On Sunday, a former Facebook data scientist went on “60 Minutes” to accuse the company of defrauding its advertising customers and deliberately engineering social division and ethnic strife. Then on Monday, the entire Facebook product family went offline for six hours: Instagram, WhatsApp, and, of course, Facebook itself.
On Wednesday, Big Tech critic and antitrust advocate Jonathan Kanter got a highly favorable reception from the Senate Judiciary Committee, suggesting that he will likely be confirmed as head of the antitrust division at the Justice Department. So where does all this leave Zuckerberg Inc.? Conservative Partnership Institute Policy Director Rachel Bovard and economist and author Matt Stoller join Ryan Grim to discuss where Big Tech antitrust is headed.
Ryan Grim: This was not Facebook’s best week. I’d say it was better than when they facilitated a genocide in Myanmar, except that — from their perspective — it’s probably much worse.
On Sunday night, former Facebook employee Frances Haugen was featured on “60 Minutes,” laying out the story behind a tranche of documents she had provided to the Wall Street Journal for an explosive series that had run on the company.
Frances Haugen: There were conflicts of interest between what was good for the public, and what was good for Facebook, and Facebook over and over again chose to optimize for its own interests, like making more money. The version of Facebook that exists today is tearing our societies apart and causing ethnic violence around the world.
RG: Then on Monday, Facebook went down across the world, and because it has been scooping up other companies along the way, it took Messenger, WhatsApp, and Instagram down with it.
Newscaster: Facebook says a faulty update sent to its servers caused yesterday’s huge outage. Facebook has since apologized for the issue and said no user data was compromised.
RG: On Tuesday, Haugen appeared before the Senate Commerce Committee. Haugen told the Senate that Facebook knew its algorithm was producing toxic interactions, but pushed ahead anyway, and knew it wasn’t reaching as many people as it claimed to advertisers that it was.
FH: Facebook understands that if they want to continue to grow, they have to find new users; they have to make sure that the next generation is just as engaged in Instagram as the current one. And the way they’ll do that is by making sure that children establish habits before they have good self regulation.
Sen. Brain Schatz: By hooking kids.
FH: By hooking kids.
RG: Then on Wednesday, attorney Jonathan Kanter appeared before the Senate judiciary committee for a confirmation hearing; he’s been nominated to be assistant attorney general for the antitrust division at the Department of Justice.
Facebook desperately did not want him to be nominated, and now they very much do not want him to be confirmed.
NetChoice, a lobby group funded by Facebook, Amazon and Google, sent around talking points it hoped would appeal to Republicans, arguing that Kanter is quote “a progressive advocate, not an impartial enforcer,” and that he’s in the pocket of companies like Yelp and Match that have battled Big Tech in court and used Kanter as their attorney.
The group also warned that the Kanter quote “opposes the broad, bipartisan, and objective Consumer Welfare standard.”
So, for a deeper look at the consumer welfare standard, I’d recommend going back and checking out our episode with antitrust expert Zephyr Teachout from July, who also spoke at length about Kanter just before he was nominated.
Briefly, the consumer welfare standard was developed by conservative legal scholar Robert Bork, who was famously blocked from the Supreme Court by Democrats during the Reagan years. His idea was essentially that judges looking to interpret antitrust law should only look at whether a company’s market power was causing a bad outcome for consumers. If prices were low and quality was good, then there was no reason to enforce antitrust law, went Bork’s reasoning, and judges and regulators have followed that since, with the result being an era of endless and ever-larger corporate mergers.
Kanter, along with Lina Khan, are on the forefront of the anti-monopoly push, and it’s truly stunning to companies like Facebook — and in a way, it’s stunning to me — that people like Khan and Kanter are on their way to be in positions of real power where they can put their antitrust ideas into practice.
Khan is now chair of the Federal Trade Commission, and got 21 Republican votes on the floor of the Senate. Ted Cruz, whose biggest issue is censorship of conservatives by Big Tech, spoke favorably about her, but ultimately voted no. I asked him how he was feeling about Kanter, and he said he had recently met with him.
RG: Sen. Cruz, have you talked with Jonathan Kanter yet? The assistant attorney general for antitrust, have you made a decision on it?
Sen. Ted Cruz: I talked to him this morning, had a good conversation with him. I’ll continue to evaluate the nomination on the merits. He certainly seems smart and knowledgeable.
RG: You were encouraged by the conversation. Is that a fair assessment?
TC: We spent a lot of time talking about Big Tech, and what he expressed in the meeting. I thought it was encouraging on that front, of a willingness to enforce the antitrust laws against the rampant abuses of Big Tech.
RG: Cruz didn’t make it to Kanter’s hearing, but the hearing went extremely well for Kanter.
Iowa Republican Chuck Grassley began it by making clear he saw Kanter as an ally.
Sen. Chuck Grassley: Mr. Kanter and I met last week, and we had a very good discussion about my concerns about concentration and consolidation in the agricultural industry.
RG: Others spoke warmly to him.
