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Welcome to The Corner. In this issue, we explore the recently passed California Delete Act, aimed at curbing the rampant and invasive collection and sale of personal data by so-called data brokers. Open Markets also filed an amicus brief urging the Supreme Court to put an end to a century-old baseball antitrust exemption.

California Takes Aim at Platform Monopolies with Powerful Data Privacy Act

Austin Ahlman

California continues to lead the nation in using privacy rights legislation to cut back the power of platform monopolies like Facebook, now with the California Delete Act, which was signed into law earlier this month. This sweeping new legislation takes aim at data brokers, the mysterious firms that collect—often through surreptitious “scraping” of websites—and then sell extensive amounts of data on individuals. For the first time, Californians will have the option to force brokers to purge that collected information and then to opt out of further collection going forward. To that end, the Act establishes a one-stop web portal where users can engage with every data broker registered with the state.

The bill’s designer, technology expert Tom Kemp, has long held that the data compiled by these shadowy firms has profound civil rights implications. Law enforcement and other government agencies today can easily buy data previously accessible only with a search warrant, including about a person’s online activity, family background, medical conditions, and even location history. And private actors increasingly use data from these firms to target individuals, including through hate-driven agendas, such as the well-known case of the high-ranking Catholic priest forced to resign after his brokered data revealed [[link removed]] he was gay. Senator Elizabeth Warren and others have warned [[link removed]] that such data could also be used to harass or prosecute women seeking abortion care.

In an interview with Open Markets, Kemp explained that the bill is modeled on the popular National Do Not Call Registry. At first, he says, “it was hard for lawmakers to envision this. But if you say it is like the Do Not Call Registry, then the light bulb goes off.” Kemp recently published a book on his work and thinking, Containing Big Tech [[link removed]].

But whereas the Do Not Call Registry takes a narrow view on what constitutes an unsolicited call, the Delete Act defines data brokers far more broadly. The bill also forces data brokers to disclose precisely which types of information they collect when registering with the state.

Given California’s large population, the new law will also likely have a big effect. Over 70 percent of U.S. phone numbers are enrolled in the National Do Not Call Registry. Assuming a similar percentage of Californians exercise their new rights under the Delete Act, brokers will be barred from collecting and storing the personal data of nearly a tenth of American adults.

The legislation builds on the 2018 California Privacy Protection Act, which first required data brokers operating in the state to register [[link removed]] with the Attorney General’s office. Crucially, the new bill substantially boosts the state’s ability to enforce registration requirements. According to Kemp, California’s AG office has done little thus far to enforce compliance —which explains why only 500 of the estimated 4,000 data brokers in the state are currently registered. By transferring responsibility to the California Privacy Protection Agency and reprogramming funds for enforcement of non-registration, the California Delete Act will soon make this registry the nation’s premier source of information on data brokers.

California’s new reform comes at a moment when national efforts to bolster data privacy rights have come to a standstill, despite broad bipartisan support. The most serious bipartisan attempt to modernize American data privacy laws—the American Data Privacy and Protection Act—failed in the Senate during the last congressional session and has not been reintroduced. That failure has left Americans with far fewer data privacy rights than our European peers, who have benefited from the European Union’s recent General Data Protection Regulation and other laws.

But this does not mean the federal government lacks tools to take on the data broker industry on behalf of the 300 million Americans who live outside California. The Federal Trade Commission (FTC) has recently taken steps toward cracking down on the industry’s abuses, such as its lawsuit against the data broker Kochava Inc. over its location history practices. The FTC’s broad rulemaking authority around unfair and deceptive business practices arguably enables them to create a tool like the Delete Act’s registry on the federal level. The results of an exploration [[link removed]] into how to use that rulemaking power to enact new commercial surveillance regulations are pending. But as the Congressional Research Service has noted [[link removed]], the “intentionally flexible nature of the FTC Act” is reason to believe the commission has the authority to go big.

