among those platforms and the ways in which those platforms fail to let users control or even see how they’re using our data. Undermining Section 230 won’t fix Twitter and Facebook; in fact, it risks making matters worse by further insulating big players from competition and disruption.

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today.

Section 230 says that if you break the law online, you should be the one held responsible, not the website, app, or forum where you said it. Similarly, if you forward an email or even retweet a tweet, you’re protected by Section 230 in the event that that material is found unlawful. It has some exceptions—most notably, that it doesn’t shield platforms from liability under federal criminal law—but at its heart, Section 230 is just common sense: you should be held responsible for your speech online, not the platform that hosted your speech or another party.

Without Section 230, the Internet would be a very different place, one with fewer spaces where we’re all free to speak out and share our opinions. Social media wouldn’t exist—at least in its current form—and neither would important educational and cultural platforms like Wikipedia and the Internet Archive. The legal risk associated with operating such a service would deter any entrepreneur from starting one, let alone a nonprofit.

As commentators of all political stripes have targeted large Internet companies with their ire, it’s become fashionable to blame Section 230 for those companies’ failings. But Section 230 isn’t why five companies dominate the market for speech online, or why the marketing and behavior analysis decisions that guide Big Tech’s practices are so often opaque to users.

The Problem with Social Media Isn’t Politics; It’s Power

A recent Congressional hearing with the heads of Facebook, Twitter, and Google demonstrated the highly politicized nature of today’s criticisms of Big Tech. Republicans scolded the companies for “censoring” and fact-checking conservative speakers while Democrats demanded that they do more to curb misleading and harmful statements.

There’s a nugget of truth in both parties’ criticisms: it’s a problem that just a few tech companies wield immense control over what speakers and messages are allowed online. It’s a problem that those same companies fail to enforce their own policies consistently or offer users meaningful opportunity to appeal bad moderation decisions. There’s little hope of a competitor with fairer speech moderation practices taking hold given the big players’ practice of acquiring would-be competitors before they can ever threaten the status quo.

Unfortunately, trying to legislate that platforms moderate “neutrally” would create immense legal risk for any new social media platform—raising, rather than lowering, the barrier to entry for new platforms. Can a platform filter out spam while still maintaining its “neutrality”? What if that spam has a political message? Twitter and Facebook would have the large legal budgets and financial cushions to litigate those questions, but smaller platforms wouldn’t.

We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Likewise, if Twitter and Facebook faced serious competition, then the decisions they make about how to handle (or not handle) hateful speech or disinformation wouldn’t have nearly the influence they have today on online discourse. If there were twenty major social media platforms, then the decisions that any one of them makes to host, remove, or factcheck the latest misleading post about the election results wouldn’t have the same effect on the public discourse. The Internet is a better place when multiple moderation philosophies can coexist, some more restrictive and some more permissive.

The hearing showed Congress’ shortsightedness when it comes to regulation of large Internet companies. In their drive to use the hearing for their political ends, both parties ignored the factors that led to Twitter, Facebook, and Google’s outsized power and remedies to bring competition and choice into the social media space.

Ironically, though calls to reform Section 230 are frequently motivated by disappointment in Big Tech’s speech moderation policies, evidence shows that further reforms to Section 230 would make it more difficult for new entrants to compete with Facebook or Twitter. It shouldn’t escape our attention that Facebook was one of the first tech companies to endorse SESTA/FOSTA, the 2018 law that significantly undermined Section 230’s protections for free speech online, or that Facebook is now leading the charge for further reforms to Section 230 (PDF). Any law that makes it more difficult for a platform to maintain Section 230’s liability shield will also make it more difficult for new startups to compete with Big Tech. (Just weeks after SESTA/FOSTA passed and put multiple dating sites out of business, Facebook announced that it was entering the online dating world.) We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Remember, speech moderation at scale is hard. It’s one thing for platforms to come to a decision about how to handle divisive posts by a few public figures; it’s quite another for them to create rules affecting everyone’s speech and enforce them consistently and transparently. When platforms err on the side of censorship, marginalized communities are silenced disproportionately. Congress should not try to pass laws dictating how Internet companies should moderate their platforms. Such laws would not pass Constitutional scrutiny, would harden the market for social media platforms from new entrants, and would almost certainly censor innocent people unfairly.

Then How Should Congress Keep Platforms in Check? Some Ideas You Won’t Hear from Big Tech

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today. That’s why EFF recommends that Congress update antitrust law to stop the flood of mergers and acquisitions that have made competition in Big Tech an illusion. Before the government approves a merger, the companies should have to prove that the merger would not increase their monopoly power or unduly harm competition.

But even updating antitrust policy is not enough: big tech companies will stop at nothing to protect their black box of behavioral targeting from even a shred of transparency. Facebook recently demonstrated this when it threatened the Ad Observatory, an NYU project to shed light on how the platform was showing different political advertising messages to different segments of its user base. Major social media platforms’ business models thrive on practices that keep users in the dark about what information they collect on us and how it’s used. Decisions about what material (including advertising) to deliver to users are informed by a web of inferences about users, inferences that are usually impossible for users even to see, let alone correct.

Because of the link between social media’s speech moderation policies and its irresponsible management of user data, Congress can’t improve Big Tech’s practices without addressing its surveillance-based business models. And although large tech companies have endorsed changes to Section 230 and may endorse further changes to Section 230 in the future, they will probably never endorse real, comprehensive privacy-protective legislation.

That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Any federal privacy bill must have a private right of action: if a company breaks the law and infringes on our privacy rights, it’s not enough to put a government agency in charge of enforcing the law. Users should have the right to sue the companies, and it should be impossible to sign away those rights in a terms-of-service agreement. The law must also forbid companies from selling privacy as a service: all users must enjoy the same privacy rights regardless of what we’re paying—or being paid—for the service.

The recent fights over the California Consumer Privacy Act serve as a useful example of how tech companies can give lip service to the idea of privacy-protecting legislation while actually insulating themselves from it. After the law passed in 2018, the Internet Association—a trade group representing Big Tech powerhouses like Facebook, Twitter, and Google—spent nearly $176,000 lobbying the California legislature to weaken the law. Most damningly, the IA tried to pass a bill exempting surveillance-based advertising from the practices from which the law protects consumers. That’s right: big tech companies tried to pass a law protecting their own invasive advertising practices that helped cement their dominance in the first place. That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Section 230 has become a hot topic for politicians and commentators on both sides of the aisle. Whether it’s Republicans criticizing Big Tech for allegedly censoring conservatives or Democrats alleging that online platforms don’t do enough to fight harmful speech online, both sides seem increasingly convinced that they can change Big Tech’s social media practices by undermining Section 230. But history has shown that making it more difficult for platforms to maintain Section 230 protections will further isolate a few large tech companies from meaningful competition. If Congress wants to keep Big Tech in check, it must address the real problems head-on, passing legislation that will bring competition to Internet platforms and curb the unchecked, opaque user data practices at the heart of social media’s business models.

You’ll never hear Big Tech advocate that.

Don’t Blame Section 230 for Big Tech’s Failures. Blame Big Tech.


This post is by Elliot Harmon from Deeplinks

Next time you hear someone blame Section 230 for a problem with social media platforms, ask yourself two questions: first, was this problem actually caused by Section 230? Second, would weakening Section 230 solve the problem? Politicians and commentators on both sides of the aisle frequently blame Section 230 for big tech companies’ failures, but their reform proposals wouldn’t actually address the problems they attribute to Big Tech. If lawmakers are concerned about large social media platforms’ outsized influence on the world of online speech, they ought to confront the lack of meaningful competition among those platforms and the ways in which those platforms fail to let users control or even see how they’re using our data. Undermining Section 230 won’t fix Twitter and Facebook; in fact, it risks making matters worse by further insulating big players from competition and disruption.

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today.

Section 230 says that if you break the law online, you should be the one held responsible, not the website, app, or forum where you said it. Similarly, if you forward an email or even retweet a tweet, you’re protected by Section 230 in the event that that material is found unlawful. It has some exceptions—most notably, that it doesn’t shield platforms from liability under federal criminal law—but at its heart, Section 230 is just common sense: you should be held responsible for your speech online, not the platform that hosted your speech or another party.

Without Section 230, the Internet would be a very different place, one with fewer spaces where we’re all free to speak out and share our opinions. Social media wouldn’t exist—at least in its current form—and neither would important educational and cultural platforms like Wikipedia and the Internet Archive. The legal risk associated with operating such a service would deter any entrepreneur from starting one, let alone a nonprofit.

As commentators of all political stripes have targeted large Internet companies with their ire, it’s become fashionable to blame Section 230 for those companies’ failings. But Section 230 isn’t why five companies dominate the market for speech online, or why the marketing and behavior analysis decisions that guide Big Tech’s practices are so often opaque to users.

The Problem with Social Media Isn’t Politics; It’s Power

A recent Congressional hearing with the heads of Facebook, Twitter, and Google demonstrated the highly politicized nature of today’s criticisms of Big Tech. Republicans scolded the companies for “censoring” and fact-checking conservative speakers while Democrats demanded that they do more to curb misleading and harmful statements.

There’s a nugget of truth in both parties’ criticisms: it’s a problem that just a few tech companies wield immense control over what speakers and messages are allowed online. It’s a problem that those same companies fail to enforce their own policies consistently or offer users meaningful opportunity to appeal bad moderation decisions. There’s little hope of a competitor with fairer speech moderation practices taking hold given the big players’ practice of acquiring would-be competitors before they can ever threaten the status quo.

Unfortunately, trying to legislate that platforms moderate “neutrally” would create immense legal risk for any new social media platform—raising, rather than lowering, the barrier to entry for new platforms. Can a platform filter out spam while still maintaining its “neutrality”? What if that spam has a political message? Twitter and Facebook would have the large legal budgets and financial cushions to litigate those questions, but smaller platforms wouldn’t.

We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Likewise, if Twitter and Facebook faced serious competition, then the decisions they make about how to handle (or not handle) hateful speech or disinformation wouldn’t have nearly the influence they have today on online discourse. If there were twenty major social media platforms, then the decisions that any one of them makes to host, remove, or factcheck the latest misleading post about the election results wouldn’t have the same effect on the public discourse. The Internet is a better place when multiple moderation philosophies can coexist, some more restrictive and some more permissive.

The hearing showed Congress’ shortsightedness when it comes to regulation of large Internet companies. In their drive to use the hearing for their political ends, both parties ignored the factors that led to Twitter, Facebook, and Google’s outsized power and remedies to bring competition and choice into the social media space.