Sen. Thom Tillis, a Republican from North Carolina who voted against Lina Khan said he’d be supporting Kanter.
Sen. Thom Tillis: I intend to support your nomination, I should say that up front. I don’t know if my staff know that but you do.
RG: What comes next will be a Herculean battle between the DOJ and FTC on the one hand, and the forces of corporate concentration on the other.
In the hearing, Klobochar raised the prospect of increasing funding for his antitrust division, and Kanter said he was all for it. He’ll need every penny for the fight ahead.
To talk about Facebook’s terrible week, Kanter’s confirmation hearing, and what comes next, I’m joined now by Rachel Bovard and Matt Stoller.
Rachel is the author, with former Sen. Jim DeMint, of the book “Conservative: Knowing What to Keep.” She’s senior director of policy at the Conservative Partnership Institute, and previously worked as an aide in both the House and the Senate, until Mitch McConnell got her tossed out. No really, Google it — it’s quite a story. Lately she’s been co-hosting Hill TV’s politics morning show “Rising” with me.
Matt Stoller has also worked as an aide in both the House and Senate, but on the Democratic side — or, in the Senate, on the Democratic Socialist side. He’s the author of the book “Goliath: The 100-Year War Between Monopoly Power and Democracy, “and is Director of Research at the American Economic Liberties Project.
Rachel and Matt, welcome to Deconstructed.
Rachel Bovard: Good to be here.
Matt Stoller: Thanks for having me.
RG: And so we’re recording this on Wednesday afternoon, and the Jonathan Kanter confirmation hearing just wrapped, but we’re also in the middle of a quite a week for Facebook. So off the top of that, Rachel, let me ask you about how the conservative antitrust folks, and the conservative movement more broadly, has been receiving these new revelations from the Facebook whistleblower, and what you think the most important of those revelations has been?
RB: So I think there is a little bit of suspicion on the right about Francis Haugen, how she sort of magically appeared, very sort of groomed and flashy with a “60 Minutes” interview and then immediately followed by a Senate hearing.
And people on the right have unpacked her Democratic contribution history and said, Oh, look, she’s working with Jen Psaki’s PR firm, how can we trust this person? The general paranoia on the right that everything’s an op. And that may all be true. And I think her answers at the hearing that she had yesterday were not comforting, I think, to a lot of us on the right who want to take a more free market approach to solving the tech problem. She very much said she doesn’t want to break up Facebook, she’d prefer a regulatory agency to sort of manage, quote-unquote, misinformation on the platform. And that, I think, concerns some of us.
But from where I sit, Francis Haugen, as much as she may want to be the protagonist of the story, is not. The documents that she released are. And so I think it would be a mistake for people on the right, you know, simply because they’ve discredited the messenger to discredit the underlying documents that she’s produced, because those documents are fairly explosive. I mean, they confirm a lot of what we know, or what we suspected, right?
We know, for instance, that social media, particularly Instagram, has very negative effects on the mental health of teenage girls. Now, we know from these documents that Facebook knows it, too, and continues its push to get kids on their platform. We know or we suspected anyway, that Facebook may have been misleading its advertisers and investors about the reach of its ad platform, and she brought that information to the SEC.
And so I just think there’s a lot in there to pay attention to, a lot of damning evidence that Facebook is not being upfront about things, and the harm, and the reach of that harm that can follow. So I think that should be the focus here in the continued effort to address the Big Tech companies — not Francis Haugen herself.
RG: And Matt, what did you think was the most consequential thing that came out of the documents that she leaked?
MS: I think it’s the misrepresenting of advertising reach to advertisers and investors. So she submitted a document to the Securities and Exchange Commission that said that Facebook was lying, or actively deceiving investors and advertisers about how many people that they could reach. And this is something that we pretty much guessed. Facebook, in public marketing documents, said that they reached more teenagers in the United States than there are teenagers in the United States.
MS: Not like this stuff isn’t known. But the fact that there are documents seems to have some sort of impact on people.
Although, I will say this: It’s hard for me to evaluate because it’s somebody who’s paid attention to Facebook for quite a while and said, Hey, this is a problem, it’s pretty irritating that we have to listen like face that it’s a big deal that Facebook has internal documents showing that Instagram makes teenage girls insecure. Because it’s like, I’m sorry, but have you ever used Instagram?
RG: [Laughs.] Right.
MS: Have you ever talked to a teenage girl? Instagram makes me insecure, right?
RG: That’s the goal of Instagram is to make you feel like you’re missing out on something.
MS: I find it irritating that stuff is not real until a certain cadre of people has thought it or stated it. And when stuff like we know, this is all obvious to anybody who pays any attention to any of this and has been for years. So it’s hard for me to evaluate because I’m sort of trying to predict how policy insiders will learn. And it’s hard for me to imagine people who have never talked to a teenage girl, and don’t know that Instagram makes you insecure. I don’t know. Will they now be convinced of that? So, I guess that’s kind of why I’m having trouble processing it. It seems like it’s a big deal, though.
