Welcome to The Corner. In this issue, we explore underseas cables and who controls this critical infrastructure amid Meta’s proposal to build the world’s longest.

Meta’s Foray Into Undersea Cables Raises Questions Over Critical Infrastructure

Michelle Nie

Meta last month announced Project Waterworth, a $10 billion project to build the world’s longest undersea cable. Critically, Meta would be the sole owner and user of this cable, further concentrating ownership of critical international infrastructure in the hands of a few technology corporations. While ownership of a cable does not necessarily mean that one has access to the data that flows through it, owners can determine which data flows are prioritized, as well as exploit their control over these chokepoints to favor their own services. The overall result highlights the urgent need for democracies around the world to take policy action.

Today’s undersea cables are designed to transmit enormous amounts of data, including voice and eventually internet traffic, across thousands of miles. In all, 99 percent of today’s international communications traffic — including internet, telephone, and video — is transmitted through such cables. These connections are core to the basic functioning of our societies. Both cloud computing and financial systems such as the Society for World Interbank Financial Telecommunications (SWIFT) depend extensively or even exclusively on undersea cables to manage essential services and to transmit transactions valued at trillions of dollars daily.

Despite their critical importance, only one percent of all undersea cables are owned by governments. The vast majority are owned by private firms or consortiums of firms. And just four corporations — Google, Microsoft, Meta, and Amazon— own or lease about half the world’s undersea cable capacity. The same four account for an even greater percentage — 71 percent – of total cable traffic, thanks in part to the fact that their cables tend to be of higher capacity; Meta, for example, has been deploying cables that use 24 pairs of fibers, when typical cables have only up to 16.

These four tech giants have used their control over undersea cables to their advantage in a variety of ways. For instance, the corporations are making critical decisions about where cables lie. One result is they predominantly use cables to connect data centers instead of population centers, as was previously common practice — a trend that is set to accelerate due to the importance of cloud and AI on these businesses’ growth.

Similarly, these four corporations use their effective control over international connectivity to further reinforce their already outsized market power over digital communications systems. As with cloud services, they can prioritize their own services and slow or even deny services to other companies, in ways that limit both freedom and competition.

To solve these issues, some have advocated for the increased use of satellites to facilitate data transfers. But even the most advanced extraterrestrial systems are less reliable, slower, and less resilient to external factors. They are also dependent on powerful U.S. companies, notably Starlink.

Others have advocated for increased protections under international laws, such as the UN Convention on the Law of the Sea (UNCLOS), written in 1982. But the convention largely addresses nations' rights and responsibilities over cables rather than regulating the use of cables.

Late in the Biden administration the Federal Communications Commission (FCC) proposed an overhaul of its cable licensing rules to force license applicants to demonstrate that new cables would serve the public interest and that they have not “violated U.S. antitrust or other competition laws.” If adopted this rule would apply to new cables connected to the U.S. but not to existing infrastructure.

There are, however, other ways to challenge the control of these four sprawling corporations, while reducing systemic vulnerability to accidents, disruption, and geopolitical coercion. For instance, governments couldd treat cables as public utilities and regulate them accordingly. This could be done through domestic regulation, since nations have jurisdiction over cable laying and placement activity 200 nautical miles (around 10 kilometers) from shore per the UNCLOS.

A second approach would be for democratic governments to increase their investment in alternative cable systems. This would allow democratic nations to take a more active role in establishing public alternatives with the aim of expanding access without depending on Big Tech-controlled infrastructure.

Last, at the international level, democratic nations could aim to strike new multilateral treaties to require cable owners to share cable capacity with smaller businesses, eliminating their exclusive access rights.

The stakes are high. If we fail to regulate cables in the public interest, this critical infrastructure will continue to be controlled by a tiny few U.S.-based Big Tech companies and, by proxy, the U.S. government — further undermining a free internet and threatening the security and resilience of one of the fundamental critical infrastructure networks that society depends on.

Open Markets Submits Letter in Support of Minnesota Bill Banning Price Discrimination

Open Markets Institute’s food program manager Claire Kelloway submitted a letter to the Minnesota House committee on commerce, finance, and policy, in support of the state’s proposed Consumer Grocery Pricing Fairness Act, which would help level the playing field for independent grocers by banning concessionary pricing for large retailers like Walmart and Amazon. “This bill would ensure that any differences in pricing or terms of sale are grounded in demonstrable, genuine cost savings (such as lower per unit shipping costs for larger orders). Any grocer that can purchase orders in a way that saves costs should be able to receive the same pricing and terms of service,” Kelloway wrote, noting that the under-enforced federal Robinson-Patman Act outlaws price discrimination. Read the full letter here.