Ironically, though calls to reform Section 230 are frequently motivated by disappointment in Big Tech’s speech moderation policies, evidence shows that further reforms to Section 230 would make it more difficult for new entrants to compete with Facebook or Twitter. It shouldn’t escape our attention that Facebook was one of the first tech companies to endorse SESTA/FOSTA, the 2018 law that significantly undermined Section 230’s protections for free speech online, or that Facebook is now leading the charge for further reforms to Section 230 (PDF). Any law that makes it more difficult for a platform to maintain Section 230’s liability shield will also make it more difficult for new startups to compete with Big Tech. (Just weeks after SESTA/FOSTA passed and put multiple dating sites out of business, Facebook announced that it was entering the online dating world.) We shouldn’t be surprised that Facebook has joined Section 230’s critics: it literally has the most to gain from decimating the law.

Remember, speech moderation at scale is hard. It’s one thing for platforms to come to a decision about how to handle divisive posts by a few public figures; it’s quite another for them to create rules affecting everyone’s speech and enforce them consistently and transparently. When platforms err on the side of censorship, marginalized communities are silenced disproportionately. Congress should not try to pass laws dictating how Internet companies should moderate their platforms. Such laws would not pass Constitutional scrutiny, would harden the market for social media platforms from new entrants, and would almost certainly censor innocent people unfairly.

Then How Should Congress Keep Platforms in Check? Some Ideas You Won’t Hear from Big Tech

While large tech companies might clamor for regulations that would hamstring their competitors, they’re notably silent on reforms that would curb the practices that allow them to dominate the Internet today. That’s why EFF recommends that Congress update antitrust law to stop the flood of mergers and acquisitions that have made competition in Big Tech an illusion. Before the government approves a merger, the companies should have to prove that the merger would not increase their monopoly power or unduly harm competition.

But even updating antitrust policy is not enough: big tech companies will stop at nothing to protect their black box of behavioral targeting from even a shred of transparency. Facebook recently demonstrated this when it threatened the Ad Observatory, an NYU project to shed light on how the platform was showing different political advertising messages to different segments of its user base. Major social media platforms’ business models thrive on practices that keep users in the dark about what information they collect on us and how it’s used. Decisions about what material (including advertising) to deliver to users are informed by a web of inferences about users, inferences that are usually impossible for users even to see, let alone correct.

Because of the link between social media’s speech moderation policies and its irresponsible management of user data, Congress can’t improve Big Tech’s practices without addressing its surveillance-based business models. And although large tech companies have endorsed changes to Section 230 and may endorse further changes to Section 230 in the future, they will probably never endorse real, comprehensive privacy-protective legislation.

That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Any federal privacy bill must have a private right of action: if a company breaks the law and infringes on our privacy rights, it’s not enough to put a government agency in charge of enforcing the law. Users should have the right to sue the companies, and it should be impossible to sign away those rights in a terms-of-service agreement. The law must also forbid companies from selling privacy as a service: all users must enjoy the same privacy rights regardless of what we’re paying—or being paid—for the service.

The recent fights over the California Consumer Privacy Act serve as a useful example of how tech companies can give lip service to the idea of privacy-protecting legislation while actually insulating themselves from it. After the law passed in 2018, the Internet Association—a trade group representing Big Tech powerhouses like Facebook, Twitter, and Google—spent nearly $176,000 lobbying the California legislature to weaken the law. Most damningly, the IA tried to pass a bill exempting surveillance-based advertising from the practices from which the law protects consumers. That’s right: big tech companies tried to pass a law protecting their own invasive advertising practices that helped cement their dominance in the first place. That the Internet Association and its members have fought tooth-and-nail to stop privacy protective legislation while lobbying for bills undermining Section 230 says all you need to know about which type of regulation they see as the greater threat to their bottom line.

Section 230 has become a hot topic for politicians and commentators on both sides of the aisle. Whether it’s Republicans criticizing Big Tech for allegedly censoring conservatives or Democrats alleging that online platforms don’t do enough to fight harmful speech online, both sides seem increasingly convinced that they can change Big Tech’s social media practices by undermining Section 230. But history has shown that making it more difficult for platforms to maintain Section 230 protections will further isolate a few large tech companies from meaningful competition. If Congress wants to keep Big Tech in check, it must address the real problems head-on, passing legislation that will bring competition to Internet platforms and curb the unchecked, opaque user data practices at the heart of social media’s business models.

You’ll never hear Big Tech advocate that.

The Cost of the “New Way to Message on Instagram”


This post is by Andrés Arrieta from Deeplinks

If you are on Instagram, you have been probably bombarded by Instagram Stories and notifications about new features like emojis, chat themes, selfie stickers, and “cross-platform messaging” that will allow you to exchange direct messages with, and search for, friends who are on Facebook. But the insistent messages to “Update Messaging” minimize the extent of this change, which will blur the lines between the two apps in ways that might unpleasantly surprise users.

Images of notification promoting new features when updating the Messaging in Instagram

Even worse, if you choose to accept the update, you won’t be able to go back. Reading the fine print at the bottom raises questions about whether this is a mere update or an entirely new messaging system.

“When you update, the old version won’t be available.”

Images of notification promoting new features with fine print at the bottom “When you update, the old version won’t be available.”

The “old version” Facebook refers to is simply the Instagram Direct messaging app. And the “new version” is a new messaging system that links Instagram and Facebook.

To put it simply, you now have “ Instagram Messenger.” After the “update,” you have in essence Facebook Messenger inside of Instagram.  

Competition

Facebook announced their intention to merge Facebook Messenger, Instagram Direct, and WhatsApp in March 2019. The announcement promised new privacy and security features across the board, including end-to-end encryption, ephemeral messages, and reduced data retention. End-to-end encryption beyond WhatsApp hasn’t arrived yet, but cross-platform messaging between Messenger and Instagram is clearly one step in this grand plan. And its execution seems to be in step with Facebook’s custom of minimizing the extent—and invasiveness—of a business move in order to get users to click “ok.”

When Facebook acquired WhatsApp in 2014, antitrust enforcers already had concerns about what this meant for consumers. WhatsApp users had made the choice to use a service outside of Facebook, and many were concerned that this was not only an attempt to acquire the users’ data and crush competitors, but also to eventually merge WhatsApp into Facebook’s ecosystem. Facebook made promises to keep the two services operating separately, and Facebook broke those promises just two years later, with similarly unclear notice to users.

Facebook’s acquisition of Instagram in 2012 came the same story, concerns, and failure from enforcers to properly evaluate the acquisition. Now, this latest update represents another step towards merging Instagram into Facebook, and making it harder to distinguish one from the other.  It’s not a coincidence that the “updated” version of the Instagram messaging app does not use the Instagram logo or a new one, but the Facebook Messenger logo.

In the initial 2019 announcement on merging the three messaging apps, Facebook called it a step toward “interoperability, saying,  “We want to give people a choice so they can reach their friends across these networks from whichever app they prefer.” But communicating across services owned and operated by a single company isn’t interoperability. If anything, Facebook isn’t trying to make its messengers interoperable; it’s trying to make them indistinguishable to regulators with competition and data-sharing concerns and to users. And, if this Instagram update is any indication, users are not getting the opportunity to make a clear, informed choice. 

Choice

Tech companies like Facebook have mastered the art of distorting choice and consent. Here, you have the choice to change to the new messaging system— but you don’t have the choice to go back to the previous Instagram non-linked version. More importantly, hiding this detail in the fine print makes it an unclear choice to users who are surrounded by notifications, pings, and banners pressuring them into the change. Not forgetting that Facebook’s policy means that this change will eventually link to your real name.

This is not an update, but a new messaging system from which you can’t switch back. There is nothing especially innovative about having colors in chats, or new emojis. Facebook could have added these to the Instagram Direct messaging app without bringing Facebook Messenger cross-platform functionality along with it. These are simply features presented to artificially devalue one of the systems, distract from the real changes, and manipulate users into changing to a different system. This is not an “update,” but a forced change to blur the lines between Facebook-owned apps.

The Last Smash and Grab at the Federal Communications Commission


This post is by Ernesto Falcon from Deeplinks

AT&T and Verizon secured arguably one of the biggest regulatory benefits from the Federal Communications Commission (FCC) with the agency ending the last remnants of telecom competition law. In return for this massive gift from the federal government, they will give the public absolutely nothing. 

A Little Bit of Telecom History 

When the Department of Justice successfully broke up the AT&T monopoly into regional companies, it needed Congress to pass a law to open up the regional companies (known as Incumbent Local Exchange Carriers or ILECs) to competition. To do that, the Congress passed the Telecommunications Act of 1996 that established bedrock competition law and reaffirmed non-discrimination policies that net neutrality is based on.  The law Congress created a new industry that would interoperate with the ILECs. These companies were called Competitive Local Exchange Carriers (CLECs) and already existed locally at the time as many were selling early day Internet access via dialup over the AT&T telephone lines along with local phone services. As broadband came to market, CLECs used the copper wires of ILECs to sell competitive DSL services. In the early years the policy worked and competition sprung forth with 1,000s of new companies existing along with a massive new competition based investment in the telecom sector in general (see chart below).

Source: Data assembled by the California Public Utilities Commission in 2005

Congress intervened to create the competitive market through the FCC, but at the same time gave the FCC the keys (through a process called “forbearance”) to eliminate the regulatory interventions should competition take root on its own. The FCC started to apply forbearance just a short number of years after the passage of the ‘96 Act with arguably one of the most significant decisions in 2005 when fiber wires being deployed by ILECs did not have to be shared with CLECs like copper wires with the entry of Verizon FiOS. Many states followed course though with notable resistance because it was questionable whether future networks did not need strong competition policy to ensure the goals of affordability and universality could be met with market forces alone. One California Public Utilities Commissioner expressed concern that “within a few years there may not be any ZIP codes left in California with more than five or six providers.”

What Little Competition Remains Today

The ILECs today, essentially AT&T and Verizon, no longer deploy fiber broadband and have abandoned competition with cable companies to pursue wireless services. Without access to fiber, CLECs began to deploy their own fiber networks that were financed from their revenues they gained from copper DSL customers, even in rural markets. But for the last two years AT&T and Verizon have been trying to put a stop to that by asking the FCC to use its forbearance power to eliminate copper sharing as well, which they achieved today. Worst yet, AT&T is already positioning itself to abandon DSL copper lines rather than upgrade them to fiber in markets across the country leaving people with a cable monopoly or undependable cell phone service for Internet. In other words, the FCC will effectively make the digital divide worse for 100,000s of Americans by today’s decision. 