RG: And what could be the consequences of the alleged fraud around the advertising numbers. Because this is very reminiscent of the way that Facebook actively destroyed digital media several years ago by encouraging all of these news outlets, including the one that I used to work, Huffington Post, to pivot to video, and they paid these outlets to produce video that they then lied to them about how many people were watching the videos, which then gave sugar highs to all of the editors at all of these digital publications who said, Well, we need to lay off all of our reporters and just invest in producing more of these videos that Facebook will then tell us are getting 250,000 views. And I could tell right away that this livestream of me was like talking about what I’d had for lunch, there were not 80,000 people watching that. It was just impossible. Yet those were the numbers that Facebook was reporting to outlets.
Were there ever any consequences for that? And what could happen now that the climate’s a little bit different?
MB: Yeah, just so you know, Ryan, that video stream of you eating lunch, that was me watching it 80,000 times?
RG: 80,000 times. With your 80,000 alts?
MB: I just love it. I just love watching you eat lunch. It’s weird.
RB: Do you guys need a minute? You need me to step out?
MB: [Laughs.] Yeah, so the pivot to video? Oh, and we’ll move away from the weird, creepy commentary by Matt Stoller.
Yeah, I mean, I think it was like a settlement. Facebook was sued for that, there was a settlement. But, broadly speaking, we know of multiple examples of criminal behavior, and it was a civil settlement. But what he did was fraud, he stole money, right? That’s what Facebook did.
And this is not the first time they’ve done it. I think they’ve lied to advertisers or publishing partners three times with meaningful monetary consequences, which is fraud, stealing. It’s not the only time that we’ve seen potential criminal activity. Another example would be that there’s a suit against Google in Texas, which alleges price fixing between Facebook and Google over ad markets, price fixing is, per se illegal. And, again, it’s a criminal violation of the Sherman Act.
Another example — these are all alleged, right, so maybe they have good defenses, no one’s bringing charges against them.
But the other one is: Last week or two weeks ago, a series of pension funds brought a case against Facebook over Cambridge Analytica and what they alleged, which was, I think, some pretty good evidence is that Mark Zuckerberg, and Sheryl Sandberg, and a few others were engaged in insider trading, so they knew that the Cambridge Analytica stuff was gonna come out. And they sold a bunch of stock. And it was the kind of thing where Zuckerberg was saying, I’m really only gonna sell $1 billion per year to finance my foundation. And then Cambridge Analytica came out, and he sold $5 billion of stock, right? And Sheryl Sandberg did the same thing. And so did a few other board members and early investors.
So, that’s illegal. I mean, the rule of law is kind of adorable these days when you’re talking about elites, but you know, there’s just a bunch of stuff that he’s done that’s criminal, right?And so in a functional society with the rule of law, you would see criminal charges brought against executives who do this, just like you would have seen criminal charges brought against people who caused the financial crisis through securities and bank fraud; you would have seen criminal charges against the Sackler family over opioids for illegal distribution of narcotics. We have a problem with the rule of law and Facebook, being able to kind of do whatever they want, make apologies, maybe pay a fine here or there, but not actually holding the people who are responsible for engaging in what could be criminal activity for that criminal activity, it’s a crisis of the rule of law. And that’s really what we’re dealing with.
RB: I think an element of this too, is that absent criminal charges what you get are sort of settlements and civil penalties and fines, and they do nothing. And I think that goes to this idea that we actually need structural reform of these platforms. Because, I mean, you look back as recently as 2019, when the FTC slapped Facebook with a $5 billion fine, and it was like orders of magnitude larger than anything that the FTC had ever fined any company before. And Facebook’s like yeah, OK, cost of doing business, whatever.
RG: And their stock jumped!
RB: Their stock actually rose, because it’s not just Facebook that understands this reality that these are just speed bumps on the way to Facebook going about doing its business, it’s the rest of the market that understands it too. And I think that is maybe one of the more compelling cases that there has to be structural reform, because these platforms are largely ungovernable with the laws that we have now. Absent criminal charges for the people in charge, this is what you get, and it means nothing to them.
RG: So speaking of governing them, the one person that these releases were quite well timed for, I think, would be Jonathan Kanter, who’s now going through the confirmation process. And you know, getting Facebook front and center in the days and week ahead of that hearing are probably pretty, pretty helpful for him. But Rachel, who is Jonathan Kanter, tell us a little bit about him?
RB: So Jonathan Kanter is a seasoned antitrust attorney, has worked for a long time in the antitrust space, really representing sort of smaller firms, although he did represent Microsoft as well, but going up against the Big Tech giants. And he really is one of the few antitrust attorneys in town, I think. I don’t know if Matt would agree with this. But that just really hasn’t gotten sucked into the Borg of representing Big Tech. I mean, that’s what most people do in the antitrust space these days. And he is viewed, I think, fairly, I don’t want to say favorably, but with a lot of respect from the right, generally, because he is such a good practitioner and his skillset is really widely known in this space. You saw people come out in support of his nomination. I think it was all of the former people who had his job — the assistant attorney general at the Department of Justice — have come out in support of him, based on that fact he’s a seasoned practitioner, that he knows the law, that he treats his co-counsels with respect, that he’s been in the space for a very long time.
