Source: United States Senator for Minnesota Amy Klobuchar
“When big data inhibits competition – by allowing those who have it to block access to markets for those who do not – we need to step in and fix it”
WATCH CHAIRWOMAN KLOBUCHAR’S OPENING REMARKS HERE
WASHINGTON – At today’s Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights hearing on big data, U.S. Senator Amy Klobuchar (D-MN), Chairwoman of the Subcommittee, highlighted how the use of big data affects and can threaten competition.
“We all want opportunities for new and innovative companies to emerge, and for new markets to develop. When big data inhibits competition – by allowing those who have it to block access to markets for those who do not – we need to step in and fix it. This means enforcing our existing antitrust laws to their fullest extent to protect competition. It means updating our antitrust laws for the modern economy, just as we’ve done centuries past…Well, the time has long passed for today’s tech world,” said Klobuchar.
Witnesses at the hearing include:
- Mr. Steve Satterfield – Vice President, Privacy & Public Policy at Facebook, Inc.
- Mr. Markham Erickson – Vice President of Government Affairs and Public Policy at Google, Inc
- Ms. Sheila Colclasure – Global Chief Digital Responsibility and Public Policy Officer at IPG Kinesso
- Mr. John Robb – Author of The Global Guerrillas Report
- Ms. Charlotte Slaiman – Competition Policy Director at Public Knowledge
The full transcript of Senator Klobuchar’s opening remarks as given below and video available for TV download HERE and online viewing HERE.
Today we’re going to be talking about how competition is affected and threatened by the use of big data. Big data is at the core of our modern economy, as Senator Durbin so well pointed out, powering targeted advertising and driving artificial intelligence to select what products and services we are shown online and, increasingly, offline as well. In this hearing, we will explore the companies that control the data, the state of competition and barriers to entry, and the effects of big data on consumers, their choices, and their privacy.
Now, I’d like to be clear about what we mean when we say “big data.” Technology companies such as Google, Facebook, and Amazon collect an enormous amount of information, as Senator Durbin pointed out, about our daily activities in real time. They know what we buy, who our friends are, where we live, work, and travel, and more. In fact, their very business models were set up around getting that information and then using it to profit. Through services such as Google’s Gmail and Facebook’s Instagram, though those services are offered to us for free, these companies and advertisers use the data they collect about us to sell to other companies.
So in the end you can’t get around the fact, we are the product. We are the product that makes the companies money.
Big Tech companies are not the only ones keeping tabs on all of us. Data brokers, including Kinesso and its sister company, Acxiom, also buy, process, and sell massive amounts of personal information about consumers, and they have actually been doing it since before we even knew what the internet was. They collect information from the Department of Motor Vehicles, from public records, from our grocery store loyalty cards, and even from other data brokers. Today, they also buy our browsing histories, and guess how much money we make and what religion we practice.
This data has immense competitive value, and the way that it is collected and used has important impacts on consumers. I’ll give you an example. The simple act of a consumer visiting a utility company’s website to pay a monthly gas bill allowed dozens of companies to profit off of her, for the most part, without her knowledge.
Facebook and Google are likely to know about that consumer paying her bill even though they had nothing to do with the transaction. If the gas company runs advertisements on Facebook – as many do – Facebook would have trackers embedded on the gas company’s website. And if the consumer, if she uses the world’s most popular web browser, Chrome, Google would know what websites she visited. Both companies collect and analyze this kind of information, building a detailed profile of the consumer and giving advertisers access to her online – for a price, of course, but not something she gets paid.
At the same time, data brokers like Acxiom are buying and selling data from utility providers — so they also potentially know that she paid her gas bill, and they pair that information with her other purchasing habits, location data, financial information, family details, and their guesses about her race and gender. They sell this kind of information to governments, advertisers, health care companies, and others.