Broadband competition has been on a long slow decline for well over a decade after the FCC’s 2005 decision. In the years that followed the industry rapidly consolidated with smaller companies being snuffed out or closing shop. Virtually every single prediction the FCC made about the market in 2005 have failed to pan out and the end result is a huge number of Americans now face regional monopolies as their need for high-speed access has grown dramatically during the pandemic. It is time to rethink the approach, but today we got a double down. 

The FCC’s Decision is Not Final and a Future FCC Can Chart a New Course

The decline of competition didn’t happen exclusively at the hands of the current FCC, but the signs of the regional monopolization were obvious at the start of 2017 when the agency decided to abandon its authority over the industry and repeal net neutrality rules. Approving today’s AT&T/Verizon petition to end the 1996’s final remnants of competition policy, rather than improving and modernizing them to promote high-speed access competition, the FCC has decided that big ISPs know best. But we see what is going to happen next. AT&T will work hard to eliminate any small competitors on their copper lines because doing so impairs their ability to replace them with fiber. All that while they themselves will not provide the fiber replacement resulting in a worsening of the digital divide worse across the country. The right policy would make sure every American gets a fiber line rather than disconnected. None of this has to happen though and EFF will work hard in the states and in DC to bring back competition in broadband access.

EU vs Big Tech: Leaked Enforcement Plans and the Dutch-French Counterproposal


This post is by Cory Doctorow from Deeplinks

At the end of September, multiple press outlets published leaked set of antimonopoly enforcement proposals proposed for the a new EU Digital Market Act , which EU officials say they will finalize this year.

The proposals confront the stark fact that the Internet has been thoroughly dominated by a handful of giant, U.S.-based firms, which compete on a global stage with a few giant Chinese counterparts and a handful of companies from Russia and elsewhere. The early promise of a vibrant, dynamic Internet, where giants were routinely toppled by upstarts helmed by outsiders seems to have died, strangled by a monopolistic moment in which the Internet has decayed into “a group of five websites, each consisting of screenshots of text from the other four.

Anti-Monopoly Laws Have Been Under-Enforced The tech sector is not exceptional in this regard: from professional wrestling to eyeglasses to movies to beer to beef and poultry, global markets have collapsed into oligarchies, with each sector dominated by a handful of companies (or just one).

Fatalistic explanations for the unchecked rise of today’s monopolized markets—things like network effects and first-mover advantage—are not the whole story. If these factors completely accounted for tech’s concentration, then how do we explain wrestling’s concentration? Does professional wrestling enjoy network effects too?

A simpler, more parsimonious explanation for the rise of monopolies across the whole economy can be found in the enforcement of anti-monopoly law, or rather, the lack thereof, especially in the U.S. For about forty years, the U.S. and many other governments have embraced a Reagan-era theory of anti-monopoly called “the consumer welfare standard.” This ideology, associated with Chicago School economic theorists, counsels governments to permit monopolistic behavior – mergers between large companies, “predatory acquisitions” of small companies that could pose future threats, and the creation of vertically integrated companies that control large parts of their supply chain – so long as there is no proof that this will lead to price-rises in the immediate aftermath of these actions.

For four decades, successive U.S. administrations from both parties, and many of their liberal and conservative counterparts around the world, have embraced this ideology and have sat by as firms have grown not by selling more products than their competitors, or by making better products than their competitors, but rather by ceasing to compete altogether by merging with one another to create a “kill zone” of products and services that no one can compete with.

After generations in ascendancy, the consumer welfare doctrine is finally facing a serious challenge, and not a moment too soon. In the U.S., both houses of Congressheld sweeping hearings on tech companies anticompetitive conduct, and the House’s bold report on its lengthy, deep investigation into tech monopolism signaled a political establishment ready to go beyond consumer welfare and return to a more muscular, pre-Reagan form of competition enforcement anchored in the idea that monopolies are bad for society, and that we should prevent them because they hurt workers and consumers, and because they distort politics and smother innovation — and not merely because they sometimes make prices go up.

A New Set of Anti-Monopoly Tools for the European Union These new EU leaks are part of this trend, and in them, we find a made-in-Europe suite of antimonopoly enforcement proposals that are, by and large, very welcome indeed. The EU defines a new, highly regulated sub-industry within tech called a “gatekeeper platform” — a platform that exercises “market power” within its niche (the precise definition of this term is hotly contested). For these gatekeepers, the EU proposes a long list of prohibitions:

  • A ban on platforms’ use of customer transaction data unless that data is also made available to the companies on the platform (so Amazon would have to share the bookselling data it uses in its own publishing efforts with the publishers that sell through its platform, or stop using that data altogether)
  • Platforms will have to obtain users’ consent before combining data about their use of the platform with other data from third parties
  • A ban on “preferential ranking” of platforms’ own offerings in their search results: if you search for an address, Google will have to show you the best map preview for that address, even if that’s not Google Maps
  • Platforms like iOS and Android can’t just pre-load their devices exclusively with their own apps, nor could Google they require Android manufacturers to preinstall Google’s preferred apps, and not other apps, on Android devices
  • A ban on devices that use “technical measures” (that’s what lawyers call DRM — any technology that stops you from doing what you want with your stuff) to prevent you from removing pre-installed apps.
  • A ban on contracts that force businesses to offer their wares everywhere on the same terms as the platform demands — for example, if platforms require monthly subscriptions, a business could offer the same product for a one-time payment somewhere else.
  • A ban on contracts that punish businesses on platforms from telling their customers about ways to use their products without using the platform (so a mobile game could inform you that you can buy cheaper power-ups if you use the company’s website instead of the app)
  • A ban on systems that don’t let you install unapproved apps (AKA “side-loading”)
  • A ban on gag-clauses in contracts that prohibit companies for complaining about the way the platform runs its business
  • A ban on requiring that you use a specific email provider to use a platform (think of the way that Android requires a Gmail address)
  • A requirement that users be able to opt out of signing into services operated by the platform they’re using — so you could sign into YouTube without being signed into Gmail

On top of those rules, there’s a bunch of “compliance” systems to make sure they’re not being broken:

  • Ad platforms will have to submit to annual audits that will help advertisers understand who saw their ads and in what context
  • Ad platforms will have to submit to annual audits disclosing their “cross-service tracking” of users and explaining how this complies with the GDPR, the EU’s privacy rules
  • Gatekeepers will have to produce documents on demand from regulators to demonstrate their compliance with rules
  • Gatekeepers will have to notify regulators of any planned mergers, acquisitions or partnerships
  • Gatekeepers will have to pay employees to act as compliance officers, watchdogging their internal operations

In addition to all this, the leak reveals a “greylist” of activities that regulators will intervene to stop:

  • Any actions that prevents sellers on a platform from acquiring “essential information” that the platform collects on their customers
  • Collecting more data than is needed to operate a platform
  • Preventing sellers on a platform from using the data that the platform collects on their customers
  • Anything that creates barriers preventing businesses on a platform or their customers from migrating to a rival’s platform
  • Keeping an ad platform’s click and search data secret — platforms will have to sell this data on a “fair, reasonable and non-discriminatory” basis
  • Any steps that stop users from accessing a rival’s products or services on a platform
  • App store policies that ban third-party sellers from replicating an operating system vendor’s own apps
  • Locking users into a platform’s own identity service
  • Platforms that degrade quality of service for competitors using the platform
  • Locking platform sellers into using the platform’s payment-processor, delivery service or insurance
  • Platforms that offer discounts on their services to some businesses but not others
  • Platforms that block interoperability for delivery, payment and analytics
  • Platforms that degrade connections to rivals’ services
  • Platforms that “mislead” users into switching from a third-party’s services to the platform’s own
  • Platforms that practice “tying” – forcing users to access unrelated third-party apps or services (think of an operating system vendor that requires you to get a subscription to a partner’s antivirus tools).

One worrying omission from this list: interoperability rules for dominant companies. The walled gardens with which dominant platforms imprison their users are a serious barrier to new competitors. Forcing them to install gateways – ways for users of new services to communicate with the friends and services they left behind when they switched will go a long way to reducing the power of the dominant companies. That is a more durable remedy than passing rules to force those dominant actors to use their power wisely.

That said, there’s plenty to like about these proposals, but the devil is in the details.

In particular, we’re concerned that all the rules in the world do no good if they are not enforced. Determining whether a company has “degraded service” to a rival is hard to determine from the outside — can we be certain that service problems are a deliberate act of sabotage? What about companies’ claims that these are just normal technical issues arising from providing service to a third party whose servers and network connections are out of its control?

Harder still is telling whether a search-result unduly preferences a platform’s products over rivals: the platforms will say (they do say) that they link to their own services ahead of others because they rank their results by quality and their weather reports, stores, maps, or videos are simply better than everyone else’s. Creating an objective metric of the “right” way to present search results is certain to be contentious, even among people of goodwill who agree that the platform’s own services aren’t best.

What to do then? Well, as economists like to say, “incentives matter.” Companies preference their own offerings in search, retail, pre-loading, and tying because they have those offerings. A platform that competes with its customers has an incentive to cheat on any rules of conduct in order to preference its products over the competing products offered by third parties.

Traditional antimonopoly law recognized this obvious economic truth, and responded to it with a policy called “structural separation“: this was an industry-by-industry ban on certain kinds of vertical integration. For example, rail companies were banned from operating freight companies that competed with the freighters who used the rails; banks were banned from owning businesses that competed with the businesses they loaned money to. The theory of structural separation is that in some cases, dominant companies simply can’t be trusted not to cheat on behalf of their subsidiaries, and catching them cheating is really hard, so we just remove the temptation by banning them from operating subsidiaries that benefit from cheating.

A structural separation regime for tech — say, one that prevented store-owners from competing with the businesses that sold things in their store, or one that prevented search companies from running ad-companies that would incentivize them to distort their search results — would take the pressure off of many of the EU’s most urgent (and hardest-to-enforce) rules. Not only would companies who broke those rules fail to profit by doing so, but detecting their cheating would be a lot easier.

Imposing structural separation is not an easy task. Given the degree of vertical integration in the tech sector today, structural separation would mean unwinding hundreds of mergers, spinning off independent companies, or requiring independent management and control of subsidiaries. The companies will fight this tooth-and-nail.