So, he’s been nominated to take the position of assistant attorney general at the Department of Justice responsible for antitrust, formerly held by Makan Delrahim in the Trump administration. And I think it’s at a critical time. The Biden administration definitely took a while to fill this spot. And I think it was unclear who they’d pick. But I think Jonathan Kanter is probably the best person that they could have put in that job in terms of support from both sides of the aisle.
RG: And Matt, first, anything to add to that? And then what was your reaction to the hearing, which struck me as sort of a Jonathan Kanter lovefest?
MS: Yeah. Well, Rachel just said what I would have said, and now you just said what I would have said about the hearing. So I have nothing to say.
Yeah, he didn’t get any really tough questions. But what was interesting — except, sort of a back and forth with Mike Lee about consumer welfare standards, which is kind of a weird, nerdy thing.
Sen. Mike Lee: OK, let’s talk about the consumer welfare standard for a moment. You’ve criticized the standard in the past.
RG: Yeah, can you unpack that a little bit? I thought that was one of the meatier welfare parts of the hearing.
ML: Do you agree that the consumer welfare standard could encompass many factors beyond price factors that we both agree are important, including things like quality, and innovation …? [Fades out.]
MB: Yeah. So the consumer welfare standard, basically what it means is to what extent do you allow economists to control antitrust law? Originally with antitrust law, so from the 1890s onward until the 1970s, if you showed a violation, you know, someone was exploiting their market power against someone else. It was illegal. And then Robert Bork, who’s this antitrust attorney invented this idea called the consumer welfare standard. And he said, Well, actually, you should have to prove not only that somebody is exploiting their market power — or rather, the way that you prove that someone is exploiting their market power is by showing through the way that economists calculate models that it is creating inefficiency, so that there would be more output if they hadn’t done whatever they did.
It seems like a technical, small change, but what it effectively did is it moved questions of equity, and justice, and common sense out of the equation when you’re thinking about competition, and it moved competition law, antitrust law into the hands of economists, who tend to be very favorable to a monopoly power. It’s really a debate over the role of economics versus a broader sense of how you conduct antitrust law.
And Mike Lee, he’s carrying the flag of the consumer welfare standard, which is this weird status quo symbol. But he’s kind of cross-pressured, because he also thinks that Big Tech has gone too far. And so he’s like: We need to really get aggressive against Big Tech. We really need a revolution in antitrust, as long as everything stays the same. And he kind of put that out on Kanter and they went back and forth on that question.
RG: Yeah. And Rachel, as a former Mike Lee staffer, maybe you could help explain where he’s coming from a little bit. It seemed like he’s trying to say: OK, we clearly need to do more when it comes to antitrust and the current standard doesn’t allow us to do what we need to do, but maybe we don’t need a new standard, but what we need is a different interpretation of that standard. Like, in other words, that judges are too narrowly interpreting consumer welfare standards by referring only to prices and that if you expand it out to other inefficiencies, then that could maybe do what needs to be done. Kanter seemed to agree.
Do you think Kanter does actually agree with that? Or was he just being agreeable in his hearing? And what’s your take on whether the consumer welfare standard can be just kind of reinterpreted or whether it needs to be thrown out and redeveloped?
RB: So I do think, based on the questions that Mike Lee asked, I mean, he really does seem to want to push the competence of the consumer welfare standard beyond its current narrow focus exclusively on economics. I mean, you heard him ask specifically: Is it more than price? Can it encompass consumer welfare quality, all these other topics? And Kanter agreed with him.
And I think Lee has said in other venues as well that the courts have become too tied to this idea of speculative economics, right? You can now hire an economic expert to spin these very complex econometric tales at a trial and the judge is like: Oh, yes! That guy! And meanwhile, the actual antitrust attorneys are like, we have actual evidence, we have emails showing anticompetitive intent, right? And you just blew us off and went with the economics guy, like what the hell?
That is true, and that has happened. And I think Matt would probably agree with this, this has happened widely and broadly across the antitrust space, perhaps most infamously, I think when the Obama administration whiffed on prosecuting Google. You had exactly this scenario: You had the economists making very speculative and hilariously wrong — that now we know they were wrong — claims, while the attorneys were like, We have emails.
RB: We can show that they are anti-competitive intent and potential practices here.
So I do think that Mike Lee would agree that the status quo in the interpretation of this is not correct. But I think if I’m reflecting how the right thinks about the consumer welfare standard, they think that anchoring antitrust enforcement in the market realities. in some sort of economic framework is correct, because I think they fear this application of values outside of this space. Like if antitrust isn’t tethered to some sort of objective framework, then it becomes a tool to impose sort of social goals. And so really, at the end of the day, I think for them it’s a question of: Are the political benefits in antitrust primary or secondary, right? Do you bring a case because of social harm or because of anti-competitive evidence? And I think the right is more concerned that if you lose that framework, then it’s just an untethered vessel for all kinds of what they call woke antitrust. So pursuing antitrust for claims of social justice, all these things. And that’s why I think they’ve worked very hard to preserve at least some kind of framework.
