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Welcome to The Corner. In this issue, we discuss NYC’s data-sharing mandate for restaurant delivery apps, the fight for a crypto tax-reporting carveout, and how to realize the promise of the massive railroad funding in the infrastructure bill.
NYC’s delivery-app mandate to share data with restaurants is a missed opportunity
Karina Montoya
The New York City Council recently approved five bills to protect small restaurants from the power of delivery apps such as Grubhub, UberEats and DoorDash, as the eateries have become ever more reliant on their service to weather the COVID-19 pandemic. Among these bills, a first: an order for delivery apps to share some data collected from consumers — name, phone number, email, delivery address and the contents of their orders — upon the restaurants’ request.
The move is important. Until now, restaurateurs were not able to access their own customers’ basic information from the food apps, which can especially hurt thin-margin shops that want to develop direct ties to their own clientele. But the City Council also missed an opportunity to stop these same dominant intermediaries from then selling the data about these sales to other third parties.
One key result of this missed opportunity was that the City Council left itself open to criticism by the delivery apps for actually undermining the privacy of the restaurants’ customers.
The bill in question, Intro. 2311-A, comes with certain provisions for data privacy. For example, apps will have to provide a way for customers to opt out from sharing their data with restaurants. The eateries, in turn, are not to sell, rent, or share such data in exchange for financial benefit. But the bill still allows the dominant apps to sell personal data to third-party vendors, unless they opt out.
A more desirable outcome for data protection is achieved by offering consumers an “opt-in” button, for those who don’t mind having their data sold to third parties.
Data privacy advocates have been pushing for this change for years. The California Consumer Privacy Act of 2018 introduced the right to opt out from this practice — a big achievement then. Today, one of the organizations that supported it, the Electronic Frontier Foundation, is pushing to amend the CCPA for the sale of data to an opt-in default. New York City could have taken a first step in this direction for the big platforms.
“We want the default to be privacy,” Hayley Tsukayama, legislative activist for the Electronic Frontier Foundation, told Open Markets. “If you want consumer choice, let’s give them the opportunity to opt in if they want to share their data with a company. [The City Council] could have definitely done that,” she said. According to a recent study by pCloud, 52% of apps share user data with third parties, with UberEats in the top 10.
Dede Lahman of Clinton Street Baking Co. says restaurants have measures in place to protect their customers’ information. For advertising, she prefers to build a direct relationship with them, mainly through Instagram. "I am directly talking to my customers who are opting in because they seem to be interested in me," the co-owner of the Lower East Side café said. "I’m a bricks-and-mortar, dine-in restaurant. I never wanted to turn into a delivery machine."
Most big food delivery apps have gotten even bigger in recent years. In 2013, Grubhub merged with Seamless. In 2019, Caviar merged with DoorDash. A year later, UberEats acquired Postmates after dropping a $6.5 million deal with Grubhub to dodge regulatory scrutiny. The intermediaries also increased their commission fees, which now vary from 15 to even 60 percent of an order’s sale (One of the bills approved in New York City extended a 15 percent cap until February 2022.).
In late 2020, complaints from restaurant owners about the business practices of these companies prompted calls from the Congress and antitrust groups for the Federal Trade Commission to launch an investigation into market consolidation and anti-competitive practices.
The cryptocurrency lobby fought for a tax carveout. They lost — for now.
The Open Markets Institute’s Alexis Goldstein helped block an intense effort by the crytocurrency lobby against language in the infrastructure bill requiring major participants in cryptocurrency markets to send tax forms to the IRS and to their users. Right now, individual crypto investors bear the burden of figuring out how much they owe in taxes, since crypto trading platforms don’t send them the same kinds of forms that stockbrokers do — leaving them to rely on expensive third-party sites. The language is part of a plan to increase taxes on cryptocurrency transactions to help pay for new infrastructure investment.
The win helped to ensure passage of the infrastructure package. The win also helps lay a foundation for ensuring that cryptocurrency does not pose unnecessary risks to individual users or to the financial system as a whole. At present, “decentralized finance” or DeFi, is a Wild West, where the lack of “Know Your Customer” is often proclaimed as a feature, and scams can proliferate. Commissioner Dan Berkovitz of the Commodity Futures Trading Commission has warned that DeFi risks developing into an “unregulated shadow financial market.”