But despite this, there is political will for separation. The Dutch and French governments have both signaled their displeasure with the leaked proposal, insisting that it doesn’t go far enough, signing a (non-public) position paper that calls for structural separation, with breakups “on the table.”

Whatever happens with these proposals, the direction of travel is clear. Monopolies are once again being recognized as a problem in and of themselves, regardless of their impact on short-term prices. It’s a welcome, long overdue change.

California Is Putting Together A Broadband Plan. We Have Thoughts.


This post is by Ernesto Falcon from Deeplinks

Right now the California Public Utilities Commission and the California Broadband Council are collecting public comment to create the California Broadband Plan, per Governor Newsom’s Executive Order 73-20. The order’s purpose is to get a means of delivering 100 mbps-capable Internet connections to around 2 million Californians who lack access to at least one high-speed connection. These Californians overwhelmingly live in two types of places: rural and low-income urban. 

California’s Systemic Broadband Access Failures Will Require a Lot of Work to Fix, But It Can Be Done

California has some major broadband access problems, despite the size and reach of its economy. The state has the largest number of students (1.298 million) in the country who are unable to access high-speed Internet access. When we see kids going to fast food parking lots for Internet access, like the two little girls in Salinas, California doing their homework with Taco Bell parking lot WiFi, that is a pretty clear sign of policy failure in cities. When 2 million, mostly rural, Californian residents are dependent on the now bankrupt Frontier Communications— which received billions in federal subsidies and spent a lot of it on obsolete copper DSL instead of profitable fiber to the home—that is a pretty clear sign of both market failure and policy failure. And when studies of California cities find that ISPs are more likely to avoid Black neighborhoods with fiber in Los Angeles and have deployment patterns of high-speed access that mirror 1930s-era redlining in Oakland, we have a failure to modernize and enforce our existing non-discrimination laws. 

As bad as things are today, particularly in light of how the pandemic has shifted more of our needs online, the state has a great opportunity to fix these problems. The Electronic Frontier Foundation has been studying this issue of 21st-century access to the Internet and based on our legal and technical research, we’ve submitted the following recommendations to the state outlining how to bring fiber-to-the-home to all people. 

Here is the good news. It is already commercially feasible to deliver fiber to the home to 90% of households in the United States (and California) within a handful of years—if we adopt the right policies soon. Public sector deployments led by rural cooperatives across the country are proving that even in the cases of the absolutely hardest deployments, such as a 7,500 person cooperative reaching only 2.5 people per square mile, it’s possible to get access to gigabit fiber-to-the-home. So, contrary to what a legacy industry overly reliant on limiting customers to yesterday’s infrastructure may say, or the arguments of policy makers who adopt the belief that some residents deserve 2nd-class access to the Internet, it can not only be done, it should have already been happening now. 

EFF’s Recommendations to the State of California to Deliver a Fiber for All Future

If our current and past policies have failed us, what is the new approach? You can read our is our full filing here (pdf), but the main points we make are as follows:

  1. Prioritize local private and public options and de-emphasize reliance on large national ISPs tethered to 3 to 5 years return on investment formulas. This short-term focus is incompatible with resolving the digital divide that will require 10 year or longer return on investment strategies (that’s ok with fiber that will last several decades).
  2. Mandate full fiber deployment in California cities with a density of more than 1,000 people per square mile in areas where low-income neighborhoods are being denied fiber infrastructure, in violation of current law. Give Internet service providers (ISPs) an opportunity to remedy, but make the consequence of failing to do so losing both their franchise for lack of compliance and the right to do business in California.
  3. Promote open access fiber policies and sharing opportunities in fiber infrastructure to reduce the overall cost of deployment. Leverage existing fiber needs in non-telecom markets such as electrical utilities to jointly work with telecom providers. 
  4. Adopt statewide San Francisco’s tenants ordinance, which expanded broadband competition through the city’s apartment complexes and ended the monopoly arrangement between cable companies and landlords. 
  5. Have the state assist in the creation of special districts to fill the role of rural cooperatives when a rural cooperative does not exist. Provide support in feasibility studies, technical education support, long term financing, and regulatory support to ensure such networks can interconnect with the nearest fiber infrastructure. 
  6. Begin mapping public sector fiber infrastructure, and open it up to shared uses to facilitate more local public and private options. Require private ISPs to provide mapping data of their fiber deployments to facilitate sharing, and intervene to address monopoly withholding of fiber access if necessary.  
  7. Standardize and expedite the permitting process for deploying fiber. Explore ways to improve micro-trenching policy to make it easier to deploy fiber in cities.    
  8. Support local government efforts to build fiber by financially supporting their ability to access the bond market and obtain long term low interest debt financing.

We hope that state policymakers recognize the importance of fiber optics as the core ingredient for 21st-century networks. It is already a universally adopted medium to deliver high-capacity networks, with more than 1 billion gigabit fiber connections coming online in a few years (primarily led by China). And to the extent that policymakers wish to see 5G high-speed wireless in all places, the industry has made it clear that is contingent on dense fiber networks being everywhere first

We urge the state to start the work needed to bring broadband access to every Californian as soon as possible. It will be hard work, but we can do it—if we start with the right policies, right now.

House Antitrust Report Is a Bold Prescription for Curing Big Tech’s Ills


This post is by Mitch Stoltz from Deeplinks

The long-awaited report[pdf] by the House Judiciary Committee staff[1] on Big Tech’s monopoly power hits all the right notes—and just a few wrong ones. Following a year of hearings and research, the staff of the Subcommittee on Antitrust found that Facebook, Google, Amazon, and Apple all have either significant market power or outright monopoly power in a variety of markets. Many of the report’s recommendations echo calls EFF has also made, proof of just how obviously effective, needed, and common-sense they are.

The power of Big Tech weakens innovation, erodes privacy, and undermines “political and economic liberties,” says the report. We’re pleased to see the report go beyond U.S. antitrust law’s narrow focus on consumer prices. The report also recommends many of the interventions that EFF has championed: new requirements for interoperability, a tougher standard for approving mergers and acquisitions, and stepping up the DOJ and Federal Trade Commission enforcement of the antitrust laws.

Interoperability as a Remedy

EFF has long been pointing out the value of interoperability as a monopoly-killer and innovation promoter that harnesses the skills of diverse and widely distributed entrepreneurs, without the central planning of governments or giant tech firms. That’s why we’re pleased that one of the committee’s recommendations is to require the Big Tech firms to allow their services to interoperate with competitors, breaking the power of network effects. Policies to promote compatible products are “an important complement, not substitute, to vigorous antitrust enforcement,” says the report.

Privacy Focus

The report explains how “the persistent collection and misuse of consumer data” by Big Tech firms is a sign of their monopoly power and gets worse the closer to monopoly a company gets. For example, major privacy scandals and data breaches haven’t caused many people to stop using Facebook, which is evidence of the social network’s monopoly power. People continue to use Facebook not because they trust it, but because it’s where their friends and family are. The lack of competition has allowed the Big Tech firms to create a “race to the bottom” on privacy. Importantly, the report connects this to antitrust analysis: while most Facebook and Google services are free to the consumer, poor privacy protection means a lower-quality product that customers wouldn’t accept if they had alternatives. That’s a harm that antitrust laws can address.

Get Tougher on Mergers

The report also recommends raising the bar on approval of mergers and acquisitions by the dominant tech platforms through a burden-shift: before acquiring nascent tech firms, the Big Tech companies would need to prove that the acquisition would not increase monopoly power or substantially decrease competition. This shift is another measure that EFF has long supported, because it makes sense: merging firms always have the most information about impacts on consumers and competition, information that enforcers often have difficulty obtaining, especially with limited budgets for litigation.

For News Media, It’s Goliath vs. Goliath

The report stumbles when it makes recommendations about preserving news media in the face of declining advertising revenues. The report recommends offering news media companies an exemption from the antitrust laws, allowing them to join as a bloc to negotiate some form of payments from Big Tech news aggregators. The problem with this is that U.S. news media is itself a highly concentrated industry. Exempting another set of giant firms from antitrust scrutiny will tend to shift money from one set of monopolists to another, without providing more media diversity for consumers. The report recognizes that such exemptions are “disfavored” and may run contrary to the goals of antitrust law.

Overall, the Judiciary Committee report is a strong, evidence-based prescription for fixing antitrust law to help address the problems of Big Tech. We hope the conversation continues, with good changes to the law and increased enforcement yet to come.

[1] While much of the effort that led to the report was bipartisan, the final report was issued by the majority (Democratic) committee staff.

Bust ‘Em All: Let’s De-Monopolize Tech, Telecoms AND Entertainment


This post is by Cory Doctorow from Deeplinks

The early 1980s were a period of tremendous foment and excitement for tech. In the four years between 1980 and 1984, Americans met:

But no matter how exciting things were in Silicon Valley during those years, even more seismic changes were afoot in Washington, D.C., where a jurist named Robert Bork found the ear of President Reagan and a coterie of elite legal insiders and began to fundamentally reshape US antitrust law.

Bork championed an antitrust theory called “the consumer welfare standard,” which reversed generations of American competition law, insisting that monopolies and monopolistic conduct were rarely a problem and that antitrust law should only be invoked when there was “consumer harm” in the form of higher prices immediately following from a merger or some other potentially anti-competitive action.

Tech and lax antitrust enforcement grew up together. For 40 years, we’ve lived through two entwined experiments: the Internet and its foundational design principle that anyone should be able to talk to anyone using any protocol without permission from anyone else; and the consumer welfare standard, and its bedrock idea that monopolies are not harmful unless prices increase.

It’s not a pretty sight. Forty years on and much of the dynamism of technology has been choked out of the industry, with a few firms attaining seemingly permanent dominance over our digital lives, maintaining their rule by buying or merging with competitors, blocking interoperability, and holding whole markets to ransom.

Thankfully, things are starting to change. Congress’s long-dormant appetite for fighting monopolists is awakening, with hard-charging hearings and far-reaching legislative proposals.

And yet… Anyone who hangs out in policy circles has heard the rumors: this was all cooked up by Big Cable, the telecom giants who have been jousting with tech over Net Neutrality, privacy, and every other measure that allowed the public to get more value out of the wires in our homes or the radio signals in our skies without cutting in the telecoms for a piece of the action.