📝 WHAT WE'VE BEEN UP TO:

Open Markets executive director Barry Lynn condemned President Trump’s move to remove Democratic appointees at the Federal Trade Commission. “President Trump’s illegal, unconstitutional attempt today to fire the Democratic Commissioners Rebecca Slaughter and Alvaro Bedoya makes abundantly clear that he is not interested in protecting the liberty and economic wellbeing of the American people and American business, or the security and safety of the United States itself,” Lynn said, as he called on Trump to reverse his decision, and failing that, on the courts to halt the politically motivated attack on the FTC.
Washington Monthly described Open Markets legal director Sandeep Vaheesan’s new book Democracy in Power: A History of Electrification in the United States as a “striking portrait of how federal, state, and local governments collaboratively built much of the U.S. electricity system over the first half of the twentieth century.” The reviewer praised Vaheesan for building on this “history to spin off a future in which the government’s role in public power is revivified to construct a decarbonized and democratized energy system.”
The Open Markets Institute submitted a comment to the Office of Science and Technology Policy, proposing an alternative vision to the Artificial Intelligence (AI) Action Plan, one which fosters widespread innovation, rather than corporate concentration and control. The submission reads, “A concentrated AI market controlled by a few powerful players presents challenges beyond mere market competition. It stifles innovation by reducing incentives for established players to develop new solutions.” Read the full submission here.
Executive director Barry Lynn gave an interview to Politico Europe in the wake of a critical meeting with EU Competition Commissioner Teresa Ribera earlier this week. Lynn said he warned the European Commission against relaxing its merger control rules and other regulations aimed at reining in U.S. tech platforms. Lynn urged Europe to stay the course and not get ensnared in the chaotic directives coming from the Trump administration. “They just need to do what they need to,” he told Politico.
Last week, Center for Journalism and Liberty director Courtney Radsch spoke at the CTRL+J Latam conference in São Paulo, Brazil, a convening focused on the challenges facing journalism in Latin America. Dr. Radsch discussed how journalism can survive amid threats such as AI and the removal of news from search feeds by Big Tech giants like Google.
Executive director Barry Lynn and Open Markets senior fellow spoke at Somo’s Antimonopoly Conference in Amsterdam this week.
Open Markets senior reporter Karina Montoya published an explainer on the Department of Justice’s proposed remedies for Google in its search trial in Tech Policy Press. “By now, the DOJ’s stance is abundantly clear: to restore competition in search, one has to go beyond the Google-Apple revenue share and look at the interdependencies Google has created to lock in users, creators, publishers, and advertisers to monopolize search,” Montoya wrote.
In a review of two books promoting the Abundance framework of zoning reforms and deregulation, The American Prospect quoted from an article in Dissent written by OMI legal director Sandeep Vaheesan and chief economist Brian Callaci, in which they wrote, “For those who see housing as a right, the role of the state in structuring markets expands beyond the YIMBY vision of increasing supply at the margin through deregulation.”
Open Markets senior legal analyst Daniel Hanley was quoted in Bloomberg criticizing Nvidia's anticompetitive practices such as better pricing for customers buying its systems exclusively or as a package. “The conditions are ripe for preferential dealing,” Hanley said.
The Open Markets Institute officially joined the Digital Merger Watch network, a global initiative aimed at scrutinizing and challenging Big Tech's dominance. The network provides a platform for members to meet, exchange information, and coordinate responses to problematic M&A activity within digital markets. Among its 17 members are Article 19, Balanced Economy Project, and SOMO.

🔊 ANTI-MONOPOLY RISING:

State lawmakers in Nevada introduced legislation to mandate corporations intending to merge provide the state attorney general the same documentation they are required to file with federal regulators. The move is among a flurry of such bills that have been filed in at least half a dozen other state legislatures this year. (Nevada Current)
The European Commission ordered Apple to drastically improve their products’ interoperability with third-party hardware developers, after a monthslong probe into the company found its tightly controlled external device ecosystem violated the new Digital Markets Act. (Reuters)
Live Nation agreed to pay $20 million to settle a federal antitrust lawsuit brought by investors who claimed the live entertainment giant did not adequately disclose the anticompetitive behaviors that led to federal antitrust enforcement action. (Billboard)

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📈 VITAL STAT:

$1 billion

The amount the EU is considering forcing Meta to pay for violating its landmark Digital Markets Act. The owner of Facebook is facing scrutiny over its “pay or consent” advertising model, under which users could either pay approximately $14 per month for an ad-free experience or consent to having their personal data used for targeted advertising. This model, EU officials argue, effectively coerces users into sharing their data. (Competition Policy International)

📚 WHAT WE'RE READING:

Chokepoints: American Power in the Age of Economic Warfare — Edward Fishman, a former State Department official and current researcher and teacher at Columbia University’s School of International and Public Affairs, analyzes the way the United States has increasingly relied on its rapidly growing sanctions regime and influence over global oil, tech, and finance markets to thwart Russia, China, and Iran. In his account, Fishman argues this form of economic warfare is quickly emerging as the key force reshaping the global economy.

Order Legal Director Sandeep Vaheesan’s new 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 on December 3, 2024. Vaheesan 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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