While Kemp expressed hesitation over the FTC taking such an aggressive view of its authority, he acknowledged the agency’s traditional enforcement tools against predatory data practices are currently underutilized. “They can use additional tools—discrimination, health care breach laws, etc.—to work data brokers… Over time, if you put enough enforcement actions together, you will create lines most of these brokers won’t cross.”

Open Markets Files Amicus Brief Urging Supreme Court to End Baseball Antitrust Exemption

The Open Markets Institute has filed an amicus brief [[link removed]] calling on the Supreme Court to put an end to baseball’s century-old antitrust exemption. The brief, written by Open Markets legal director Sandeep Vaheesan and antitrust attorney Jay Himes, argues that the enduring exemption has allowed Major League Baseball to exert monopoly-like control over major and minor league players and teams. In this case, the two teams that filed suit had their minor league affiliation terminated by MLB in late 2020, meaning they could no longer compete against the top minor league teams. More than a dozen states’ attorneys general have also weighed in on the case, urging the Court to end baseball’s antitrust immunity.

“While baseball may be a national pastime, Major League Baseball’s (MLB) control over the minor leagues, unhindered by antitrust law, is a national disgrace,” the brief reads. “MLB and its clubs collude to cap minor league player salaries at poverty levels and to arbitrarily terminate the affiliation of minor league teams and rob many small towns of cherished local institutions.” Vaheesan penned an op-ed on the baseball exemption for the Boston Globe [[link removed]]. Bloomberg Law [[link removed]] wrote about the brief. Read the full brief here [[link removed]].

Open Markets and AI Now Institute

to Host Conference,

“AI and the Public Interest” on Nov 15

The Open Markets Institute and the AI Now Institute will host a conference [[link removed]], “AI and the Public Interest,” on November 15 to discuss the promise, threats, and practical regulatory challenges we face in managing the advent of large scale AI. The event, to be held at the JW Marriott in Washington D.C., will examine large-scale AI in relation to the already existing powers, structures, and behaviors of the corporations that control these technologies and the computing systems on which they depend. The conference will also ask whether antitrust and other competition law and policy can play a role in protecting democracy, individual health and wellbeing, the properties of creators, and open and competitive innovation from AI-related threats. The event will bring together leading policymakers, law enforcers, technologists, entrepreneurs, writers, musicians, policy experts, and academics from the United States and Europe. Follow updates here [[link removed]].

📝 WHAT WE'VE BEEN UP TO: Open Markets Institute’s chief economist Brian Callaci published a think piece in The Atlantic [[link removed]] on how Bidenomics is reversing four decades of economic orthodoxy led by the Chicago school that was focused on weeding out inefficiencies. “But the turbo-growth promised by the Chicago-school intellectuals never materialized. And so, in perhaps the most overlooked element of his economic agenda, Biden has thrown out the tweezers,” Callaci writes. “Instead of trying to generate growth by removing micro-inefficiencies, his policies target growth directly through aggressive spending, creating a high-pressure macroeconomy.”

Open Markets Institute’s Europe director Max von Thun published a piece in Tech Policy Press [[link removed]] flagging the early monopolization of AI by predominant Big Tech firms. “Should we be worried about a handful of incumbents controlling AI?” von Thun asks. “There is plenty of evidence to show that market concentration undermines innovation, reduces investment, and harms consumers and workers.”

OMI senior legal analyst Daniel Hanley published a piece in The Sling [[link removed]] arguing for greater use of the state action doctrine, which exempts states from the Sherman Act and allows them to use their regulatory power in order to protect small businesses and enhance standards and wages for workers. Hanley writes, “Like New York and California, more states should enact and be prepared to fight for their regulations to enhance and protect the lives of working people by taking advantage of the immunity granted by the Supreme Court more than 80 years ago.”

Dr. Courtney Radsch, director of the Center for Journalism & Liberty, spoke at the Internet Governance Forum [[link removed]], held Oct. 8-12 in Kyoto, on setting AI governance standards. Speaking on a panel at IGF, she called for the need to address the monopolization of the emerging AI space by a handful of Big Tech firms and avoid replicating the failures of the past.