Or perhaps it’s not the telecoms: maybe it’s Big Content, the giant, hyper-consolidated entertainment companies (five publishers, four movie studios, three record labels), whose war on tech freedom has deep roots: given all their nefarious lobbying and skullduggery, is it so hard to believe they’d cook up a fake grassroots campaign to defang Big Tech under color of reinvigorating antitrust?

In any event, why selectively enforce competition laws against tech companies, while leaving these other sectors unscathed?

Why indeed? Who said anything about leaving telecoms or entertainment untouched by antitrust? The companies that make up those industries are in desperate need of tougher antitrust enforcement, and we’re here for it.

Who wouldn’t be? Just look at the telecoms industry, where cable and phone companies have divided up the nation like the Pope dividing up the “New World,” so that they never have to compete head to head with one another. This sector is the reason that Americans pay more for slower broadband than anyone else in the world, and the pandemic has revealed just how bad this is.

When Frontier declared bankruptcy early in the Covid-19 crisis, its disclosures revealed the extent to which American families were being victimized by these monopolies: Frontier’s own planning showed that it could earn $800,000,000 in profits by providing 100gb fiber to three million households, but it did not, because the company’s top execs were worried that spending money to build out this profitable fiber would make the company’s share price dip momentarily, and since a) these execs are mostly paid in stock; and b) none of those households had an alternative, Frontier left nearly $1 billion on the table and three million households on ancient, unreliable, slow Internet connections.

The big telcos and cable operators are in sore need of adult supervision, competitive pressure, and Congressional hearings.

And things are no better in the world of entertainment, where a string of mergers —most recently the nakedly anticompetitive Disney-Fox merger—has left performers and creators high and dry, with audiences hardly faring any better.

Anyone who tells you that we shouldn’t fight tech concentration because the telecom or entertainment industry is also monopolistic is missing the obvious rejoinder: we should fight monopoly in those industries, too.

In boolean terms, trustbusting tech, entertainment, and cable is an AND operation, not a XOR operation.

Besides, for all their public performance of hatred for one another, tech, content, and telcos are perfectly capable of collaborating to screw the rest of us. If you think tech isn’t willing to sell out Net Neutrality, you need to pay closer attention. If you think that tech is the champion who’ll keep the entertainment lobby from installing automated copyright filters, think again. And if you think all competing industries aren’t colluding in secret to rig markets, we’ve got some disturbing news for you.

Surviving the 21st Century is not a matter of allying yourself with a feudal lord—choosing Team Content, Team Tech, or Team Telecomand hoping that your chosen champion will protect you from the depredations of the others.

If we’re gonna make it through this monopolistic era of evidence-free policy that benefits a tiny, monied minority at the expense of the rest of us, we need to demand democratic accountability for market abuses, demand a pluralistic market where dominant firms are subjected to controls and penalties, where you finally realize birthright of technological self-determination.

If Big Cable and Big Content are secretly gunning for Big Tech with antitrust law, they’re making a dangerous bet: that trustbusting will be revived only to the extent that it is used to limit Big Tech, and then it will return to its indefinite hibernation. That’s not how this works. Even if tech is where the new trustbusting era starts, it’s not where it will end.

Bust ‘Em All: Let’s De-Monopolize Tech, Telecoms AND Entertainment


This post is by Cory Doctorow from Deeplinks

The early 1980s were a period of tremendous foment and excitement for tech. In the four years between 1980 and 1984, Americans met:

But no matter how exciting things were in Silicon Valley during those years, even more seismic changes were afoot in Washington, D.C., where a jurist named Robert Bork found the ear of President Reagan and a coterie of elite legal insiders and began to fundamentally reshape US antitrust law.

Bork championed an antitrust theory called “the consumer welfare standard,” which reversed generations of American competition law, insisting that monopolies and monopolistic conduct were rarely a problem and that antitrust law should only be invoked when there was “consumer harm” in the form of higher prices immediately following from a merger or some other potentially anti-competitive action.

Tech and lax antitrust enforcement grew up together. For 40 years, we’ve lived through two entwined experiments: the Internet and its foundational design principle that anyone should be able to talk to anyone using any protocol without permission from anyone else; and the consumer welfare standard, and its bedrock idea that monopolies are not harmful unless prices increase.

It’s not a pretty sight. Forty years on and much of the dynamism of technology has been choked out of the industry, with a few firms attaining seemingly permanent dominance over our digital lives, maintaining their rule by buying or merging with competitors, blocking interoperability, and holding whole markets to ransom.

Thankfully, things are starting to change. Congress’s long-dormant appetite for fighting monopolists is awakening, with hard-charging hearings and far-reaching legislative proposals.

And yet… Anyone who hangs out in policy circles has heard the rumors: this was all cooked up by Big Cable, the telecom giants who have been jousting with tech over Net Neutrality, privacy, and every other measure that allowed the public to get more value out of the wires in our homes or the radio signals in our skies without cutting in the telecoms for a piece of the action.

Or perhaps it’s not the telecoms: maybe it’s Big Content, the giant, hyper-consolidated entertainment companies (five publishers, four movie studios, three record labels), whose war on tech freedom has deep roots: given all their nefarious lobbying and skullduggery, is it so hard to believe they’d cook up a fake grassroots campaign to defang Big Tech under color of reinvigorating antitrust?

In any event, why selectively enforce competition laws against tech companies, while leaving these other sectors unscathed?

Why indeed? Who said anything about leaving telecoms or entertainment untouched by antitrust? The companies that make up those industries are in desperate need of tougher antitrust enforcement, and we’re here for it.

Who wouldn’t be? Just look at the telecoms industry, where cable and phone companies have divided up the nation like the Pope dividing up the “New World,” so that they never have to compete head to head with one another. This sector is the reason that Americans pay more for slower broadband than anyone else in the world, and the pandemic has revealed just how bad this is.

When Frontier declared bankruptcy early in the Covid-19 crisis, its disclosures revealed the extent to which American families were being victimized by these monopolies: Frontier’s own planning showed that it could earn $800,000,000 in profits by providing 100gb fiber to three million households, but it did not, because the company’s top execs were worried that spending money to build out this profitable fiber would make the company’s share price dip momentarily, and since a) these execs are mostly paid in stock; and b) none of those households had an alternative, Frontier left nearly $1 billion on the table and three million households on ancient, unreliable, slow Internet connections.

The big telcos and cable operators are in sore need of adult supervision, competitive pressure, and Congressional hearings.

And things are no better in the world of entertainment, where a string of mergers —most recently the nakedly anticompetitive Disney-Fox merger—has left performers and creators high and dry, with audiences hardly faring any better.

Anyone who tells you that we shouldn’t fight tech concentration because the telecom or entertainment industry is also monopolistic is missing the obvious rejoinder: we should fight monopoly in those industries, too.

In boolean terms, trustbusting tech, entertainment, and cable is an AND operation, not a XOR operation.

Besides, for all their public performance of hatred for one another, tech, content, and telcos are perfectly capable of collaborating to screw the rest of us. If you think tech isn’t willing to sell out Net Neutrality, you need to pay closer attention. If you think that tech is the champion who’ll keep the entertainment lobby from installing automated copyright filters, think again. And if you think all competing industries aren’t colluding in secret to rig markets, we’ve got some disturbing news for you.

Surviving the 21st Century is not a matter of allying yourself with a feudal lord—choosing Team Content, Team Tech, or Team Telecomand hoping that your chosen champion will protect you from the depredations of the others.

If we’re gonna make it through this monopolistic era of evidence-free policy that benefits a tiny, monied minority at the expense of the rest of us, we need to demand democratic accountability for market abuses, demand a pluralistic market where dominant firms are subjected to controls and penalties, where you finally realize birthright of technological self-determination.

If Big Cable and Big Content are secretly gunning for Big Tech with antitrust law, they’re making a dangerous bet: that trustbusting will be revived only to the extent that it is used to limit Big Tech, and then it will return to its indefinite hibernation. That’s not how this works. Even if tech is where the new trustbusting era starts, it’s not where it will end.

The Government’s Antitrust Suit Against Google: Go Big and Do It Right


This post is by Mitch Stoltz from Deeplinks

U.S. antitrust enforcers are reported to be crafting a lawsuit against Google (and its parent company, Alphabet). The Department of Justice and a large coalition of state attorneys general are meeting this week and could file suit very soon. While it will reportedly focus on Google’s dominance in online advertising and search, the suit could encompass many more facets of Google’s conduct, including its dominance in mobile operating systems and Web browsers. This suit has the potential to be the most significant antitrust case against a technology company in over 20 years, since the DOJ’s 1998 suit against Microsoft.

All users of Google products, and everyone who views Google-brokered ads—in other words, nearly all Internet users—have a stake in the outcome of this lawsuit. That’s why it needs to be done right. It should cover more than just advertising markets, and focus on Google’s search, browser, and mobile OS market power as well. And the antitrust authorities should pursue smart remedies that look beyond money damages, including breakups and requiring interoperability with competitive products, all while being careful to protect users’ free speech and privacy interests that will inevitably be caught up in the mix. Like many, we worry that if this is rushed, it might not go well, so we urge the enforcers to take the time they need to do it right, while recognizing that there is ongoing harm.

The Importance of “Big Case” Antitrust

U.S. government antitrust suits have a have an important place in the history of innovation, because even when they didn’t end with a court order to break up a company, there is a reasonable case to be made that they created breathing room for innovation. The DOJ’s suit against IBM, for “monopolizing or attempting to monopolize the general purpose electronic digital computer system market” began in 1969, went to trial in 1975, and was withdrawn in 1982. Even though the case didn’t end with a court-ordered remedy, a decade-plus of public scrutiny into IBM’s business practices arguably kept the company from squashing nascent competitors like Microsoft as it had squashed other rivals for decades. That result likely helped launch the personal computer revolution of the 1980s, fueled by the ideas of numerous companies beyond “Big Blue.”

The government’s suit against AT&T, which had held a legally recognized monopoly over telephone service in the U.S. for most of the twentieth century, almost ended the same way as the IBM suit. Filed in 1974, US v. AT&T had not reached a judgment by 1982. But years of scrutiny, combined with the rise of potential competitors who were itching to enter telephone service and related markets, led AT&T’s leadership to agree to a breakup, allowing the “Baby Bells” and technology-focused spinoffs to innovate in data communications and the development of the Internet in ways that “Ma Bell” could not. It’s hard to imagine the Internet entering widespread use in the 1990s with a monolithic AT&T still deciding who could connect to telephone networks and what devices they could use. Even though the successors to AT&T eventually re-assembled themselves, the innovation unleashed by the breakup is still with us.