Just a few years ago, Acxiom had a partnership with Facebook to combine their data for advertisers and share the profits. At that time, Facebook would have supplied the consumer’s online activities, and Acxiom would have provided her offline activities, and advertisers could use them both to show her ads. Facebook ended that program in 2018, raising questions about whether massive technology companies now have so much data that they don’t need to buy from data brokers. In today’s hearing, we will discuss how this kind of control over enormous data affects competition.
While data-driven targeting can filter out things we don’t want, show us products that might be of interest, and help some small businesses reach new customers, it also functions as a gatekeeper to important services and opportunities.
And so we talk a lot in this space, as Senator Durbin did, about the privacy concerns. And obviously there are big concerns about that – I’ve been a longtime advocate for federal privacy legislation. I think its time has long come, and I know we are looking at focusing some resources into these privacy issues in the bill that’s currently being debated in the Senate. But we also have to look at another piece of this, and that is that there are real threats to fair competition from these massive data sets and the artificial intelligence inferences that these companies make based on them. For example, after years of complaints and a federal lawsuit, Facebook is reportedly still disproportionately showing jobs ads for mechanics to men and for pre-school nurses to women. That distorts labor markets and it doesn’t help us get to where we need to be, to be able to recruit people for these jobs.
We also see the control that big data has serious implications for healthy, competitive marketplaces. Data can be a barrier to entry – unless you have a lot of it, you may not be able to reach consumers successfully. The big data allows you to target ads, to create algorithms that others who might want to be entering the market can’t do if they don’t also have the data. It can be another way that powerful internet gatekeepers maintain control of how small businesses reach customers, and earn outsized profits from that control.
The impact of big data should also play an important role in merger analysis. As dominant digital platforms try to acquire other companies with massive troves of consumer data, the antitrust agencies must place greater emphasis on determining the competitive impact of obtaining even more data through mergers.
This is why I talk about that our laws have to be as sophisticated as the markets that we operate in today.
We all want opportunities for new and innovative companies to emerge, and for new markets to develop. When big data inhibits competition – by allowing those who have it to block access to markets for those who do not – we need to step in and fix it. This means enforcing our existing antitrust laws to their fullest extent to protect competition. It means updating our antitrust laws for the modern economy, just as we’ve done centuries past. It’s like every 50 years or so, we do a major update. Well, the time has long passed for today’s tech world.
My bill, the Competition and Antitrust Law Enforcement & Reform Act, would do so by updating the legal standard to prohibit harmful mergers and anticompetitive conduct, shifting the burden to dominant companies to prove that their acquisitions, and most significantly here, their exclusionary conduct, doesn’t threaten competition.
We also have to make sure that our antitrust enforcers have the resources to do their jobs. They can’t take on the biggest companies and some of the most complex conduct the world has ever seen with duct tape and band aids. Senator Grassley and I, with the support of this committee, got our bill through to update the merger fees, which will bring in over one hundred million dollars for both agencies. It has passed the Senate, we are awaiting action in the House, we have every reason to believe we will get it done. But there’s more we can do, not only in the reconciliation bill before us, but in the year-end budget, to make sure these agencies have what they need.
We also need competition reforms, specifically targeted at tech. These are issues like interoperability, we’ve been talking about app stores recently, there’s a major bill on that – bipartisan – that’s been introduced, as well as bills targeting discriminatory conduct with tech companies.
As we explore paths forward, we see that the dynamics of data mining are already changing. In recent months, Apple rolled out an update that lets iPhone and iPad users decide whether they want to be tracked online by Facebook and other apps. That was a major good change, and what happened? What do we know so far? Early reports indicate consumers have overwhelmingly opted out of being tracked – more than 75 percent, Senator Lee, decided not to be tracked on apps on their Apple devices when they were posed that simple, straightforward question.
But as we push for increased consumer privacy, we must make sure that monopolists don’t fool us into handing over all control of our data to them at the expense of fair competition. We must both fight monopolies and protect consumer data – guess what, we can do both things at once. But I don’t want us to not realize this brave new world we are in, where having the data at all completely advantages certain companies who are the gatekeepers and makes it much more difficult to have a competitive market.
I will now turn it over to Ranking Member Lee. Thank you.
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