Now I have, frankly, been surprised to see Mike Lee move on this question. I think if you had asked Mike Lee five years ago, about mergers and acquisitions, I don’t think he would have met a merger he didn’t like, right? And now he is proposing legislation that does codify the consumer welfare standard, but also does make some tweaks to the existing way that antitrust is enforced, which, to me, is surprising, but he’s not going to move, I think, on the issue of consumer welfare that far. Now, Jonathan Kanter himself? I don’t know what his personal views are on the consumer welfare standard. But at the moment, he has to enforce the law as it’s currently written and currently interpreted. So I think he can push the competence of the consumer welfare standard, but he won’t, I think, at DOJ, be able to overturn it completely.
RG: And, Matt, what do you think of that concern from the right that antitrust policy is going to be used to try to do social policy as an end run around, I guess, doing social policy through Congress?
MS: Yeah. I mean, so I guess in 2018, when the Democrats put antitrust, in one of their campaign provisions on taking back Congress, they said that certain social factors need to be embedded in how we do antitrust. And a couple of people have said that occasionally. So there is a fear, I think, that the Democrats are trying to take this area of law and expand the way that they do that they do antitrust, but if you actually pay attention to the people that are doing the work, right? Which is the antitrust subcommittee and Lina Khan and Jon Kanter and this kind of movement that’s about 5-10 years old, it has nothing to do with embedding abstract social goals into antitrust. It’s a much more — I don’t want to say technical, because that’s not quite right — philosophical disagreement. It’s a philosophical disagreement about how to actually enforce competition. So the consumer welfare standard is output-driven, right? So you look at prices and pricing helps tell you whether there’s efficiency or not.
Mike Lee says, OK, well let’s also add on innovation, and quality, and a bunch of stuff, right. Says: Oh, actually it’s flexible, it’s slices and dices, dessert topping and floor cleaner, right?
The Brandeisan view, which is kind of my faction, we don’t think that you should just do output-based antitrust because fundamentally you’re just guessing, right? When somebody says, Oh yeah, there’s three companies and two of them want to merge, but don’t worry, prices will go down, you should let it through. Here’s this economic model that says that — you’re just guessing about the future so you can stick other factors in there. You can say: Oh, well, it’ll be higher quality and also there will be more innovation. But you’re always just guessing about a model.
The Brandeisians, what we think is, look, you should just look at the competitive process itself. Are there enough competitors? Right? If there are three competitors, that’s probably not enough. So you should not allow the merger. You probably need at least five in every market. Can you count to five? There. That’s the analysis that you need to do.
So it’s not about embedding other forms of law and social concern into antitrust. It’s about bringing antitrust back to the original goal of decentralizing and deconcentrating economic concentrations of power. And I think some people on the right are there. I think Sen. Josh Hawley has probably the most sophisticated view of antitrust of anyone in the Senate with the exception of a few other senators, but that’s where he is.
And there are some other members that kind of get that. Jim Jordan, on the House side, there are some conservatives who are exploiting this philosophical disagreement about whether economic concentrations of power are a problem, he’s exploiting that, to just retain the status quo, which is the consumer welfare standard. It’s a way of basically protecting Big Tech without seeming like you’re protecting Big Tech, because you’re saying, Oh, well, I’m not saying that we need to protect Google — in fact, we should go after Google — but we do need to protect the laws that have protected Google because otherwise, the boogeyman woke guy is gonna is going to get you. And that’s not what this is about.
So I just read this long book with a bunch of agricultural economists who study the cattle industry and the beef supply-chain. If you know anything about ranchers, they are super angry right now, because beef prices are going up, but they’re not getting paid more for their cattle. And it’s a problem of consolidated meatpackers. And they’re in a rage. It hasn’t been this bad in eight years, bankruptcies, it’s just a nightmare. And I read this book from a bunch of economists from Texas A&M, and the USDA, and whatnot, and they actually said ranchers need to stop being so emotional. In fact, the whole system is working perfectly. I mean, that was the whole point of this.
And it’s not like ranchers are super woke, right? They are just like we are getting screwed by the meatpackers. So it’s really a fight over: Do you allow economists who are agents of monopoly to control policy? Or do you actually do it based on evidence from people in the marketplace?
RG: Rachel, is that why you saw Chuck Grassley saying such nice things to and about Kanter? The ag side monopoly problem?
RB: Yeah, I mean, I think this is something Chuck Grassley is actually concerned about. And I think, you know, he’s also old school, right? I mean, literally old. He’s ancient, right?
RG: Yes. And running for reelection.
RB: Yeah. And he’s running for re-election. But he’s also I think from the school of thought that he’s fairly friendly to nominees regardless of where they come from, because he thinks the president should be able to pick their own person. So I think he starts from that sort of bent already. And you saw, I think, a nod from Senator Klobuchar to the work that they are doing, Grassley and Klobuchar together, to address competition policy.