The 1998 case against Microsoft over its exclusion of rival Web browser software from PCs was also a boon to innovation. At the time, an AT&T-style breakup of Microsoft, perhaps splitting its operating system and application software divisions into separate companies, was a distinct possibility. In fact, the trial court ordered just that. On appeal, the D.C. Circuit rejected a breakup and instead ordered Microsoft to adhere to ongoing restrictions on its behavior towards competing software vendors and PC manufacturers. Once again, this seemed like something less than shining success. But facing ongoing monitoring of its behavior towards competitors, Microsoft shelved plans to crush a little-known search company called Google.

Two decades later, Google has expanded into so many Internet-related markets that its position in many of them appears unassailable. Google has been able to buy out or drive out of business nearly every company that dares compete with it in a variety of markets. The engine of disruptive innovation has broken down again, and a bold, thoughtful antitrust challenge by federal and state enforcers may be just the thing to help revive it.

Look at All of Alphabet, Not Just Advertising

News reports suggest that the suit against Google may focus on the company’s dominance of Web advertising, which is alleged to depress the ad revenues available to publishers. The suit may also address Google’s conduct towards competitors in search markets, such as travel and product searches. It could also look at Google’s history of mergers and acquisitions, such as its 2007 purchase of the advertising company DoubleClick, to see if it led to it acquiring monopoly power in various markets.

On the scope of the lawsuit, antitrust enforcers should go big. A suit that challenges Google’s conduct in advertising markets alone would not benefit consumers very much. While Google’s vast collection of data about users’ browsing habits and preferences, derived from its ad networks, causes great harm to consumers, it’s not yet clear whether dozens of smaller competitors in the ad-tech space, some of which are extremely shady, will be better stewards of user privacy. The answer here involves both antitrust and much-needed new privacy law. That will help consumers across the board.

The DOJ and states should also challenge Google’s leveraging of its existing market power in search, Web browsing (Chrome), and mobile operating systems (Android) to shut out competition. The suit should also address whether Google’s collection and control of user data across so many apps and devices—plus data from the millions of websites connected to Google’s advertising networks—gives it an advantage in other markets that triggers antitrust scrutiny. These are, in part, novel and difficult claims under antitrust law. But enforcers should aim high. Success in holding Google to account for its wielding of monopoly power, even if it does not succeed entirely, can help the courts and possibly Congress adapt antitrust law for the digital age. It can also help create a bulwark against further centralization of the Internet. And as history shows, even a suit that doesn’t ultimately lead to a breakup can help make room for innovation from diverse sources beyond the walls of today’s tech giants.

Have A Big Toolbox of Remedies: Interoperability, Follow-On Innovation, Conduct Rules, and Breakups

It’s obvious by now that antitrust enforcers need to pursue remedies beyond money damages. Google and Alphabet are large enough to treat almost any fine as a cost of doing business without significantly changing their behavior. A court-ordered breakup of Alphabet should be seriously considered as part of the case, as well—perhaps an order to separate aspects of Google’s advertising business or to unwind Google’s most problematic acquisitions.

Breakups shouldn’t be the only arrow in the government’s quiver of remedies, though. Ordering Google to allow its competitors to build products that interoperate would strike at the heart of Google’s monopoly problem and might be an easier lift. As we’ve shown through many examples, building products that can connect to existing, dominant products, without permission from the incumbent vendor, can be a potent antimonopoly weapon. It can help put users back into control.

In Google’s case, that could mean ordering Google not to interfere with products that block Google-distributed ads and tracking. Allowing ad- and tracker-blocking technologies to flourish would allow users to shape the ad-tech market by favoring companies that collect less user data, and who are more responsible with the data they have. It could also spur innovation in that market (note: EFF’s Privacy Badger is one of those technologies, but this could help many services). In that scenario, Google would have to compete for users’ views and clicks by protecting their privacy.

Interoperability requirements imposed as an antitrust remedy, or as part of a settlement, avoid many of the problems that come with more generalized technology mandates because orders can be crafted to suit a particular company’s technologies and practices. It can involve ongoing monitoring to ensure compliance and help avoid problems with security or other issues that could arise with a one-size-fits-all approach.

The upcoming lawsuit against Google is a great opportunity to begin addressing the problems of Big Tech’s monopoly power. If enforcers act boldly, they can set new antitrust precedents that will promote competition throughout high-tech markets. They can also use this opportunity to advance interoperability as a spur to innovation and a monopoly remedy.

California’s Assembly May Do Nothing to Help on Broadband—Thanks to Big ISPs


This post is by Ernesto Falcon from Deeplinks

As the final hours of the California legislative session tick down, it appears that the California Assembly may decide to not move forward on S.B. 1130 or any other legislative deal to start addressing the digital divide this year.

There has been broad support for legislation to close the digital divide: from rural and urban representatives in the California Senate, from small businesses and consumer advocates, and from the governor’s office. But big Internet Service Providers (ISPs) oppose any and all such plans, from boosting local communities’ ability to bond finance fiber, to extending financing for infrastructure to areas that the major ISPs have ignored through a tiny fee that the ISPs already pay. In fact, they have opposed virtually every idea that would challenge their slow, non-broadband Internet monopoly profits just as strongly as every effort to connect the completely unserved. And that opposition from big ISPs appears to have been too much for the California Assembly to ignore.

TAKE ACTION

California: Call On Your AssemblyMember To Act on Broadband Now

This is despite all the suffering people are enduring from a lack of universal access to robust Internet connections during the pandemic. Our Assembly appears unwilling to stand up for all the parents who are trying to work through the pandemic, while also educating their kids remotely.  Instead, they’re bowing to the very companies that have actively caused that pain through systemically underinvesting in neighborhoods across the state while simultaneously reaping billions in profits from your monthly bills. By pressuring the California Assembly to literally do nothing during the crisis, large national ISP lobbyists are on the verge of winning arguably one of the biggest legislative victories in decades.

The people hurting most right now will pay the greatest price. We are regularly seeing photos of children having to do their school work in fast food restaurant parking lots because they can’t get a connection at home. Everyone knows this is a serious problem that warrants a serious response. As former State Senator Kevin De Leon remarked, this generation deserves better. California’s children deserve better.

Two students sit outside a Taco Bell fast food restaurant to gain access to the restaurant's Internet.

From https://twitter.com/kdeleon/status/1299386969873461248

There is no question that the major national ISPs have systemically avoided building modern connections to low-income neighborhoods in cities. Their fiber deployment decisions of high-speed access, dating back more than a decade, are now causing active harm to communities of color. These decisions force children from their homes to fast food restaurant parking lots to pursue their education—because, of course, those same ISPs happily built fiber infrastructure to those fast food mega-corporations. There is no defensible argument that supports this racially discriminatory digital redlining. Yet the California Assembly, facing this evidence, may opt to do nothing about it.

Doing nothing also means choosing to leave millions in rural communities behind. Slow Internet monopolies who make billions selling inferior, obsolete services to rural Californians have denied those communities adequate service for even longer.  More than 2 million Californians rely on the now-bankrupt Frontier Communications for access to the Internet. Frontier, which in its filings to the government, revealed that millions of its customers could have been profitably upgraded to fiber. But, with its slumlord mentality, Frontier opted to pocket those investments for greater profits for as long as possible, until the house of cards collapsed. And it’s not the business executives that profited handsomely from this exploitation that are trapped inside that house. It’s rural Californians.

Shame is the only word that can describe the collective inaction of the California Assembly. It is a shame the Assembly is choosing to leave their fellow Californians behind—despite support for forward-thinking broadband plans from the California Senate, and from the Governor of California. It is a shame that the pandemic has not prompted a deeper realization among the Assembly that people need help. And it is a shame they will not recognize that government policy and money are the means to provide that help.

We have tried the private-only model for decades now, and we are living with the result today. There is no question: it has not worked. If you are in California and you think our legislature shouldn’t close for the year before taking decisive action on broadband access, call them now. They have the solutions in hand, and both the California Senate and Governor are willing to act. The Assembly just has to be willing to say no to Big ISPs and vote yes on a better future.

TAKE ACTION

California: Call On Your AssemblyMember To Act on Broadband Now

Throwing Out the FTC’s Suit Against Qualcomm Moves Antitrust Law in the Wrong Direction


This post is by Alex Moss from Deeplinks

The government bestows temporary monopolies in the form of patents to promote future innovation and economic growth. Antitrust law empowers the government to break up monopolies when their power is so great and their conduct is so corrosive of competition that they can dictate market outcomes without worrying about their rivals. In theory, patent and antitrust law serve the same goals—promoting economic and technological development—but in practice, they often butt heads.

The relationship between antitrust and patent law is especially thorny when it comes to “standards-essential patents” or “SEPs.” These are patents that cover technologies considered “essential” for implementing standards—agreed-upon rules and protocols that allow different manufacturers’ devices to communicate with each other using shared network infrastructure. Some technology standards become standards by achieving widespread adoption through market forces (the QWERTY keyboard layout is on example). But many are the result of extensive deliberation and cooperation among industry players (including competitors), like the MP3 audio compression and 3G wireless communication standards.

Standards can enhance competition and consumer choice, but they also massively inflate the value of patents deemed essential to the standard, and give their owners the power to sue companies that implement the standard for money damages or injunctions to block them from using their SEPs. When standards cover critical features like wireless connectivity, SEP owners wield a huge amount of “hold-up” power because their patents allow them to effectively block access to the standard altogether. That lets them charge unduly large tolls to anyone who wants to implement the standard.

To minimize that risk, standard-setting organizations typically require companies that want their patented technology incorporated into a standard to promise in advance to license their SEPs to others on fair, reasonable, and non-discriminatory (FRAND) terms. But that promise strikes at a key tension between antitrust and patent law: patent owners have no obligation to let anyone use technology their patent covers, but to get those technologies incorporated into standards, patent owners usually have to promise that they will give permission to anyone who wants to implement the standard as long as they pay a reasonable license fee. 

Qualcomm is one of the most important and dominant companies in the history of wireless communication standards. It is a multinational conglomerate that has owned patents on every major wireless communication standard since its first CDMA patent in 1985, and it participates in the standard-setting organizations that define those standards. Qualcomm is somewhat unique in that it not only licenses SEPs, but also supplies the modem chips used by a wide range of devices. These include chips that implement wireless communication standards, which lie at the heart of every mobile computing device.

