There has been no summer slowdown for regulatory overtures toward technology firms, spanning social media, antitrust concerns and the cryptocurrency arenas.
As reported this past week, Big Tech has especially been under the microscope, viewed through the lenses of hearings on Capitol Hill and ongoing investigations touching on strategies anti-competitive in nature.
The Federal Trade Commission (FTC) antitrust investigation leveled at Facebook (which was recently fined $5 billion in the wake of findings it had mishandled users’ data) has trained its sights on the social media giant’s acquisitions – in particular, whether the company bought firms in an effort to stop them from becoming rivals.
Facebook, for its part, touched on the investigations in its own earnings report earlier in July. Back then, Facebook said the FTC was examining “areas of social networking or social media services, digital advertising and/or mobile or online applications.”
According to reports, the investigation into acquisitions is at the stage where the FTC has been contacting people at the firms bought by Facebook. The FTC probe has reportedly been looking into the company’s acquisitions of Instagram and WhatsApp.
The FTC’s latest actions – where its probe into Facebook has stretched over a year – seem to dovetail with the announcement by two senators, Amy Klobuchar and Richard Blumenthal, that they had introduced legislation titled the “Monopolization Deterrence Act.” That legislation would make it easier for the government to penalize larger tech firms for violations of antitrust law. In terms of punitive actions, the bill would mandate that a U.S. company found to be in violation of antitrust laws can be fined as much as 15 percent of their annual top line. Klobuchar, a candidate for the Democrat party’s nomination for president, has said the U.S. has a “major monopoly problem.”
The FTC, Facebook-specific investigations and the antitrust legislation are not the only legs of anti-competitive scrutiny Big Tech is facing. The Justice Department is reportedly opening a new investigation into such activities on top of existing probes into Apple, Google and Facebook. This time around, the probes would focus not just on acquisitions, but on how business practices spanning search and social media might stifle competition.
Google and Facebook Down Under
Lest one think the U.S. is the only hotbed of antitrust and shifting Big Tech landscapes, regulators have been stepping up their efforts overseas, too.
In one example, Australia is establishing the world’s first office dedicated to monitoring Facebook and Google – part of a series of recommendations made by the Australian Competition and Consumer Commission (ACCC), which touch on boosting privacy laws and a code of conduct for how firms can access users’ data, as well as how they share revenues with news firms and handle complaints.
As is specific to Facebook and Google, the ACCC’s digital platforms office would be able to hold inquiries on how companies use their algorithms to compete – and disclose how mergers and acquisitions would affect the competitive landscape.
The “Like” Button and Liability
Separately, the seemingly ubiquitous “Like” button that is a Facebook hallmark also makes third-party websites liable for processing individuals’ data in the European Union. That determination comes from a ruling by the EU Court of Justice, which ruled this past week that websites are liable for “the collection and transmission to Facebook of the personal data of visitors to its website. By contrast, that operator is not, in principle, a controller in respect of the subsequent processing of those data carried out by Facebook alone.”
The OCC, Too
Beyond the confines of social media and search, beyond the antitrust concerns and possible reorganizations, it turns out that (some) regulators are reorganizing, too.
The Office of the Comptroller of the Currency (OCC) said via press release that it will realign about 150 staff members in two new units, tied to bank supervision support, risk analysis and the oversight of national trust banks and important service providers.
“This realignment will improve the agency’s ability to supervise the federal banking system by aligning like work, eliminating redundancies and ensuring the OCC presents a single voice to supervised institutions,” Comptroller of the Currency Joseph Otting said in the release. “In addition, this work will contribute to our strategic goal of operating the agency as effectively and efficiently as possible.”
Crypto Makes a Hill Appearance
In cryptos, the news hasn’t been all about Libra, though Facebook’s proposed digital currency seems to have sharpened the debate over cryptos and blockchain.
In a July 30 hearing titled “Examining Regulatory Frameworks for Digital Currencies and Blockchain,” the United States Senate Banking Committee heard from industry participants and analysts about the general cryptocurrency landscape. As reported by PYMNTS, witnesses told the panel that potential and risk are in the offing as digital currencies gain traction and that new regulations are needed.
Sen. Sherrod Brown of Ohio said efforts such as those from Facebook on Libra are risky. Facebook, he said, has proven that it “cannot be trusted. They break things like … political discourse … relationships and privacy. Now they want to break our currencies and payment systems while hiding behind the phrase ‘innovation.’”
Among the advocates for cryptos, Jeremy Allaire, co-founder and CEO of payments company Circle, testifying on behalf of the CENTRE Consortium, said the current, traditional banking system is vulnerable to money laundering. According to his testimony, as much as 99 percent of money laundering goes undetected – but the problem could be well-addressed by blockchain and digital assets. He contended that know your customer (KYC) requirements would be satisfied and data leakage would be reduced.
“We will become comfortable with the adoption of a mix of private and public monies being available to everyone, everywhere, and will see the rapid development of global basket currencies that become preferred for settlements and storing value,” Allaire said, according to testimony.
Prof. Mehrsa Baradaran of the University of California, Irvine School of Law, said “there are inequalities and problems in the U.S. banking system and they must be fixed, but they must be fixed through democratic means. Cryptocurrencies want to take over where our public institutions have failed.” She noted that thus far, no cryptocurrencies have reached the scale to become systemic threats, “but if their ambitions are believed, they will, and we have regulators for that.” Baradaran took issue with the idea that financial inclusion would be a hallmark of cryptos, asking “how does any digital-based currency help when people are operating in cash?”