And I think, you know, that’s sort of where he’s reflecting a little bit of where the middle of the mainstream Republican Party is on some of these questions, which is, you know, I think they’ve been very beholden to a specific view of the market for a very long time. But you do have some senators, I think, now that are saying, All is not well, in the world of American antitrust enforcement. There’s so much evidence at this point that the market is being distorted — or, at the very least, that our laws and enforcement have not kept up with innovation in the tech space, that we need to take steps here.
And that’s why I think it is important to point out you do have philosophical disagreements between elements of the right on this question, but it’s significant to me that you have everyone from Mike Lee to Josh Hawley that’s introduced antitrust legislation, right? Josh Hawley is sort of on one end of the spectrum and Mike Lee is on the other, but you don’t have a lot of people who are very substantive thinkers on this question on the right saying anymore: See no evil, hear no evil, there’s nothing to do here. You definitely do have people, I think, trying to answer this question.
Now, as Matt pointed out, you always have people that are trying to hold something up that they’re doing something under the guise of doing nothing. But I do think that you really do see some of the intellectual leaders in the Republican Party on this question really wrestling with some of the underlying questions that people like Matt have been studying for a really long time.
RG: So is that the phase we’re in now where there’s no longer a serious argument about whether something needs to be done, but it’s the side that used to say that nothing needs to be done is now kind of floating things that can’t really be done and wouldn’t work just as a way to of delaying — there’s an evolution that these these debates go through in Washington. At some point, it becomes, they’re just a stalling tactic for the side that knows it’s gonna lose, but wants to, you know, I guess extract as much time and money value out of it as they can.
RB: I mean, that’s politics, right? [Laughs.] There’s always a faction of whatever party that wants to protect the market incumbents or the incumbent interest, whatever it is.
But I do think — I travel a lot and talk about the question of Big Tech on the right. And I do think that the base of the Republican Party is no longer going to accept half measures. They are savvier, I think, than a lot of Republicans in Washington understand about this question. They’re starting to get very tired, anyway, of the rhetorical shaming that Republicans will do at hearings, but then have absolutely no follow through or no plan on how to actually put in structural reform.
So, I do think that this is a struggle for the right. There’s a lot of people who want to approach this question, but the right still remains unfocused about what to do, specifically. And that’s, I think, the phase that they need to be in now.
Now, a lot of the political folks I talked to on the hill, there is a shift in the sense that they know that antitrust is now part of this equation, there’s no backing away from it. And so it’s just a matter of figuring out how to best approach this question. And I will point out too, I think sometimes the left forgets that the right sort of doesn’t have the intellectual depth as much on this question, right? We have Borkians, right?
We have people that have been trained in one specific way of thinking, and thinking in that specific way is incentivized. And so there hasn’t been a lot of just intellectual dynamism on this question on the right for a very long time. So we are catching up, I think a little bit, in these areas. And that’s taken some time. But hopefully, it’s pushing us in the right direction, from my perspective.
RG: And how much of the antitrust energy on the right is coming from this, this notion of censorship, like this fear that Big Tech is censoring them, or shadow banning them, or they’re getting booted off platforms or, they’re not getting enough likes on their posts — which I worry — and tell me if I’m wrong about this — which I worry if that’s too much of a driving impulse of this, that when it gets time to a solution, it’s going to conflict with whatever’s actually doable.
RB: Yeah. That was obviously what drove a lot of the interest from the right in the first place, right? It was this idea of censorship — of conservatives being suppressed online. And, for a long time, the retort was: Well, that’s conspiracy theory. But then I think that the Donald Trump presidency and sort of how social media handled news about Donald Trump, handled stories about him, I think, really fed into that idea that no, there is an ideological speech control.
Now, I think the savvy Republicans understand that that is a symptom of market power. Right? That I think a lot of these speech concerns are actually downstream of market control, and that this is far more of an economic question in a lot of ways than it is simply a speech question. So you’re starting to see Republicans, I think, wake up to that fact.
And then also the question of competition and small businesses and innovators being able to compete with these platforms. I think one of the most compelling hearings that the House antitrust subcommittee did during their investigation of Big Tech was with small competitors. I think it was a field hearing in Colorado, and you saw these small competitors come forward and say, “This is the reality of trying to compete with these guys. We are not on a level playing field here.”
That resonated with a lot of Republicans. Because, again, that idea of small business and competition and fair play in the market should be central — and has been central in a lot of ways — to the Republican philosophy. So speech concerns, I think, sparked a lot of the issue. But I think people who are trying to actually address this in a savvy way understand that it’s merely a symptom of market power, it’s not the cause of every problem they face.
RG: And Matt, you work with both the left and the right on these questions. How do you navigate this issue of censorship grievance? Is it something that can be exploited to push the agenda forward? How do you grapple with that?
MS: Yeah, I mean, I’ll talk about the confusion on the Democratic side.
