Welcome to The Corner. In this issue, we take a look at how the fight to rein in Big Tech giants is moving to the states as the future for antitrust enforcement remains uncertain under the incoming Trump administration and Republican-controlled Congress.

Google Refines its 50-State Lobby Strategy As Tech Fight Moves to States

By: Austin Ahlman

The fight to make Big Tech safe for democracy is at a crossroads. Oversight efforts in a Republican-controlled Congress are uncertain at best. And while the incoming Trump White House may continue the antitrust cases the Biden administration has pursued against giants like Google, Amazon, and Microsoft, there is a real possibility the new administration will attempt to settle those lawsuits under terms that do little to reduce the power or change the behavior of the corporations.

In the face of those uncertainties, many advocates have urged moving efforts to restructure and regulate Big Tech to the states. If and when they do so, they will find that at least one of the dominant corporations — Google — is waiting for them. While other tech giants like Meta are gradually increasing their state-level lobbying activities, Google in recent years has aggressively scaled up its operation.

Perhaps the most dramatic example is California, where the corporation’s third-quarter lobbying reports revealed that it had spent over $10 million on pressuring the state legislature to kill an ambitious piece of legislation called the California Journalism Protection Act, or CJPA. That bill would have created a permanent framework for Google and other platforms like Facebook to compensate news publishers for the value of their content — a move that would have cost Google tens of millions of dollars annually and established a model for other states.

Ultimately, Google secured a side deal [[link removed]] with Governor Gavin Newsom and the legislature to create a journalism sustainability fund. The deal, which will require taxpayer support, appears to fall well short of the compensation publishers would have received had the CJPA passed.

With the California blitz, Google’s total lobbying expenditures at the state level in the 2024 calendar year are set to surpass its federal lobbying spending for the first time. But the increase in Google’s state-level spending was evident long before the corporation unleashed its full court effort to kill the CJPA earlier this year.

In 2023, the corporation spent nearly $1.6 million opposing that bill and other data privacy reforms in their early stages, during the first half of California’s two-year legislative session. That figure represented a three-fold increase from the roughly half million dollars the corporation spent on similar activities during each of the prior two years.

Other states pursuing legislation that could affect Google’s business model have seen similarly rapid increases in lobbying spending. In Maryland, one of several states which passed or considered a comprehensive consumer data privacy law earlier this year, Google’s annual lobbying spend ballooned to over $600,000 in the reporting year that ended last month, an amount that dwarfs the less than $100,000 the corporation spent on similar activities the previous calendar year. (Meta also spent over half a million dollars lobbying in Maryland during the last 12 months.) Unlike in California, Maryland reformers and citizens ultimately triumphed, as Governor Wes Moore signed the Maryland Kids Code and the Maryland Online Data Privacy Act of 2024 into law in May.

Even in states where the passage of major reforms seem unlikely due to legislative deadlock, like Pennsylvania, Google’s lobbying spending has seen a noticeable uptick. Control over the Keystone state’s senate and house is split between the two parties, which has limited the odds of passing substantial reforms. Even so, Google nearly doubled its lobbying expenditures in the last four quarters to over $140,000 compared to the less than $86,000 it spent the previous year.

FTC Bans Mobilewalla to Stop Collecting Personal Data from Real-Time Bidding System

The Federal Trade Commission has ordered [[link removed]] data broker Mobilewalla to stop collecting data from the online advertising “Real-Time Bidding” (RTB) system. RTB operates the majority of advertising on the Internet. Mobilewalla claims to have five years of data from 1.9 billion people’s devices, and creates dossiers about American’s most intimate characteristics.

Open Markets has long advocated for measures to regulate Real-Time Bidding. In November 2022, Open Markets flagged the dangers of Mobilewalla to the FTC [[link removed]] in a submission together with the Irish Council for Civil Liberties and the Trans Atlantic Consumer Dialogue, a forum of 75 NGOs.

“This FTC action against Mobilewalla is an important step in shutting down the free-for-all of sensitive data that exposes America to national security vulnerability and exposes every American to the discrimination, manipulation, and private and government surveillance,” said Johnny Ryan, a senior fellow at Open Markets and Director of ICCL Enforce. The online advertising “Real-Time [[link removed]] Bidding” [[link removed]] [[link removed]] (RTB) [[link removed]] system broadcasts the GPS coordinates of Americans and what they are doing online 107 trillion times a year. RTB is the dominant technology behind online advertising and is triggered whenever a person loads a webpage or uses an app, leading to predatory profiling, theft by tracking-based advertising systems from businesses who unknowingly pay to show ads to bots, and the risk of blackmail and hacking.

Open Markets Files Amicus Brief Urging for Rehearing of Case on Merck’s Mumps Vaccine

The Open Markets Institute filed an amicus brief [[link removed]] with the U.S. Court of Appeals for the Third Circuit, urging the court to grant a rehearing in an antitrust case regarding Merck’s mumps vaccine. A class of physicians alleged that Merck misled the Food and Drug Administration about the shelf-life of its vaccine and thereby kept out a competing vaccine. Authored by counsel of record Jason Rathod, Open Markets’ legal director Sandeep Vaheesan, and OMI policy counsel Tara Pincock, the brief emphasizes that granting absolute immunity for material misrepresentations to agencies like the Food and Drug Administration encourages firms to lie to regulators in order to build and maintain monopolies.