OMI Executive Director Barry Lynn spoke at the Riga Conference 2023 on international and national security, in Riga, Latvia. In his talk, Lynn discussed how national security can be bolstered by smart trade, industrial, and competition policy that breaks manufacturing chokepoints and ensures the neutrality of international communications systems. Other speakers included Thierry Breton, the Commissioner for Internal Market at the European Commission.

The Open Markets Institute called on law enforcers to block Chevron’s proposed takeover of Hess Oil and another recent takeover by Exxon. Lynn, in the statement, said: "Today's news…. demands a swift response from U.S. law enforcers. The proposed deals mean higher prices for every American and harder days for U.S. manufacturers and farmers.” CBS News [[link removed] proposed deals mean higher prices for every American and harder days for U.S. manufacturers and farmers. Even worse, they pose a variety of threats to the energy security and national security of the United States and our closest allies, and to the resiliency of local energy systems.] covered Lynn’s statement.

OMI Europe director Max von Thun was quoted by ABC News [[link removed]] commenting on Microsoft’s takeover of Activision Blizzard, saying the U.K.’s antitrust authority “deserves credit for imposing a structural remedy on Microsoft that is significantly stronger than the weak commitments accepted by the European Commission.”

Executive director Barry Lynn was quoted in CNN Business [[link removed]] in a profile of Federal Trade Commission chair Lina Khan, whom Lynn hired straight out of college. “I remember one day sitting around talking [about the chicken farming industry]. She was like, ‘What these people are doing, it’s just wrong … It’s insulting, because it is intellectually so unjustifiable,“ he recalls of her early days at Open Markets.

Senior fellow Nikki Usher was quoted in The Washington Post [[link removed]]on the rising popularity of once flippant Instagram accounts now offering credible news on cities amid the decline of local news outlets. “They start as a joke account for people to make fun of or rant about things that frustrated them, or they’re bored and want to have fun,” Usher said. “And then they accidentally start to get credibility because they’re so authentic.”

🔊 ANTI-MONOPOLY RISING:

More than 40 states filed a lawsuit against Facebook and Instagram over concerns the addictive products are fueling the mental health crisis among America’s youth. ( NPR [[link removed]])

The U.S. Trade Representative dropped digital trade demands, originally drafted by Big Tech, made to the World Trade Organization that would have prevented peer nations from implementing data localization requirements and software code reviews. ( Reuters [[link removed]])

The Federal Trade Commission is suing the alcohol chain Total Wine & More for failing to produce records necessary for the commission’s probe of price-fixing in the industry. ( Reuters [[link removed]])

The European Commission announced its intention to set stricter rules for airline mergers following a wave of air travel consolidation across the continent. ( Financial [[link removed]] Times [[link removed]])

The European Commission issued a fine to five pharmaceutical companies after accusing the companies of operating a price-fixing cartel for a key drug component. ( Reuters [[link removed]])

Japan’s Free Trade Commission has launched an investigation into Google over the tactics it uses to push device makers into setting its search engine as the default on their products. ( United [[link removed]] Press International [[link removed]])

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

DONATE [[link removed]] 📈 VITAL STAT: $12 Trillion

The size of the private equity sector represented by the American Investment Council, which, as the sector’s chief lobbying group, is currently challenging efforts by the FTC and DOJ to more closely scrutinize private equity roll-ups, the sector’s strategy of buying many small companies to create a single large one. ( W [[link removed]] all Street Journal [[link removed]])

📚 WHAT WE'RE READING:

LIV and Let Die [[link removed]]: Sportswriter Alan Shipnuck dives into the decline of the PGA Tour and the rapid ascension of the Saudi-backed LIV Golf. In his book, Shipnuck weaves together the stories of golfers, tour managers, and financiers to explain how the LIV professional golf tour upended the classic sport. With the LIV Tour pursuing a merger with the PGA Tour and PGA European Tour, Shipnuck’s timely account exposes the people and policies responsible for putting the beloved sport’s future at the mercy of a brutal authoritarian regime.

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Written and edited by: Barry Lynn, Austin Ahlman, Ezmeralda Makhamreh, and Anita Jain.

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