Although Qualcomm promised to license its SEPs (including patents essential to CDMA, 3G, 4G, and 5G) on FRAND terms, its conduct has to many looked unfair, unreasonable, and highly discriminatory. In particular, Qualcomm has drawn scrutiny for bundling tens of thousands of patents together—including many that are not standard-essential—and offering portfolio-only licenses no matter what licensees actually want or need; refusing to sell modem chips to anyone without a SEP license and threatening to withhold chips from companies trying to negotiate different license terms; refusing to license anyone other than original-equipment manufacturers (OEMs); and insisting on royalties calculated as a percentage of the sale price of a handset sold to end users for hundreds of dollars, despite the minimal contribution of any particular patent to the retail value.

In 2017, the U.S. Federal Trade Commission sued Qualcomm for violating both sections of the Sherman Antitrust Act by engaging in a number of anticompetitive SEP licensing practices. In May 2019, the U.S. District Court for the Northern District of California agreed with the FTC, identifying numerous instances of Qualcomm’s unlawful, anticompetitive conduct in a comprehensive 233-page opinion. We were pleased to see the FTC take action and the district court credit the overwhelming evidence that Qualcomm’s conduct is corrosive to market-based competition and threatens to cement Qualcomm’s dominance for years to come.

But this month, a panel of judges from the Court of Appeals for the Ninth Circuit unanimously overturned the district court’s decision, reasoning that Qualcomm’s conduct was “hypercompetitive” but not “anticompetitive,” and therefore not a violation of antitrust law. To reach that result, the Ninth Circuit made the patent grant more powerful and antitrust law weaker than ever.

According to the Ninth Circuit, patent owners don’t have a duty to let anyone use what their patent covers, and therefore Qualcomm had no duty to license its SEPs to anyone. But that framing requires ignoring the promises Qualcomm made to license its SEPs on reasonable and non-discriminatory terms—promises that courts in this country and around the world have consistently enforced. It also means ignoring antitrust principles like the essential facilities doctrine, which limits the ability of a monopolist with hold-up power over an essential facility (like a port) to shut out rivals. Instead, the Ninth Circuit held rather simplistically that a duty to deal could arise only if the monopolist had provided access, and then reversed its policy.

But even when Qualcomm restricted its licensing policies in critical ways, the Ninth Circuit found reasons to approve those restrictions. For example, Qualcomm stopped licensing its patents to chip manufacturers and started licensing them only to OEMs. This had a major  benefit: it let Qualcomm charge a much higher royalty rate based on the high retail price of the end user devices, like smartphones and tablets, that OEMs make and sell. If Qualcomm had continued to license to chip suppliers, its patents would be “exhausted” once the chips were sold to OEMs, extinguishing Qualcomm’s right to assert its patents and control how the chips were used.

Patent exhaustion is a century-old doctrine that protects the rights of consumers to use things they buy without getting the patent owner’s permission again and again. Patent exhaustion is important because it prevents price-gouging, but also because it protects space for innovation by letting people use things they buy freely, including to build innovations of their own. The doctrine thus helps patent law serve its underlying goal—promoting economic growth and innovation. In other words, the doctrine of exhaustion is baked into the patent grant; it is not optional. Nevertheless, the Ninth Circuit wholeheartedly approved of Qualcomm’s efforts to avoid exhaustion—even when that meant cutting off access to previous licensees (chip-makers) in ways that let Qualcomm charge far more in licensing fees than its SEPs could possibly have contributed to the retail value of the final product.

It makes no sense that Qualcomm could contract around a fundamental principle like patent exhaustion, but at the same time did not assume any antitrust duty to deal under these circumstances. Worse, it’s harmful for the economy, innovation, and consumers. Unfortunately, the kind of harm that antitrust law recognizes is limited to harm affecting “competition” or the “competitive process.” Antitrust law, at least as the Ninth Circuit interprets it, doesn’t do nearly enough to address the harm downstream consumers experience when they pay inflated prices for high-tech devices, and miss out on innovation that might have developed from fair, reasonable, and non-discriminatory licensing practices.

We hope the FTC sticks to its guns and asks the Ninth Circuit to go en banc and reconsider this decision. Otherwise, antitrust law will become an even weaker weapon against innovation-stifling conduct in technology markets.   

California Governor Newsom’s Broadband Plan Lays Important Foundation and Opens Possibilities


This post is by Ernesto Falcon from Deeplinks

On August 14, 2020, Governor Gavin Newsom issued an executive order to establish a state goal of 100 mbps download speeds for all Californians, citing the 2 million Californians who lack access to high-speed broadband today. This announcement is significant, as it firmly illustrates that the state of California believes the federal definition of broadband is no longer sufficient to estimate modern needs.  It is completely right in doing so. The federal definition of broadband lost its relevance long ago,  and it is both useless and harmful as a means to measure equality of access.

While the governor acknowledged that a 100 mbps download speed does not deliver speeds synonymous with fiber networks, the emphasis on high-speed access holds a lot of overlap with fiber infrastructure. Inherently, any network delivering these types of speeds requires fiber to some degree. If done right, Governor Newsom’s broadband plan could be the stepping stone towards universal fiber that all communities need to embrace to compete in the gigabit era that 21st-century economies are entering.

Any Infrastructure Plan Pushing 100 mpbs To All Californians Needs To Have Fiber at Its Core

Fiber is the universal medium of 21st-century broadband access. EFF’s engineering analysis found that fiber is vastly superior to copper, cable, and wireless last mile options in terms of upper capacity and its future-proofed characteristics. This is why China, the other advanced Asia markets, and the EU have adopted universal fiber infrastructure plans as government policy. And while the United States desperately needs to play catch up, the House of Representatives recently passed a plan that would effectively deliver a fiber connection to every American household—showing a growing awareness of the need to build the infrastructure.

As the legislature and executive branch in California begin to formulate a strategy to deliver 100 mbps download speeds to all Californians, they must avoid efforts to preserve the existence of last century’s legacy providers. There is no future in the copper infrastructure for broadband, in the long run, as major telecommunications companies such as Frontier Communications enter bankruptcy for being too copper-heavy. (And now they want to transition to fiber). Wall Street analysts are warning private investors away from telecommunications providers that aren’t investing into fiber today, and the state should follow suit for good reason. Speed-capped networks dependent on legacy infrastructure are rapidly approaching obsolescence. They will cost the state more in the long run, as compared  to simply focusing on pushing out fiber as the goal.

If the Governor’s plan results in a systemic approach to push even a single fiber-optic wire deep into unserved markets, it will be transformative for the California economy—so long as access to that wire is open for follow on users. A single fiber wire can be leveraged by future efforts to extend those fiber wires to homes and businesses, while enabling high-speed wireless services sooner as an interim step.

To give an example, look no further than the story of Dillon Beach, CA. There, 400 residents lacked high-speed access a handful of years ago. But today, they have access to 250 mbps/150 mbps wireless broadband at $50 a month. This happened because a parent who needed to get high-speed Internet to their home for their child’s schoolwork paid AT&T $12,000 to allow him to string one fiber line to his garage. The capacity from  a single wire allowed him to launch a startup ISP with off-the-shelf hardware to deliver high-speed broadband to the broader community.

This type of enabling force makes fiber a critical infrastructure to push to all communities. It is the road towards the 21st-century Internet. And EFF will work to ensure policymakers in Sacramento do not lose track of the end goal of getting everyone on equal 21st-century ready broadband connections.

Californians, Sacramento Needs Your Voice on the State’s Broadband Future


This post is by Ernesto Falcon from Deeplinks

Two bills before the California legislature in its final month of session, S.B. 1130 and A.B. 570, chart very different courses for the state’s broadband infrastructure program. In considering them, the state faces a  fundamental question about how to invest its money: in modern, high-capacity fiber networks, or slow wireless and DSL copper networks. 

EFF has researched—and devoted substantial legal and technical expertise to—this very question. The choice is clear. If we are not spending resources into building, brick-by-brick, and as soon as possible,  21st-century access by extending fiber deeper into communities, we stall efforts to end the digital divide. Spending money on slow speeds and legacy networks will end up costing taxpayers a substantial amount more.  Why? Because they will fail to provide useful access to modern applications and services, let alone next generation Internet products. Worst yet, they do not offer a meaningful way to transition toward the gigabit era. In other words, the “cheaper” option now means that California will still have to replace these networks with fiber eventually, to keep pace with demand and stay competitive with other parts of the United States and the world.

SB 1130 Charts a Course to Equality of Access and Ending Decades of Neglect for Communities that Major ISPs Have Ignored 

Communities that are suffering today do so because, for more than 15 years, neglect from major national ISPs and a lack of government involvement have deprived them of investments in fiber infrastructure. Major national ISPs deployed fiber deep into areas that represented the top half of the income scale and primarily within cities, leaving rural and low-income people behind. This is well-documented through federal data. But the debate as to whether state policy should stand for the proposition that all California residents deserve the same access to the Internet is ongoing. 

Areas of the state that have deep, dense fiber networks have cheaper, faster connections that have allowed them to transition to remote work and education, which have become even more important as the state responds to the COVID-19 pandemic. Meanwhile, the communities that lack fiber have seen their Internet connections systemically fail. We predicted this outcome at the beginning of the pandemic, and worked closely with Senator Lena Gonzalez in Sacramento to introduce S.B. 1130, to  end this inequality of access as state law. In partnership with Common Sense Media, which has produced definitive research to show that remote education needs far exceed the federal minimum standard of broadband (established at 25 mbps for download speed /3 mbps for upload speed in 2015), we have been pushing Sacramento to equip the state with a 21st-century infrastructure plan. All roads to the broadband future runs through fiber, and state policy should be focused on extending it to everyone. 

Take Action

Tell Your Lawmakers to Support S.B. 1130

AB 570 Funds the Wrong Infrastructure in the Wrong Century and Leaves Too Many Behind. But This Can Be Fixed.

The proponents of A.B. 570—namely its sponsor, the California Emerging Technology Fund—fundamentally do not agree that all communities deserve the same 21st-century ready access to the Internet. If they did, they would not have drafted legislation that is affirmatively anti-fiber in rural markets, and prioritizes DSL upgrades and cell tower deployments that were already happening with private dollars under federal law. They wouldn’t be pushing legislation that affirmatively ignores close to 1 million Californians who lack high-speed access today from receiving help from the state. The common refrain in all of these arguments is that a future where we try to help everyone with high-speed access to close the digital divide is “aspirational.” And that is categorically wrong. Modern economies all around the world, including those that are smaller than California’s economy, all have universal fiber plans. Smaller states with limited budgets such as Utah and North Dakota are rapidly approaching universal fiber. We should be asking ourselves why our current policies of favoring slow networks have failed us, rather than doubling down on them as A.B. 570 would do. 