RG: Right, which there’s a ton of that, too. It’s like they blame Facebook for Trump, and that’s a significant amount of energy around some kind of anti-Big Tech.
MS: That’s right. I mean, I was talking to a member who has been interested in antitrust for quite awhile, and he said to me after January 6, how do we have antitrust law and non-discriminatory regimes, but still allow these firms to ban Donald Trump?
And so he was wrestling with the idea of: Well, I want to censor. [Laughs.] I want them to be fair, but also I want to censor. And I think that’s a real tension. I mean, this guy’s from Silicon Valley — there are other things involved there.
But you have this old tradition, which I think is kind of the Democratic version of the libertarian tradition, which is this very consumer-focused, consumer-oriented bias, right? To the exclusion of other problems. And so there’s a lot of people who are like: We need to focus on privacy, privacy, privacy, and we need to make sure that there’s transparency around how Facebook discloses whatever, and misinformation, disinformation. That’s what you see in the Energy and Commerce Committee; it’s what you see in the Senate Commerce Committee.
And it bleeds and blurs into some good policy, like children’s tracking and privacy. But there’s also this kind of deep desire, going back to the 1970s and earlier, to just set up large centralized administrative agencies. And they’re like: Oh, well, if misinformation is a problem, we’ll just have a large centralized administrative agency to deal with it.
I think that’s actually what Francis Haugen said, who’s the whistleblower. That’s one of her ideas. And so a bunch of Democrats jumped on it and were like: Oh, this is a really good idea. Because they see a problem, they want to put a regulator in there, and they don’t really think about competition. But on the other side, you have a whole set of Democrats who are kind of loosely aligned with the faction that I’m a part of, of the antitrust debates.
And this doesn’t break down on normal ideological lines. We see it the way that, I think, Rachel described, which is that a lot of the problems are disinformation, and censorship, and various other social polarizations are upstream from market power, and market structure questions. And if you get the market structure right, then a lot of these things kind of go away.
So to put it in a slightly different way: Alex Jones is not somebody that we particularly like, but you’ve always had people who stand on the corner and scream crazy things, or even people who are in the media and say things that are crazy. The problem is that Alex Jones was recommended by YouTube’s algorithms, owned by Google, 15 billion times. Right? That is a difference between thinking about misinformation and disinformation saying that a person shouldn’t speak, and thinking about a business model that creates a kind of algorithmic amplification because of a specific way that we regulate data and allow advertising in a specific regulatory model.
That’s actually another thing that the whistleblower was talking about is algorithmic amplification. She had some good ideas and bad ideas. But it’s like that question of: How do you get the market structure right? Versus: How can we put together a centralized agency to fix these social problems? That’s a real point of tension on the Democratic side.
RG: So if algorithmic amplification is a major problem, how does competition solve that? Because is there a concern that the worst kind of algorithmic amplification will win a free market battle?
MS: Yeah, so Okay, so competition policy is never just about breaking things up. Sometimes you don’t break things up, right? It’s about setting clear rules for market structure that create social benefits. And competition, if you can have it, often is a really important part of that. It’s not the only part of it. So it’s kind of like you can have multiple car companies producing cars, but you also need seatbelts, right? And you need stop signs, you need rules of the road, you also need competition.
And then when they killed all their competition or bought their competition — they bought Instagram and WhatsApp by 2014, they started surveilling aggressively because people couldn’t really leave. So if you did see Facebook broken up and you saw more competition in the space, you would see product differentiation. So you would have firms saying: Well, you know, we’ll offer you this social networking product, but we have a safer or more private product. Or: We’ll offer you this messenger product that’s safer and more private; that was what WhatsApp was. And so you can see through that product differentiation, just like in a competitive market prices often go down, you would see quality go up because these institutions would have to fight over customers.
But to deal with social problems, you need to go beyond just having more competitors, you also need to put clear rules of the road in there. And that would be things like preventing conflicts of interest by addressing the problem of algorithms and surveillance advertising. I think we should just ban surveillance advertising, straightforwardly. And you know, there’s probably a few other things that you would have to do to get back to human scale systems.
But both competition and setting clear rules of the road that are content neutral, would be the way to get us back to a situation where one guy isn’t controlling social discourse in America and all over the world.
RG: And Rachel, what about you? How does more competition solve that problem? Do you mostly agree with Stoller? Anything you would amend there?
RB: So I think something Matt touched on briefly is actually a really important point, which is the idea that antitrust is, I think, very important to solving the issues around Big Tech, but it’s not a complete panacea. And I do think that if you infuse market forces into the tech space, you can actually compete a lot of these concerns away from speech, privacy, all these things. But you are still dealing with structural incentives that are largely lawless. He mentioned advertising surveillance and surveillance capitalism and things like that. We have a largely lawless environment around that; same with data brokerage; and what firms can collect and what they do with it, and user control. All policy around that really has to be contemplated, I think, to actually address some of these questions.
And then on the algorithmic side, you also have the legal question of: You have massive Section 230 protection for these companies, do their algorithmic choices constitute sort of editorializing? Do the action that these firms take on user content. so the fact checks and everything they do to user content, should that be outside of Section 230?