“Allowing corporations to abuse judicial and regulatory processes through misrepresentations is dangerous,” Vaheesan said. “It empowers corporations like Merck to extend their monopolies through regulatory mischief and undermines the decision-making of agencies like the FDA.” Read the amicus brief here [[link removed]].

📝 WHAT WE'VE BEEN UP TO: Open Markets Institute’s legal director Sandeep Vaheesan and chief economist Brian Callaci coauthored an article in The Atlant [[link removed]] a [[link removed]] Journal Constitution [[link removed]] calling for rent control laws that could stem the tide of rent increases contributing to the nation’s severe housing crisis, particularly in light of the widespread collusion among landlords promoted by property software company RealPage.

Center for Journalism & Liberty director Courtney Radsch hosted a panel at The Trust Conference [[link removed]], organized annually by the Thomson Reuters Foundation in London, on which she spoke about the threats posed by AI, including misinformation and trust erosion.

OMI legal director Sandeep Vaheesan participated in a debate at the ABA 2024 Antitrust Fall Forum [[link removed]] entitled “Anticompetitive Conduct is Best Determined by the FTC.” He argued that the FTC, not the courts, should be the lead federal actor on competition policy in the United States, highlighting the non-compete ban as an example of the FTC exercising its subject matter expertise and public watchdog role.

CJL director Dr. Courtney Radsch issued a statement [[link removed]] after closing arguments in the U.S. Department of Justice’s case against Google for monopolizing the digital advertising industry, saying, “This case is about enabling fair competition that gives real choice to publishers and advertisers, which ultimately spurs innovation and leaves room for business models that can support a free press.”

Dr. Radsch was quoted by both The Guardian [[link removed]] and Politico [[link removed]] on a separate antirust case related to Google’s search monopoly. Following a request by the DOJ to force Google to sell its popular Chrome web browser, she told Politico, “Google’s dominance in search and its aggressive leveraging of that power into emerging AI markets pose a clear danger to competition, innovation, and the integrity of our information ecosystem.” Dr. Radsch also discussed the DOJ’s proposed remedies for Google on an episode of UpFront [[link removed]].

OMI senior reporter Karina Montoya was quoted in Digiday [[link removed]] commenting on the DOJ’s adtech antitrust case against Google, saying the federal agency had reason to be confident. “At this point the DOJ seems to think [the judge] understands that even if the anti-competitive conduct is analyzed under Google’s market definition, [the DOJ’s] claims of monopolistic conduct will prevail,” she said.

OMI’s Europe director Max von Thun was quoted in Europe Cleaning Journal [[link removed]]arguing that the EU’s AI Act fails to curb Big Tech’s monopolization of the emerging technology. “The AI Act is incapable of addressing the number one threat AI currently poses: its role in increasing and entrenching the extreme power a few dominant tech firms already have in our personal lives, our economies and democracies,” he said.

Von Thun was also interviewed by South Korea’s leading weekly business magazine Economy Chosun [[link removed]] on what a second Trump administration means for the U.S. government's relationship with Big Tech, and how this might affect Europe's own efforts to rein in the Silicon Valley behemoths.

🔊 ANTI-MONOPOLY RISING:

Canada’s Competition Bureau announced a lawsuit against Google, alleging the search giant improperly tied its ad tech tools together in an anticompetitive manner. The suit seeks to force Google to sell off two of those services. ( CBS [[link removed]] News [[link removed]])

The Federal Trade Commission opened a sweeping investigation into Microsoft over concerns the corporation is illegally bundling its artificial intelligence, cloud computing, home office, and cybersecurity products in violation of competition law. ( New [[link removed]] York Times [[link removed]])

A federal lawsuit against gaming marketplace giant Valve was granted class action status. The case, brought by development studios Wolfire Games and Dark Catt Studios, claims Valve has improperly leveraged the market power of its Steam marketplace to extract an exorbitant cut of video game sales. ( Eurogamer [[link removed]])

Microsoft is facing a $1.25 billion class action suit in the UK over allegations it charged thousands of customers who used cloud services from competitors above-market rates for server licensing services. ( TechCrunch [[link removed]])

The Consumer Financial Protection Bureau proposed a new rule to sharply curtail data brokers’ ability to sell Americans’ sensitive personal and financial information. The rule would put brokers who traffic in those kinds of data under similar amounts of scrutiny as credit reporting and background check services. ( The [[link removed]] Verge [[link removed]])

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

DONATE [[link removed]] 📈 VITAL STAT:

$700 million

The amount Nvidia has proposed to pay to acquire Run:ai, which would cement the chip giant’s chokehold on the graphics processing unit market, in which it has an 84% market share. The deal is under scrutiny by EU antitrust regulators. ( Reuters [[link removed]])

📚 WHAT WE'RE READING:

Taking Back Control?: States and State Systems After Globalism [[link removed]] — Wolfgang Streeck, the emeritus director of the Max Planck Institute for the Study of Societies, takes a look at the relationship between globalism and democracy following the fall of the Soviet Union and the rise of neoliberalism around the globe. With a focus on the European Union, Streeck suggests new models for states to structure their markets and governments in a manner that promotes democracy and self-sufficiency.

Order Sandeep Vaheesan’s book

Sandeep Vaheesan, the legal director at the Open Markets Institute, published his first book Democracy in Power: A History of Electrification in the United States [[link removed]], in which he examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives.

🔎 TIPS? COMMENTS? SUGGESTIONS?

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

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