When the average North American city already enjoys speeds averaging 250/250 mbps for its wealthier residents (which stems from upgraded cable vs fiber competition), Californians should soundly reject attempts to spend 100s of millions of dollars on 25/3 mbps for low-income and rural areas. Such an approach is both wasteful and unfair to those communities. It does nothing to bring us an iota closer to resolving the digital divide problem, it just swaps it with a speed chasm. A.B. 570’s approach is not a bridge to the future, it is a link to the past that will just delay, at great expense, steps to address the undeniable fact that meaningful participation in today’s and tomorrow’s Internet, requires fiber in your community. 

Take Action

Tell your lawmakers A.B. 570 Takes the Wrong Path

We Can All be Winners, Especially California Residents, if the Legislature Fixes What’s Wrong with AB 570

The path to fixing  AB 570 is simple, straightforward, and ultimately necessary as it likely lacks the votes it needs to pass with its outdated 25/3 mbps plan. But its outright failure would be bad for Californians, in general, because financing broadband infrastructure is good policy. Lawmakers must simply be thoughtful about what type of infrastructure they fund and who benefits from these networks.

Before moving it forward, the legislature should adjust the type of networks A.B. 570 builds by increasing the minimum speeds offered to 25/25 mbps to push fiber closer to these communities. The federal definition of broadband, set at 25/3, is completely and utterly useless by any metric that measures its application in the modern economy. The state should not bake such a backwards-looking number into its infrastructure plan. California has a history of raising standards above the federal minimum when it has been needed in areas such as wages and environmental standards, and there is no good reason we shouldn’t embrace doing the same  with broadband access. In fact,the Trump Administration’s FCC is already looking to finance gigabit fiber in rural markets and the House majority has approved a 100/100 mbps standard for broadband access.

The most important issue that A.B. 570 correctly highlighted is the difference between the zero-access population, and the population that has Internet access, but not high-speed broadband access. But its current drafting tackles this issue by picking winners and losers, and cuts off far too many people in need of help (close to 1 million Californians). The better approach would be to simply dedicate a majority of the revenues A.B. 570 raises to the zero-access population with their own specialized budget with the state government. Arguably, the communities most left behind will be the most expensive to serve. Dedicating a greater portion of state resources to them—especially if we’re extending fiber—makes the most sense until they are connected. Once that goal is done, revenues can be fully focused on finishing the job of delivering at least one high-speed access point to all Californians who lack it, as laid out in S.B. 1130. 

Lastly, the state is going to have to tackle how it finances these efforts in a sustainable, long-term way. Currently, money collected for the broadband effort comes from in-state telephone calls—which is illogical because we’re building out broadband connectivity, and people are abandoning telephone lines. In the future, the state needs to decide where it collects its revenues to finance the broadband infrastructure program. Relatedly, recent discussions about opening up the bond market to long term debt financing of these types of infrastructure projects hold tremendous promise, and we support that, too. Such an approach would reflect what already happens in the EU and Australia, where long-term, low-interest loans are made available to deploy fiber. If we want to close California’s digital divide within 5-10 years, we need a large infusion of money upfront to get that started to build out fiber. Fiber optics will last decades after even a 30-year loan, and our engineering analysis has found that it will remain useful, potentially even to the advent of the 22nd century.

But the clock is ticking. The legislature only has a few weeks left to make the right calls.  If you live in California, your voice is needed now more than ever.

Californians, Sacramento Needs Your Voice on the State’s Broadband Future


This post is by Ernesto Falcon from Deeplinks

Two bills before the California legislature in its final month of session, S.B. 1130 and A.B. 570, chart very different courses for the state’s broadband infrastructure program. In considering them, the state faces a  fundamental question about how to invest its money: in modern, high-capacity fiber networks, or slow wireless and DSL copper networks.

EFF has researched—and devoted substantial legal and technical expertise to—this very question. The choice is clear. If we are not spending resources into building, brick-by-brick, and as soon as possible,  21st-century access by extending fiber deeper into communities, we stall efforts to end the digital divide. Spending money on slow speeds and legacy networks will end up costing taxpayers a substantial amount more.  Why? Because they will fail to provide useful access to modern applications and services, let alone next generation Internet products. Worst yet, they do not offer a meaningful way to transition toward the gigabit era. In other words, the “cheaper” option now means that California will still have to replace these networks with fiber eventually, to keep pace with demand and stay competitive with other parts of the United States and the world.

Take Action

Tell Your Lawmakers That All Californians Deserve 21st CEntury Internet

SB 1130 Charts a Course to Equality of Access and Ending Decades of Neglect for Communities that Major ISPs Have Ignored 

Communities that are suffering today do so because, for more than 15 years, neglect from major national ISPs and a lack of government involvement have deprived them of investments in fiber infrastructure. Major national ISPs deployed fiber deep into areas that represented the top half of the income scale and primarily within cities, leaving rural and low-income people behind. This is well-documented through federal data. But the debate as to whether state policy should stand for the proposition that all California residents deserve the same access to the Internet is ongoing. 

Areas of the state that have deep, dense fiber networks have cheaper, faster connections that have allowed them to transition to remote work and education, which have become even more important as the state responds to the COVID-19 pandemic. Meanwhile, the communities that lack fiber have seen their Internet connections systemically fail. We predicted this outcome at the beginning of the pandemic, and worked closely with Senator Lena Gonzalez in Sacramento to introduce S.B. 1130, to  end this inequality of access as state law. In partnership with Common Sense Media, which has produced definitive research to show that remote education needs far exceed the federal minimum standard of broadband (established at 25 mbps for download speed /3 mbps for upload speed in 2015), we have been pushing Sacramento to equip the state with a 21st-century infrastructure plan. All roads to the broadband future runs through fiber, and state policy should be focused on extending it to everyone.

AB 570 Funds the Wrong Infrastructure in the Wrong Century and Leaves Too Many Behind. But This Can Be Fixed.

The proponents of A.B. 570—namely its sponsor, the California Emerging Technology Fund—fundamentally do not agree that all communities deserve the same 21st-century ready access to the Internet. If they did, they would not have drafted legislation that is affirmatively anti-fiber in rural markets, and prioritizes DSL upgrades and cell tower deployments that were already happening with private dollars under federal law. They wouldn’t be pushing legislation that affirmatively ignores close to 1 million Californians who lack high-speed access today from receiving help from the state. The common refrain in all of these arguments is that a future where we try to help everyone with high-speed access to close the digital divide is “aspirational.” And that is categorically wrong. Modern economies all around the world, including those that are smaller than California’s economy, all have universal fiber plans. Smaller states with limited budgets such as Utah and North Dakota are rapidly approaching universal fiber. We should be asking ourselves why our current policies of favoring slow networks have failed us, rather than doubling down on them as A.B. 570 would do. 

When the average North American city already enjoys speeds averaging 250/250 mbps for its wealthier residents (which stems from upgraded cable vs fiber competition), Californians should soundly reject attempts to spend 100s of millions of dollars on 25/3 mbps for low-income and rural areas. Such an approach is both wasteful and unfair to those communities. It does nothing to bring us an iota closer to resolving the digital divide problem, it just swaps it with a speed chasm. A.B. 570’s approach is not a bridge to the future, it is a link to the past that will just delay, at great expense, steps to address the undeniable fact that meaningful participation in today’s and tomorrow’s Internet requires fiber in your community.

We Can All be Winners, Especially California Residents, if the Legislature Fixes What’s Wrong with AB 570

The path to fixing  AB 570 is simple, straightforward, and ultimately necessary as it likely lacks the votes it needs to pass with its outdated 25/3 mbps plan. But its outright failure would be bad for Californians, in general, because financing broadband infrastructure is good policy. Lawmakers must simply be thoughtful about what type of infrastructure they fund and who benefits from these networks.

Before moving it forward, the legislature should adjust the type of networks A.B. 570 builds by increasing the minimum speeds offered to 25/25 mbps to push fiber closer to these communities. The federal definition of broadband, set at 25/3, is completely and utterly useless by any metric that measures its application in the modern economy. The state should not bake such a backwards-looking number into its infrastructure plan. California has a history of raising standards above the federal minimum when it has been needed in areas such as wages and environmental standards, and there is no good reason we shouldn’t embrace doing the same  with broadband access. In fact,the Trump Administration’s FCC is already looking to finance gigabit fiber in rural markets and the House majority has approved a 100/100 mbps standard for broadband access.

The most important issue that A.B. 570 correctly highlighted is the difference between the zero-access population, and the population that has Internet access, but not high-speed broadband access. But its current drafting tackles this issue by picking winners and losers, and cuts off far too many people in need of help (close to 1 million Californians). The better approach would be to simply dedicate a majority of the revenues A.B. 570 raises to the zero-access population with their own specialized budget with the state government. Arguably, the communities most left behind will be the most expensive to serve. Dedicating a greater portion of state resources to them—especially if we’re extending fiber—makes the most sense until they are connected. Once that goal is done, revenues can be fully focused on finishing the job of delivering at least one high-speed access point to all Californians who lack it, as laid out in S.B. 1130. 

Lastly, the state is going to have to tackle how it finances these efforts in a sustainable, long-term way. Currently, money collected for the broadband effort comes from in-state telephone calls—which is illogical because we’re building out broadband connectivity, and people are abandoning telephone lines. In the future, the state needs to decide where it collects its revenues to finance the broadband infrastructure program. Relatedly, recent discussions about opening up the bond market to long term debt financing of these types of infrastructure projects hold tremendous promise, and we support that, too. Such an approach would reflect what already happens in the EU and Australia, where long-term, low-interest loans are made available to deploy fiber. If we want to close California’s digital divide within 5-10 years, we need a large infusion of money upfront to get that started to build out fiber. Fiber optics will last decades after even a 30-year loan, and our engineering analysis has found that it will remain useful, potentially even to the advent of the 22nd century.

But the clock is ticking. The legislature only has a few weeks left to make the right calls.  If you live in California, your voice is needed now more than ever.

Take Action

Tell your lawmakers That All Californians Deserve 21st CEntury Internet