As Goldstein told The Washington Post, carving DeFi out of tax reporting requirements would lead to most of the market moving to this underregulated space. OMI prepared a fact sheet outlining the dangers of exempting large portions of the crypto markets from tax reporting. The fact sheet was cited in The New Republic. Goldstein was also quoted by Politico and MSN. The fight may heat up again as the infrastructure bill moves to the House.
Amtrak Joe vs. The Modern Robber Barons
The bipartisan infrastructure bill that passed the Senate on Tuesday contains an unprecedented $66 billion for expanding Amtrak and rebuilding America’s freight railroads. The legislation promises to furnish a better balanced, more fuel-efficient, and environmentally friendly transportation system. But as OMI Policy Director Phillip Longman explains in a Washington Monthly feature article published this week, for any of this to happen on any meaningful scale, the Biden administration will need to do more than invest more public money. “It will also,” Longman writes, “need to reverse decades of deregulation, lax antitrust enforcement, and other policy blunders that have left latter-day robber barons in control of nearly all the nation’s highly monopolized railroad infrastructure, just as they were in the worst days of the Gilded Age.”
The issue is key to solving many of America’s most pressing problems. For instance, Longman details how financiers have captured control of America’s major railroads and begun stripping them of their assets to maximize short-term profits. One result is that Amtrak finds it increasingly difficult, and in some instances even impossible to maintain existing passenger service, let alone expand it. Another is that a huge volume of freight that should be moving by rail is instead shifting to pollution-spewing, pavement-pounding, long-haul trucks that kill or injure some 156,000 Americans a year. Longman explores solutions ranging from full or partial nationalization of railroads to once again regulating them as utilities as America did until the 1980s. Longman’s piece also ran in Daily Kos and was mentioned in Bloomberg.
🔊 ANTI-MONOPOLY RISING:
- Last week, the European Commission announced it would review the acquisition of customer service startup Kustomer by Facebook. Facebook announced plans to acquire the company for $1 billion in November. The European Commission has argued that the deal could weaken competition and increase Facebook’s online advertising market power. The deal was previously being investigated by Austrian competition regulators and Germany’s antitrust agency. (The Wall Street Journal)
On Wednesday, a group of North Carolina residents filed a class-action antitrust lawsuit against HCA Healthcare in the western part of the state. The lawsuit alleges the hospital uses its monopoly to charge patients in its service area higher premiums and rates than in other parts of the state. The suit also argues that HCA has not complied with federal regulation requiring transparency on prices. (Axios)
On Wednesday, a bipartisan group of senators, including sponsors Richard Blumenthal (D-Conn.), Amy Klobuchar (D-Minn.), and Marsha Blackburn (R-Tenn.), introduced a bill that restricts app stores, such as Google’s Android or Apple, from forcing app creators to use their payment systems. The bill also prohibits the stores from using non-public data obtained from the apps to compete with their product offerings and prohibits app stores from punishing app creators that use alternative payment systems and different pricing. (Reuters)
📝 WHAT WE'VE BEEN UP TO:
- Daniel Hanley published a piece in Broadband Breakfast detailing why the Federal Communications Commission (FCC) must block Verizon’s dangerous acquisition of TracFone: “The FCC has clear discretion to block this merger. Given the harmful effects of similar mergers, the sheer number of acquisitions that have already taken place in the communications industry that the agency has previously failed to stop, and the potential harms that could result directly from this merger, the FCC should review Verizon’s acquisition of
TracFone with extreme suspicion and block it outright.”
Nikki Usher’s new book, News for the Rich, White, and Blue: How Place and Power Distort American Journalism, was featured in a Marketplace interview. “There have simply been locations throughout the U.S. which have by no means actually been seen to be viable information markets.” said Usher, a media professor at the College of Illinois at Urbana-Champaign. "That doesn’t imply that these communities don’t have information. However the form of information that we have a tendency to consider as skilled information and data simply hasn’t existed in these locations.” The interview was also published on NY Daily News Gazette. Boston’s local NPR, WGBH, also interviewed Usher about her book, and the Boston Review published a review of the book.
Barry Lynn was interviewed in a podcast hosted by National Constitution Center President and CEO Jeffrey Rosen called “We The People” to discuss President Joe Biden’s competition policy executive order.