So I think antitrust has to go hand in hand with certain structural policy changes if you’re looking at a full, comprehensive view of how we take on this problem. But I do think that, for me, antitrust is one of the cleanest solutions at the outset of addressing the market concentration that has prevented the marketplace from really solving a lot of these problems in the first place.
And what’s the Big Tech pushback looking like? There was this amazing moment where, I don’t know if you saw this, but yesterday Amy Klobuchar was complaining that tech companies have, she said: They’ve literally hired so many people in this town to push their Big Tech agenda.
Sen. Amy Klobuchar: There are lobbyists around every single corner of this building that have been hired by the tech industry.
RG: And then a couple hours later, it’s reported that her own senior staffer is going to work for Apple, as a top lobbyist, which was probably top of her mind as she was making that comment.
Now, Amy Klobuchar is known to have extremely high turnover, but that doesn’t mean that all the staff have to go work for Apple. So what is your competition like on the other side?
RB: I mean, is David and Goliath too extreme of an example? [Laughs.]
I cannot explain this any better, I think, than by talking about the 2020 lobbying numbers, because I just think this makes it so plain.
In 2020, Facebook and Amazon spent more money lobbying the government than Northrop Grumman, Lockheed Martin, Boeing, and Raytheon. I mean, they spent more money than the defense industrial complex to try and purchase the rules that govern them.
And I think that, in addition to the ability they have to fund a lot of public policy institutions to turn their Big Tech talking points into a free market pablum, that’s a very powerful element. So not only are they sending all their lobbyists to the Hill, they’re creating this echo chamber from the policy space of: This is what you have to do if you’re conservative. This is what you have to do.
And it is a powerful force, and it’s worked for them. I mean, for the past 15-20 years, it has worked for them. I think, right now, you’re seeing their approach run up against the reality, which is people just aren’t buying it anymore. And I think you’re seeing maybe not a lot of the right, but some of us on the right saying, I think we really just haven’t thought about this correctly. We’re supposed to want to protect the free market, and that’s what antitrust does. Why shouldn’t we have antitrust enforcement against these firms?
But never underestimate the power of Big Tech in these debates. They have money, they have time, and they have countless resources. And that’s why if you remember TikTok, when they went around hiring up some of the very top staff from both Republicans and Democrats across Congress, from the House and the Senate. They pay a lot of money. And I guess some staff had no compunction about basically working for the Chinese government. [Laughs.] So they are still very powerful in Washington.
RG: And what does your side look like? Like how big of a room would you guys need?
RB: Like thinkers like me? Or the right?
RG: Like people in Washington who are actively engaged in fighting back against Big Tech.
RB: I think it probably started with like three people. [Laughs.] I’d like to think we’re bringing more people around every day, but I think it’s pretty small still, unfortunately. But we’re growing happy. We’re happy and optimistic.
In its own right, it’s a fascinating case study in effectiveness in Washington, because there is a ton of anger about antitrust around the country, but it has never really organized into a March on Washington or anything. Yet you guys have made major inroads, to the extent that Jonathan Kanter is on his way to being confirmed in the Senate, probably with a pretty strong bipartisan vote. Why do you think you have been able to compete so well against an industry that spent more than the military industrial complex?
RB: Yeah, as much as I’d love to give my little band a ton of credit here, I mean, Big Tech has really helped make the case for us. What’s also really amazing about this moment is how self-inflicted it is.
I mean, these companies are so arrogant. They’re so arrogant. Just even look at how they ban news, right? The Hunter Biden story was in the banning that Twitter did, followed by Facebook. That was a real rallying moment, I think, for the right. And it could have been avoided, right? It could have been avoided.
RG: Right. They could have just not done that.
RB: They could have just not done that. And instead they did and, in their arrogance, they defended it. And that really galvanized, I think, a lot of people.
RG: And they could have not had a Democratic activist make the state, Andy Stone.
RB: Right. The former Facebook executive who was working for a former leading Democrat.
And that galvanized the right. and it brought a lot of people who weren’t necessarily paying attention or on my side to this. It brought a lot of them around. So every time they just do something, it’s like they step on a rake, a little bit. Because they’re just so out of touch, I think, with where this moment is, and they do something like that. And it makes my job a lot easier because I don’t have to argue as forcefully for this because Big Tech is making the argument for me.
Now, I’ve also spent a lot of time appealing to traditional conservative philosophy, which I think very much encompasses robust antitrust enforcement. I’ve been pushing back against the swan song of neoliberalism on the right for a while, and I think this is one of the areas where I’m pushing the right to sort of reclaim its traditions. But I gotta hand it to Big Tech. Thanks, guys. You make my life a little easier.
RG: [Laughs.] Well, thank you so much for joining me. I really appreciate it.
RB: My pleasure. Thanks for having me.
RG: Matt, thank you for joining me.
MS: Thanks for having me.
RG: That was Rachel Bovard and Matt Stoller, and that’s our show.
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