Sally Hubbard was mentioned by Android Central in a piece about Facebook’s “Oculus Move” and the deceptive practice called “sherlocking,” in which big companies like Facebook, Google, and Apple take ideas from smaller developers and work them into their own products' operating systems. “Sally Hubbard, director of enforcement strategy at the Open Markets Institute, an anti-monopoly think tank, has seen this situation happen more than once. In fact, in Hubbard's book, Monopolies Suck, she details an almost carbon copy of YUR's story, just with Apple as the villain.”
Alexis Goldstein was quoted in Truthout quantifying how much student debt the Biden administration was able to cancel using his executive authority. “’If you normally pay $400 a month in loans for qualifying PSLF [Public Service Loan Forgiveness] payments, didn’t pay while the moratorium was placed, and received PSLF in July 2021, your accumulated monthly payments, or essentially $6,400 of debt, was canceled via the executive order suspension,” she said.
Daniel Hanley was quoted by S&P Global commenting on Big Tech’s spending on antitrust lobbying. According to the report, Hanley “said it will be interesting to see how lobbying dollars shift next year as companies turn their attention to the U.S. mid-term election, which could shift the balance of power in Congress and impact the types of bills that get passed.”
Open Markets’ primer on workers and monopoly power was cited in a Union of Concerned Scientists’ report about Tyson’s monopoly-like power over chicken. “This form of oligopsony power, which major processors such as Tyson have, has been shown to reduce workers’ ability to negotiate improved workplace conditions, wages, and benefits (Open Markets Institute 2021).”
Open Markets continued to receive coverage related to Lina Khan, former legal director at Open Markets and new FTC chairwoman. The latest reporting included CNBC, The Hill, The Financial Times, Newsbreak, and Texas News Today.
Open Markets was mentioned in reporting by the Wisconsin Law Journal about the Biden administration moving to support new rulemaking to prohibit unfair methods of competition, including rules to prohibit noncompete clauses in most employment contracts. “Newly confirmed FTC Chair Lina Khan is widely expected to support the new rulemaking. She was the legal director of the Open Markets Institute, which signed a petition filed with the FTC in 2019, along with several other signatories, for rulemaking that prohibits worker non-compete clauses.”
A letter that Open Markets signed along with 47 other groups asking the FTC to stop corporate surveillance was mentioned in ITPro. “It’s incumbent on the FTC to exercise the full extent of their rulemaking authority to ban corporate use of facial surveillance technology, ban continuous surveillance in places of public accommodation, and stop industry wide data abuse. Until the FTC acts, no one is safe.”
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📈 VITAL STAT:
$40 billion
The amount of money consumers in the U.S. lose each year on products they own because of corporate right-to-repair restrictions.
📚 WHAT WE'RE READING:
“How COVID-19 vaccine supply chains emerged in the midst of a pandemic” (Peterson Institute for International Economics, Chad P. Bown and Thomas J. Bollyky): The authors describe and map how the global manufacturing supply chain for the COVID-19 vaccine developed over the past year. The authors also discuss how major national pandemic policy initiatives affected the timing and formation of those supply chains.
“How Google quietly funds Europe’s leading tech policy institutes” (New Statesman, Laurie Clarke, Oscar Williams, and Katherine Swindells): The authors discuss the massive influence Google and other Big Tech companies have over policy think tanks on the European continent.
NIKKI USHER'S
NEW BOOK
News for the Rich, White, and Blue: How Place and Power Distort American Journalism
Nikki Usher, a senior fellow at Open Markets Institute’s Center for Journalism & Liberty, has released her third book, News for the Rich, White, and Blue: How Place and Power Distort American Journalism. In her latest work, Usher offers a frank examination of the inequalities driving not just America’s journalism crisis but also certain portions of the movement to save it.
“We need to radically rethink the core functions of journalism, leverage expertise, and consider how to take the best of what the newspaper ethos of journalism can offer to places that have lost geographically specific news, “ says Usher, an associate professor at the University of Illinois-Champaign. “The news that powers democracy can be more inclusive.”
Usher is also the author of Making News at The New York Times (2014) and Interactive Journalism: Hackers, Data, and Code (2016).
News for the Rich, White, and Blue, published by Columbia University Press, is available as a hardback, paperback and e-book. You can order your copy here.
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